What is the best Offshore jurisdiction and banking?

[inneedofcomp]

Hello,

I am in process of signing a very large marketing and consulting contract and would like to set up on offshore company and be paid there to avoid corporate taxes. I was considering RAK offshore company but many forums and youtube videos claim its impossible to open a bank account for it inside the UAE even when you have a UAE residency and another Free Zone company. On the other hand quite a few providers for company formation offered service to help me open a bank account but they stated it will take 2-3 months, is this true or bulls**t?

From my research I found out I can open offshore bank account in Mauritius, Bahamas or Georgia but it seems those are quite fragile as they can be frozen and closed at any time for any reason.

Would it be better to incorporate company in Seychelles, Mauritius or some other offshore zone? What are the best options for bank account?

For reference my client doesn't care where he needs to pay me and it will be a low 7 figure sum over a 12-month period of contract.

 

[CaptK]

Nationality and residency?

 

[inneedofcomp]

Nationality and residency?

Montenegro passport, residency currently same, but planning to move residency to dubai

 

[Marzio]

Crna Gora is amazing and you only pay 9% personal income tax rate. Do you really want to go through all that hassle and basically change your life just to save 90K?

 

[cangarooo]

Crna Gora is amazing and you only pay 9% personal income tax rate. Do you really want to go through all that hassle and basically change your life just to save 90K?

You spotted right!!!
Offshoring is NOT alwasy the answer.

 

[Ready Offshore]

You spotted right!!!
Offshoring is NOT alwasy the answer.

I confirm your answer.

 

[inneedofcomp]

Crna Gora is amazing and you only pay 9% personal income tax rate. Do you really want to go through all that hassle and basically change your life just to save 90K?

Its more complicated than 9%, you pay another 9% of than 9%. Privacy is one big part, second part is 21% VAT in Montenegro.

Additionally 90k is still very substantial sum of money, you can do a lot with that.

One option is to just send everything to the Free Zone company in Dubai and pay 5% which is already better than Montenegro (I already plan to move to Dubai and live there 8 months of the year). But I wanted to research and see what actual people who have experience with offshore have to say and not just agents who mostly care about money.

@Fred seems to know quite a lot about this and has given some great advice, would love to connect with you too.

 

[Ener]

Opening an offshore company is a piece of cake; getting a bank account for it can be an impossible disaster. Better focus on that part first.

 

[inneedofcomp]

Opening an offshore company is a piece of cake; getting a bank account for it can be an impossible disaster. Better focus on that part first.

Yes that's what i understand as well. Before i pick any offshore zone for company I want to see how that impacts bank account opening? Do you know what offshore banking zones are reliable?

 

[CaptK]

You can do a UK LLP/LTD also but in reality if you are living in the UAE then UAE is the place for you.

 

[JimBeam]

I'm from neighboring country and let me give you a couple advices (as a person that is running UAE company for 3+ years) and have went trough all this:

1. Don't open company in these RAK/Ajman cheaper and less reputable UAE free zones as you'll have issues with bank account opening. I know there are firms that will tell you it's possible and I even know some personally that can make it happen but their fee for the setup is €20k+ so you'll pay more and get a company at less reputable place... (but you'll get the bank account for 2-3 months).
2. Bank account opening can take months. In my case it was ~6 months... so calculate that in... Also some things move quick - and some are quite slow so always plan ahead.
3. You'll pay no VAT if you do business with company outside of UAE (Montenegro for example) so you won't pay 5% VAT - but if you go over ~$100k/year you'll have to apply for VAT id and file vat returns (accountant's work) and you'll most probably need an accountant.
4. If this is just one-time job, maybe Dubai is not the best place: long setup, costly, will you keep the company after that or not... if not you won't be having a visa and you might have to leave or find a job or a sponsor for a visa and also your personal bank account will no longer be looked as local and will go under CRS...

I have many other questions like: what do you plan to do with the money (you can't take it that easily back to Montenegro...)? How quick do you need this setup?

