Ukraine will release ''e-Residency Ukraine'' program 5% tax income...sound interesting!!! Better like Estonia ???

[Marzio]

I really find it hard to believe that this should work.

You don't have to believe it. It's the working of the Ukrainian tax code that says that when you become a private entrepreneur in Ukraine you become tax resident there. You can google "FOP Ukraine" and see for yourself.

Of course you can't live in France and pretend to pay taxes only in Ukraine because you are tax resident there.

you can't have company, only PE option which limit options a lot.

Who cares about registering a company in Ukraine when you can register a US LLC/ UK LLP and make that the front of your business? You then invoice the offshore company for your services and pay 5% taxes accordingly in Ukraine.

The biggest part of profits are left untaxed in your offshore company.

Oh yes, this is a CFC!

You have to declare all of the CFC income in Ukraine but "if the total aggregated income does not exceed EUR 2 million you are exempted" and since you are not spending any day in Ukraine the place of effective management of LLC/LLP is not Ukraine.

The only thing that has to be seen is how Ukraine treats transparent entities.

If those are seen as transparent you will have to add a capital company in the mix.

If those are seen as opaque you should be good.

Of course all of this has to be verified with a ukrainian legal person but if you are willing to be costanly on the move and never stay enough in one place to trigger tax residency in that place i don't see why this should't be working.

 

[JustAnotherNomad]

But... why? Even if it works, you might as well just get residency in Panama or something.

 

[Marzio]

But... why?

Because you don't have to spend any day there!

As long as the PE is active, you are tax resident in Ukraine.

Translated means as long as you invoice your offshore company you are tax resident in Ukraine.

I don't have to fly for 2 days to get to Panama just to maintain the residency active or fly every 6 months to Dubai and pay for an unused apartment. You don't have to rent an apartment in Ukraine unlike Dubai and all the usual suspects.

 

[JustAnotherNomad]

So what? You have tax residency certificate from Ukraine? What's the big advantage over not having a tax residency?

 

[Martin Everson]

I know your skepticism about the countries of the ex-USSR, but in fact, if this program will go further, all necessary documents required for prove residence could be issued without problem. Tax residency certificate, PE documents, e-residency card - all documents would be issued by government, could be verified as well as online(from public register) as well as apostilled/translated depend on the requirement.

If they ever give tax residency certificates to people who have never spent a day there as you say, then they will get problems in 2021.

 

[Marzio]

So what?

As i said the advantage is not about having Ukrainian tax certificate (even if could help to show that you are paying some taxes somewhere), it's about the freedom of movement and not having to show up there. Also Ukraine as far as i know it's not considered your usual tax haven. The same could'n't be said about UAE, Panama and so on.

 

[JustAnotherNomad]

But what would be the use of that tax residency certificate?
How would you want to use it?

 

[Marzio]

But what would be the use of that tax residency certificate?

If you leave your country you have to be tax resident somewhere else.

 

[JustAnotherNomad]

No, not really. Some countries require that (I believe Portugal does), others don't.

 

[John Spectre]

If they ever give tax residency certificates to people who have never spent a day there as you say, then they will get problems in 2021.

Here is I agree with you totally.

Who cares about registering a company in Ukraine when you can register a US LLC/ UK LLP and make that the front of your business? You then invoice the offshore company for your services and pay 5% taxes accordingly in Ukraine.

Banks will care about your business front line.
As described previously, banks are very restricted:
- payment from offshore? declined.
- payment from onshore company, with public registry where they will see you as director/shareholder? Declined. it's a prohibited.
- payment from some strange company without public info? declined.

So you would need to setup first good structure of abroad companies and then use them if want to pass due diligence.
What will be cost of it?
(Sure if we speak about 1-2k EUR payments per month it's not a problem. and money could flow from any shithole)

Oh yes, this is a CFC!

You have to declare all of the CFC income in Ukraine but "if the total aggregated income does not exceed EUR 2 million you are exempted" and since you are not spending any day in Ukraine the place of effective management of LLC/LLP is not Ukraine.

Taxman in Ukraine will be don't care where you do your nomad life style . You are Ukraine resident == your offshore controller from Ukraine. Quite simple.
Now limit for CFC is 2 millions, it's a correct. In next year this limit could be 0 easy peasy.

Right after obtain Ukraine tax residence and telling it to your banks, you are immediately going to be high-risk client.
Some on banks will close your account at same day, some bank will start to do due diligence for you.
Literally saying you would need to hide your UA residence from your banks. And what will you do next?
Unfortunately it's a too many caveats in this situation, and it's a not a good solution even for nomad style people.

 

[Marzio]

payment from offshore? declined.

This is pure generalization. Last week i hired a great IT guy from Ukraine and he indeed was a private entrepreneur and he received money from UpWork without any problems.

