USA LLC vs Armenia LLC for a EU resident

[x00ni]

Hi!

Just wonder which would you consider a better option for an EU resident doing 100% digital services with worldwide clients (mainly USA, EU and Australia clients).

Would you open an unipersonal (passthrough) United States LLC or an Armenia LLC ?

Thanks!

 

[CaptK]

USA LLC is applicable for WHT if any income is derived from the USA. So for a tax point of view not efficient. I am not sure about Armenia.

What sort of profit do you expect.

 

[JustAnotherNomad]

What? Why would there be WHT?

The interesting question is where you live, not where your customers are.

 

[x00ni]

USA LLC is applicable for WHT if any income is derived from the USA.

Not for digital services and passthrough LLC companies (unipersonal) for non USA citizen

The interesting question is where you live

I live in the EU, Eurozone.

 

[JustAnotherNomad]

I live in the EU, Eurozone.

Then most likely you’d have to pay taxes where you live. I guess you already know that though.

 

[x00ni]

Yes, I'm aware of that... Tax over the net benefits.
Not trying to avoid paying taxes, just trying to manage them in the most clever way possible

Kind of hate the EU VAT system. Haha

 

[JustAnotherNomad]

There won’t be any tax savings if you want to stay legal. Only additional reporting requirements and costs.

Unless you want to physically move, you can choose 2 out of 3:
- legal
- cheap
- (substantial) tax savings
All 3 at the same time are only possible if you physically move your butt to a country with lower taxes.

 

[x00ni]

There won’t be any tax savings

Well, you do not need issue invoice with EU VAT , which is already a ~20% (depending your EU country), yo do not need to do complex accounting every few months, but once a year, and depending on your country you will save some monthly fees for being self employed. I thinks that's quite a lot of "savings" already

Regarding income tax, yes, there won't be any savings there, but I see a lot of other advantages here.

 

[JustAnotherNomad]

You are completely wrong, unfortunately. How dumb do you think your country’s government is? “Oh, you don’t want to pay VAT or follow our accounting laws? Sure, just register your company somewhere else and do what you want!”
But of course you might get lucky and fly under the radar with such an ILLEGAL setup. As I wrote, you can pick 2 out of 3.

 

[CaptK]

Not for digital services and passthrough LLC companies (unipersonal) for non USA citizen


I live in the EU, Eurozone.

I have learn something new today!!
What about merchants services, would that be difficult to acquire?

 

[x00ni]

How dumb do you think your country’s government is? “Oh, you don’t want to pay VAT or follow our accounting laws? Sure, just register your company somewhere else and do what you want!”
But of course you might get lucky and fly under the radar with such an ILLEGAL setup. As I wrote, you can pick 2 out of 3.

Totally understand your point here, and I come across the same though but as far as I know having and LLC and being an EU resident is not illegal at all. Many people use this also to manage their Amazon shops.

I can understand if I open a bakery in my country (EU) and open an USA LLC to manage the bakery, to avoid paying VAT they will come after you, LOL.

But I have 0 clients from my own country, and all is digital services. In any case I will try to find more info just in case I missed some point on why this could be illegal, as I would like to sleep well at night haha
*If you have a link pointing to that info pls share!

What about merchants services

No idea about that kind of services.

 

[JustAnotherNomad]

It is not illegal if you pay the VAT and all other local taxes and also follow the local accounting requirements. But then there are no tax savings, obviously (pick 2 out of 3). What you are looking for is “permanent establishment” - google it.

Since you are running things from your country, it is just like a bakery. It is completely irrelevant where your customers are or whether you are making bread or selling stuff online. You have permanent establishment (effective place of management) in your country. There are ways to work around that, but they aren’t cheap (pick 2 out of 3).
If you don’t believe me, ask your tax office. They will tell you the same thing.

 

[x00ni]

Thanks for the info! Will double / triple check for sure!!

 

[CaptK]

Totally understand your point here, and I come across the same though but as far as I know having and LLC and being an EU resident is not illegal at all. Many people use this also to manage their Amazon shops.

I can understand if I open a bakery in my country (EU) and open an USA LLC to manage the bakery, to avoid paying VAT they will come after you, LOL.

But I have 0 clients from my own country, and all is digital services. In any case I will try to find more info just in case I missed some point on why this could be illegal, as I would like to sleep well at night haha
*If you have a link pointing to that info pls share!



No idea about that kind of services.

How much profit do you intend to make?
Will it be worth it?

 

[x00ni]

Not sure about the future, but right now about +60K year

If it's legal yes it's worth it, if it's just going to give me more headache then probably not.

 

[JustAnotherNomad]

You should probably talk to an accountant in your own country first and ask what ways of optimization they can recommend. 60k isn’t a lot of money, so other optimizations probably aren’t worth it, unless you want to break the rules or you expect higher profits soon.

 

[Jade33]

Everybody is just looking for the best possible solution. Is it worthwile? I think looking into how easy you can get out of it also matters. In my country BE administration and exit is costly...
Why does it need to be so complicated! More people would/could build upon great ideas/services to serve the community if it wasn't so complicated and overtaxed!

 

[x00ni]

EU is the HELL of taxes, and not only that, is overcomplicated, making it almost impossible for small entrepreneurs. If you start to dig into the VAT system you will see how crazy and complex it is, as each EU country has it's own regulations....

 

[Traveler]

@JustAnotherNomad is spot on, whether you like it or not. Unless you're willing to either physically move out of the EU for 183+ days a year or take on a significant cost base for an international structure, there will be no tax savings for you with the structures you're proposing.

And "a lot of people are doing that" means nada. I spend most of my time in Georgia, where "a lot of people" move to every year, thinking that territorial taxation means freelancers who live here but have clients elsewhere aren't taxed, "because some blogs say so and other people are doing it". When they step in for a consulting session and realize that they in fact owe a significant amount in back taxes, and will be taxed at the full 20% (while had they set things up properly, it could've easily been 1%), they usually go through all 7 stages of grief.

 

[x00ni]

Yes, @JustAnotherNomad was absolutely right, and looks like the important point on my case is the residency location... So not much to do regarding this.

A.) keep paying localTAX
B.) move to another country with better regulations

How's Georgia btw?