US LLC while Spain resident, then move to Georgia?

[TmeWalcO]

Hi everyone,

I'm pretty sure I'm overcomplicating things given my low income, but I would like to explore some options.

Currently, I am a Spain citizen and resident and with an income of €2.000 per month, and as a freelancer I pay €288 of Social Security and 20% tax on the remaining amount, approximately €340, so a total of €628 of the €2.000.

At the moment, I'm just providing services, and my goal is to productize them and create a real business out of it. For that, I need to be able to dedicate as much time as possible to it, and with this taxation I need to work on providing those services quite a bit to cover expenses. I have two questions:

1. From my research, I think the best solution for me is living in Georgia and having an LLC in New Mexico. Is that the case? As a single-member LLC is a disregarded entity with a pass-through status, and Georgia has 0% tax on foreign income, would I pay 0% tax? That added to the low cost of living in the country seems a good solution.

2. Would forming the LLC in NM while living in Spain and pay income tax (therefore avoiding social security) be a good solution until moving to Georgia? Those €288 might not seem much to most of you, but is significant income for me. At the same time, it's not worth it if it can cause problems with the Spanish Tax Office.

Thanks in advance you for your help.

 

[drn]

You may have to check how easy it is for the companies to deduct your LLC invoices as costs. I heard about problems in Germany at least.

 

[exprtadvisrdev]

Hi everyone,

I'm pretty sure I'm overcomplicating things given my low income, but I would like to explore some options.

Currently, I am a Spain citizen and resident and with an income of €2.000 per month, and as a freelancer I pay €288 of Social Security and 20% tax on the remaining amount, approximately €340, so a total of €628 of the €2.000.

At the moment, I'm just providing services, and my goal is to productize them and create a real business out of it. For that, I need to be able to dedicate as much time as possible to it, and with this taxation I need to work on providing those services quite a bit to cover expenses. I have two questions:

1. From my research, I think the best solution for me is living in Georgia and having an LLC in New Mexico. Is that the case? As a single-member LLC is a disregarded entity with a pass-through status, and Georgia has 0% tax on foreign income, would I pay 0% tax? That added to the low cost of living in the country seems a good solution.

2. Would forming the LLC in NM while living in Spain and pay income tax (therefore avoiding social security) be a good solution until moving to Georgia? Those €288 might not seem much to most of you, but is significant income for me. At the same time, it's not worth it if it can cause problems with the Spanish Tax Office.

Thanks in advance you for your help.

I think you will need to consult an accountant there and confirm that your LLC won't be tax resident in Spain because Spain is a hell in terms of taxes and I wouldn't be surprised if they consider your LLC as tax resident (which means you pay corporate taxes there too).

About Georgia... Where did you read there is 0% tax there for your setup? If I'm not wrong if you live there and you work there then you pay taxes there as personal income because the source of your work was while living there (it doesn't matter where the company is located as long as you are the only one doing the work)

 

[LoveMyLife]

Hi everyone,

I'm pretty sure I'm overcomplicating things given my low income, but I would like to explore some options.

Currently, I am a Spain citizen and resident and with an income of €2.000 per month, and as a freelancer I pay €288 of Social Security and 20% tax on the remaining amount, approximately €340, so a total of €628 of the €2.000.

At the moment, I'm just providing services, and my goal is to productize them and create a real business out of it. For that, I need to be able to dedicate as much time as possible to it, and with this taxation I need to work on providing those services quite a bit to cover expenses. I have two questions:

1. From my research, I think the best solution for me is living in Georgia and having an LLC in New Mexico. Is that the case? As a single-member LLC is a disregarded entity with a pass-through status, and Georgia has 0% tax on foreign income, would I pay 0% tax? That added to the low cost of living in the country seems a good solution.

2. Would forming the LLC in NM while living in Spain and pay income tax (therefore avoiding social security) be a good solution until moving to Georgia? Those €288 might not seem much to most of you, but is significant income for me. At the same time, it's not worth it if it can cause problems with the Spanish Tax Office.

Thanks in advance you for your help.

1. While living in Georgia, your tax will be tax free. If you will not have any customers in the USA. If you will have any customers in the USA, you will be required to obtain a perconal ITIN and pay personal income tax in the USA. As long as you will not have customers in USA and you will be living in Georgia, you will be tax free. Problem is somewhere else - transfers of money.
No bank will open a bank account of a New Mexico LLC in Europe nor Georgia. So you will have to travel to the USA (what will cost you foe thousand Eur) and open a bank account for your US LLC there.
As you want to live in a Georgia and their local ATMs limits for withdrawals by using a foreign card are very low, you will need a personal bank account there.
And imagin this situation:

Your customer from Spain witing money from Spain to USA: 2 % transfer fee, 2.5 % conversion from Eur to USD.
Transfer from USA to Georgia: 4 %
Conversion fee from USD to GEL: 2.5 %

So, financial transfers will cost you at least 11 %.