 

[inneedofcomp]

I'm from neighboring country and let me give you a couple advices (as a person that is running UAE company for 3+ years) and have went trough all this:

1. Don't open company in these RAK/Ajman cheaper and less reputable UAE free zones as you'll have issues with bank account opening. I know there are firms that will tell you it's possible and I even know some personally that can make it happen but their fee for the setup is €20k+ so you'll pay more and get a company at less reputable place... (but you'll get the bank account for 2-3 months).
2. Bank account opening can take months. In my case it was ~6 months... so calculate that in... Also some things move quick - and some are quite slow so always plan ahead.
3. You'll pay no VAT if you do business with company outside of UAE (Montenegro for example) so you won't pay 5% VAT - but if you go over ~$100k/year you'll have to apply for VAT id and file vat returns (accountant's work) and you'll most probably need an accountant.
4. If this is just one-time job, maybe Dubai is not the best place: long setup, costly, will you keep the company after that or not... if not you won't be having a visa and you might have to leave or find a job or a sponsor for a visa and also your personal bank account will no longer be looked as local and will go under CRS...

I have many other questions like: what do you plan to do with the money (you can't take it that easily back to Montenegro...)? How quick do you need this setup?

Thank you so much for your message. Its not a one time job, its 12 months with potentially another 3 years if everything goes properly. Besides that i have another part of my marketing business that goes on regardless so I need company long term. I was planning IFZA or Dubai Technology Entrepreneur Center free zone, what do you think about those?

My first month I will be over 100k USD in the business. I spoke to many different people about VAT everyone says different things. How do I structure my free zone company to not pay VAT when doing business with foreign companies in a legal way?

In regards to bank account, I was they can open it in 2-4 weeks if I have residency, physical address in Dubai and are willing to put deposit 20k-50k. Is this not true?

 

[Marc Rich]

In regards to bank account, I was they can open it in 2-4 weeks if I have residency, physical address in Dubai and are willing to put deposit 20k-50k. Is this not true?

Bank acc opening in UAE always depends on client profile. Also depends on the CSP's relationship with the bank i.e. private banking at more reputable bank if you already have a connection a RM there

 

[JimBeam]

Thank you so much for your message. Its not a one time job, its 12 months with potentially another 3 years if everything goes properly. Besides that i have another part of my marketing business that goes on regardless so I need company long term. I was planning IFZA or Dubai Technology Entrepreneur Center free zone, what do you think about those?

My first month I will be over 100k USD in the business. I spoke to many different people about VAT everyone says different things. How do I structure my free zone company to not pay VAT when doing business with foreign companies in a legal way?

In regards to bank account, I was they can open it in 2-4 weeks if I have residency, physical address in Dubai and are willing to put deposit 20k-50k. Is this not true?

Okay that makes more sense...

My company is also at DTEC / DSOA...
If your company activity fits into one of these categories ->

https://imgur.com/iIAVVn4

than you can setup there.

You don't charge VAT to companies outside UAE. So your invoices to non-UAE counties will be VAT free. You will have to charge VAT only if you do business with local companies. But, as I previously said, if your turnover is above 375k AED you have to register for VAT -> Online VAT Registration in UAE | Federal Tax Authority (get a VAT ID number). If you don't do business in UAE your accountant will just submit VAT statements with no VAT and you'll pay no VAT and that's pretty much it... There are no structuring or anything. It applies to all companies in UAE as it's a federal tax. So, after 1st transaction/month (100k USD is about 365k AED) I would apply for VAT number and that's it...

Bank account in 2-4 weeks is great! Who told you that? Agent or DTEC?
I opened with no deposit, but I would deposit 20-30k if that would speed up the things.
But in my experience, it was all more about the forms and compliance than it was about the money...

Also have in mind that having an address there means you need to rent an apartment for a year, sign a tenancy contract and then make the payment of the whole year in advance. It's usually done that way in Dubai or if the land lord is okay he might split that to bi-annually or quarterly (monthly is pretty rare). Once the contract is signed you need to take it to submit it to Ejari. Your bank will just need that Ejari document (not the contract, not the bills). If at that point (when you are renting the apartment) you don't have a personal bank account and the check book, you'll have to pay the whole year in advance in cash. Otherwise you can write checks if you agree on bi-annually or quarterly payments...

Dubai is now quite expensive because of an Expo. Renting a shitty studio in a shitty location will cost you about 25k AED/year, average 1BR about 50k AED/year. Add utility bills on top of that (electricity, water, cooling, tv/internet). Renting anything decent will more expensive. You can check some prices at Property Finder - UAE's number one property website for properties for sale and to rent. or https://www.dubizzle.com/

 

[inneedofcomp]

Okay that makes more sense...

My company is also at DTEC / DSOA...
If your company activity fits into one of these categories ->

https://imgur.com/iIAVVn4

than you can setup there.