Now limit for CFC is 2 millions, it's a correct. In next year this limit could be 0 easy peasy.

So next year we'll all move to Dubai

I'll put a reminder on calendar an year from now to check how Ukraine CFC rules changed.

Right after obtain Ukraine tax residence and telling it to your banks, you are immediately going to be high-risk client.

Can't really comment on accuracy of this statement.

 

[Martin Everson]

I don't see banking as a problem, if one goes with Raiffeisen etc.

The banks owner ran of with the banks money . What kind of country is this? I wouldn't touch a Ukrainian bank with someone elses barge pole.

This Billionaire Oligarch Is Being Investigated By A US Federal Grand Jury For Alleged Money Laundering

Igor Kolomoisky is accused of funneling money from a Ukrainian bank into properties across the US.

www.buzzfeednews.com

 

[John Spectre]

This is pure generalization. Last week i hired a great IT guy from Ukraine and he indeed was a private entrepreneur and he received money from UpWork without any problems.

Upwork entity is a one of few exceptions.
With proper bank managers are aware what Upwork and pass money without due diligence.

Безкоштовне відкриття рахунків для IT-фахівців (ФОП) | Продаж валюти | Швидкий переказ коштів

Зручні та вигідні валютні операції | Електронна звітність у «Приват24 для бізнесу»| Безкоштовні преміальні карткові пропозиції

privatbank.ua

Just check page and search for upwork word.
Money flow from upwork via swift to Ukraine and upwork-payoneer-ukraine was implemented exactly for freelancers, which I agree in Ukraine are quite good.

 

[John Spectre]

. I don't see banking as a problem, if one goes with Raiffeisen etc.

If you goes with Raiffeisen Aval in Ukraine as e-resident prepare not only to go to the branch for open account, but and go to the branch for every payment you would receive/send with original signed/stamped contracts, invoices etc. You won't find more bureaucratic bank in ukraine.

 

[Marzio]

Money flow from upwork via swift to Ukraine and upwork- payoneer-ukraine was implemented exactly for freelancers, which I agree in Ukraine are quite good.

Ok so problem solved then. You signup your offshore company on UpWork and hire yourself as a freelancer to do the job.

Looks like you are very informed about Ukraine. What can you tell me about monobank?

 

[John Spectre]

Ok so problem solved then. You signup your offshore company on UpWork and hire yourself as a freelancer to do the job.

And additionally to taxes, you would pay 5-20% fee for upwork only?
As a mentioned before, just go to UAE could cost something like do such these stuff with Ukraine, without number of cons.

Looks like you are very informed about Ukraine. What can you tell me about monobank?

Monobank think that IBRK illegal FI and reject transfers to/from it.
Also founder of it, it's former owner of privatbank(which Martin noted about running with bank's money above).
Its all what you want to know about mono

But for average Ukrainian resident, who got their 200 EUR salary and spend It in Ukraine its ok: no fee for almost all operations, good mobile banking, etc.

 

[Marzio]

Monobank think that IBRK illegal FI and reject transfers to/from it.

What is IBRK?

 

[Marzio]

who got their 200 EUR salary and spend It in Ukraine its ok: no fee for almost all operations, good mobile banking, etc.

Who said that i will ever deposit more than 200€ monthly?

As i said, the plan is to keep 99% of profits outside Ukraine so even in the event that money will disappear from Ukraine bank account, it will disappear 5K max.

 

[John Spectre]

What is IBRK?

Home | Interactive Brokers LLC

Leading online trading solutions for traders, investors and advisors, with direct global access to stocks, options, futures, currencies, bonds and funds. Transparent, low commissions and financing rates and support for best execution.

www.interactivebrokers.com

Who said that i will ever deposit more than 200€ monthly?

As i said, the plan is to keep 99% of profits outside Ukraine so even in the event that money will disappear from Ukraine bank account, it will disappear 5K max.

So here is question what exact money you going to spend during your nomad lifestyle?
Or you have sustainable setup of legal entities, where you could easy spend any money you want (so literally do not need to have expenses as a private person), what sense in having Ukraine residence at all? You could declare near to zero income in any high tax country and continue to live for cost of your companies.
If we speak about CFC, CRS and another things, again, I believe as a UBO of those companies you have very big chances to get accounts closed if you disclose to bank your 'new' residency. If no - companies just fall to the CRS and CFC of your 'home' residence.

 

[Marzio]

You could declare near to zero income in any high tax country and continue to live for cost of your companies.

LOL try to do that in France, Germany, Spain or any high tax country and you'll see what will happen.

Expenses has to be justified.

If we speak about CFC, CRS and another things, again, I believe as a UBO of those companies you have very big chances to get accounts closed if you disclose to bank your 'new' residency.

As i said i don't really know how much difficult would be to open a bank account as an ukrainian tax resident.