2. Absolutely no. Any income received through US LLC will be your personal income in Spain and you will have to pay income tax, health insuurance and social insurance from this in Spain. There is no advanted of having US LLC when living in Spain. The only benefit can be responsibility for any damages and losses made in business activity. But in your level income, this is not so important.

There is no way how to save any reasonable amout of money by optimizing less than 250-300 K Eur..

 

[exprtadvisrdev]

Your customer from Spain witing money from Spain to USA: 2 % transfer fee, 2.5 % conversion from Eur to USD.
Transfer from USA to Georgia: 4 %
Conversion fee from USD to GEL: 2.5 %

So, financial transfers will cost you at least 11 %

wtf? why not just open a TransferWise account for the LLC and that's it? why make all those conversions if they are not needed at all? US LLCs can have foreign accounts as long as he declares them. And traveling to the US isn't required either...

 

[LoveMyLife]

wtf? why not just open a TransferWise account for the LLC and that's it? why make all those conversions if they are not needed at all? US LLCs can have foreign accounts as long as he declares them. And traveling to the US isn't required either...

Try to have a Transferwise account for US LLC. It will work for some time. Few months, maybe a year. After some turnover, they will freeze account and ask for US SSN or US ITIN. When I recommend a solution, it has to be something that will last.

Jusr read pots of all those unhappy people who have locked Transferwise accounts. Transferwise conditions are absolutely clear for US market: It is service offered just of US LLC which are directed with people who have SSN or ITIN or company has to have a real presence in the USA. Just read carefully their Terms and conditions.

Many people believe, it is their right to have services provided based on terms of their wishes. This is not how it works. When openning a Transferwise account, you have to accept their Terms and Conditions. You should read it carefully. Or you are risking to be crying once they lock your account and your money will be lost forever.. And what is worse, once they lock one your account, their automatic bot will try to connect you as a person with all other accounts and will lock all accounts of all your companies as well as your personal one.

Which standard bank will lock your account for no reason? None serious. Which EMI can lock your account without reason? Almost all.

Please, read Terms and Conditions of service before you advice any solution next time..

 

[exprtadvisrdev]

Try to have a Transferwise account for US LLC. It will work for some time. Few months, maybe a year. After some turnover, they will freeze account and ask for US SSN or US ITIN. When I recommend a solution, it has to be something that will last.

2 of my 3 LLCs have accounts with TW (and as long as I have the EIN for the third one I'm sure I will have the new account), My oldest LLC have more than 3 years with its account and the only time they locked my funds it took less than a week to solve everything (basically send them proof that the work was real). If you are not doing anything shady, you're not involved in their blocked types businesses (adult, crypto, etc) you won't have issues. The problem starts when people start trying to fool the service...

Please, read Terms and Conditions of service before you advice any solution next time..

Please, could you share your sources? I would like to ask them if what you read applies to my businesses because if that's true I will stop using TW and just use my Mercury and BofA accounts (and maybe open accounts in a third entity just in case)

 

[iamafrog]

Hi everyone,

I'm pretty sure I'm overcomplicating things given my low income, but I would like to explore some options.

Currently, I am a Spain citizen and resident and with an income of €2.000 per month, and as a freelancer I pay €288 of Social Security and 20% tax on the remaining amount, approximately €340, so a total of €628 of the €2.000.

At the moment, I'm just providing services, and my goal is to productize them and create a real business out of it. For that, I need to be able to dedicate as much time as possible to it, and with this taxation I need to work on providing those services quite a bit to cover expenses. I have two questions:

1. From my research, I think the best solution for me is living in Georgia and having an LLC in New Mexico. Is that the case? As a single-member LLC is a disregarded entity with a pass-through status, and Georgia has 0% tax on foreign income, would I pay 0% tax? That added to the low cost of living in the country seems a good solution.

2. Would forming the LLC in NM while living in Spain and pay income tax (therefore avoiding social security) be a good solution until moving to Georgia? Those €288 might not seem much to most of you, but is significant income for me. At the same time, it's not worth it if it can cause problems with the Spanish Tax Office.

Thanks in advance you for your help.

Spanish guy here, i'm also looking to reside in Georgia with a viable scheme. I'm a cryptotrader.

 

[orangekangaroo]

Hi everyone,

I'm pretty sure I'm overcomplicating things given my low income, but I would like to explore some options.

Currently, I am a Spain citizen and resident and with an income of €2.000 per month, and as a freelancer I pay €288 of Social Security and 20% tax on the remaining amount, approximately €340, so a total of €628 of the €2.000.