You don't charge VAT to companies outside UAE. So your invoices to non-UAE counties will be VAT free. You will have to charge VAT only if you do business with local companies. But, as I previously said, if your turnover is above 375k AED you have to register for VAT -> Online VAT Registration in UAE | Federal Tax Authority (get a VAT ID number). If you don't do business in UAE your accountant will just submit VAT statements with no VAT and you'll pay no VAT and that's pretty much it... There are no structuring or anything. It applies to all companies in UAE as it's a federal tax. So, after 1st transaction/month (100k USD is about 365k AED) I would apply for VAT number and that's it...

Bank account in 2-4 weeks is great! Who told you that? Agent or DTEC?
I opened with no deposit, but I would deposit 20-30k if that would speed up the things.
But in my experience, it was all more about the forms and compliance than it was about the money...

Also have in mind that having an address there means you need to rent an apartment for a year, sign a tenancy contract and then make the payment of the whole year in advance. It's usually done that way in Dubai or if the land lord is okay he might split that to bi-annually or quarterly (monthly is pretty rare). Once the contract is signed you need to take it to submit it to Ejari. Your bank will just need that Ejari document (not the contract, not the bills). If at that point (when you are renting the apartment) you don't have a personal bank account and the check book, you'll have to pay the whole year in advance in cash. Otherwise you can write checks if you agree on bi-annually or quarterly payments...

Dubai is now quite expensive because of an Expo. Renting a shitty studio in a shitty location will cost you about 25k AED/year, average 1BR about 50k AED/year. Add utility bills on top of that (electricity, water, cooling, tv/internet). Renting anything decent will more expensive. You can check some prices at Property Finder - UAE's number one property website for properties for sale and to rent. or https://www.dubizzle.com/

Bank account in 2-4 weeks is great! Who told you that? Agent or DTEC?
Various agents that offer company formation and bank introductions.

Well if I don't need to worry about VAT than I am all set as it was my biggest concern and that's why I was searching for offshore bank accounts and offshore company formations. If its frustrating when speaking with different agents and everyone is saying different story.

So with Free Zone company I can't work with local onshore business in dubai (i don't need to work with them), but can I work with other business registered in different Free Zone than mine?

When it comes to apartment I was planning something around 150-180k UAE/year in downtown for large one bedroom or 2 bedroom furtnished but currently can't find anything to my liking. Literally stuff I have in Montenegro is way better. I found one bedroom apartment in new SLS building which is just across downtown in business bay I guess. That was my first choice but i requested some videos of apartment and saw it has super small

 

[JimBeam]

Various agents that offer company formation and bank introductions.

That's why I asked as some will tell you what you want to hear...

So with Free Zone company I can't work with local onshore business in dubai (i don't need to work with them), but can I work with other business registered in different Free Zone than mine?

We worked with only one company that was also a Free zone company so we had to include VAT on these invoices. No issues at all. We later passed most of that VAT to the FTA and that's it. I'm not sure about doing business with local companies. The stories I've heard are also confusing (you can do business but you can't approach them or offer services directly, you can offer them services only in your freezone etc... something weird along these lines).

When it comes to apartment I was planning something around 150-180k UAE/year in downtown for large one bedroom or 2 bedroom furtnished but currently can't find anything to my liking. Literally stuff I have in Montenegro is way better. I found one bedroom apartment in new SLS building which is just across downtown in business bay I guess. That was my first choice but i requested some videos of apartment and saw it has super small

That's a nice amount and you'll find something nice for that kind of money for sure. Most if not all of the buildings in Business Bay were built by DAMAC and their build quality is not very good. So you may consider other locations... I know where the SLS building is but don't know much about the apartments in the building...

 

[Marc Rich]

When it comes to apartment I was planning something around 150-180k UAE/year in downtown for large one bedroom or 2 bedroom furtnished but currently can't find anything to my liking. Literally stuff I have in Montenegro is way better. I found one bedroom apartment in new SLS building which is just across downtown in business bay I guess. That was my first choice but i requested some videos of apartment and saw it has super small

SLS is nice, but the location is terrible... in between 2 major highways. It's on the outskirts of business bay, which is not a desirable location. In Downtown, for a nice furnished & serviced apartment - only options are Vida Residences or Address hotels. If you take something furnished from a private owner, it will be terrible.

I was choosing between Address BLVD & Vida Residences for my self. I went for the latter, as Address BLVD is too much of a hotel and less of a residence. Also too many money launderers in the hotel lounge and prostitutes in the pool lol

Check out Vida Residences Downtown, for your budget - you can get a nice 1 bedroom.