At the moment, I'm just providing services, and my goal is to productize them and create a real business out of it. For that, I need to be able to dedicate as much time as possible to it, and with this taxation I need to work on providing those services quite a bit to cover expenses. I have two questions:

1. From my research, I think the best solution for me is living in Georgia and having an LLC in New Mexico. Is that the case? As a single-member LLC is a disregarded entity with a pass-through status, and Georgia has 0% tax on foreign income, would I pay 0% tax? That added to the low cost of living in the country seems a good solution.

2. Would forming the LLC in NM while living in Spain and pay income tax (therefore avoiding social security) be a good solution until moving to Georgia? Those €288 might not seem much to most of you, but is significant income for me. At the same time, it's not worth it if it can cause problems with the Spanish Tax Office.

Thanks in advance you for your help.

The LLC in Georgia would be seen as a Permanent Establishment and you would be taxed 20%. Romania micro company, 1 to 3% tax or Georgia Individual Entrepreneur 1% tax might be your best option.

 

[TmeWalcO]

The LLC in Georgia would be seen as a Permanent Establishment and you would be taxed 20%. Romania micro company, 1 to 3% tax or Georgia Individual Entrepreneur 1% tax might be your best option.

The issue I have with incorporating in Georgia is the lack of support from Stripe or major payment gateways. Do you know a workaround for this?

 

[orangekangaroo]

The issue I have with incorporating in Georgia is the lack of support from Stripe or major payment gateways. Do you know a workaround for this?

It is called a payment company. You use a UK LLP or US LLC just to process payments.

 

[TmeWalcO]

If the US LLC is owned by another LLC, doesn't that imply much more obligations with the IRS? Compared to a foreign-owned, single-member one.

 

[LoveMyLife]

It is called a payment company. You use a UK LLP or US LLC just to process payments.

To be exact, it is not a payment company. It is a payment agent. In UK as well as in the USA, it is activity for which a license for financial market services is required. There are just a few countries where payment agent does not need a license, if this service is provided for other company within holding. But you can forget to USA or UK.
Providim service of payment agent without proper license is criminal offence in the UK and in the USA also.

 

[lory]

You got some really good and serious advise in this thread. With the low income you have it make second to no sense to move to Georgia or anywhere else on earth if you are happy to live where you do.

Why would you move anywhere to reduce you 368 euro to maybe 100€ if the costs to relocate and begin a new live anywhere else may be 20K or even more?

 

[TmeWalcO]

You got some really good and serious advise in this thread. With the low income you have it make second to no sense to move to Georgia or anywhere else on earth if you are happy to live where you do.

Why would you move anywhere to reduce you 368 euro to maybe 100€ if the costs to relocate and begin a new live anywhere else may be 20K or even more?

Makes sense, and the cost of relocation is a concern. My rationale behind the move is that with an income of €2k, with exactly the same lifestyle (assuming power doesn't go off and things like that in Georgia), my expenses in Georgia might be €700 when here it's €1.400. This essentially means I could do half the client work every week, freeing considerable time to work on building a real business.

But I totally see your point.

 

[fanban]

Makes sense, and the cost of relocation is a concern. My rationale behind the move is that with an income of €2k, with exactly the same lifestyle (assuming power doesn't go off and things like that in Georgia), my expenses in Georgia might be €700 when here it's €1.400. T

you are really going in small shoes, but I see your point. For some people around here 2K a month is a lot, really a lot, of money. If you can restructure your time by moving to Gerogia and double your income that way, then it is a good plan for you.

 

[TmeWalcO]

The LLC in Georgia would be seen as a Permanent Establishment and you would be taxed 20%. Romania micro company, 1 to 3% tax or Georgia Individual Entrepreneur 1% tax might be your best option.

Hi, can you point me to the sources of that Permanent Establishment consideration?

 

[orangekangaroo]

If you are a tax resident of Georgia and the management of a company like a US LLC is done within Georgia it becomes a PE. Territorial taxation only applies to passive investment.

This is what PWC quotes for Georgia.

Permanent establishment (PE)​

The domestic definition for a PE essentially adopts the definition for PE found in the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention.

Local legislation provides the definition for economic activity to be any activity undertaken with the intent to gain profit, income, or compensation, regardless of the results of such activity, unless otherwise provided by the tax code.

Alternatives.

Panama has a different Territorial taxation where by all foreign income is exempt, this applies also to Panamanian companies foreign income.

Malaysia if it reopens its MM2H program works also like Panama by exempting foreign income completely even if managed and controlled.

 

[JohnLocke]

The problem you may face quickly is that many payment service providers will ask for lots and lots of documents now in regards where the UBO is resident and where the activity of the company is. It's not like a finger snip any longer, sadly.

 

[TmeWalcO]

Seems it's not such a good option then. For someone with such a low income but willing to move anywhere (provided is safe and has internet and stable electricity), what would be the best option so I can afford living with around 700 € - 800 € after tax? Romania?