Where to form Crypto related company.

[ronthecry]

The current situation is that we have two companies. One operating company in the EU that mine cryptocurrency and owns the hardware.

We have formed an LLC in the UK but haven't managed to get an IBAN and can still reverse the choice of the UK if it is other places we can get both company formation and bank account faster.

The offshore company are going to buy the hashrate/compute power from the mother company and also in a while start developing software and sell hashrate to other customers.

Any recommendations on where we should look for registration and or bank account?

Off course, we don't want to pay more taxes than needed.

For the banking service, we don't need a lot more crypto-related than being able to exchange the mined currency to fiat to pay for computing power. That is not a requirement since we also could in theory pay with crypto.

 

[MiddleEuroAsia]

The current situation is that we have two companies. One operating company in the EU that mine cryptocurrency and owns the hardware.

We have formed an LLC in the UK but haven't managed to get an IBAN and can still reverse the choice of the UK if it is other places we can get both company formation and bank account faster.

The offshore company are going to buy the hashrate/compute power from the mother company and also in a while start developing software and sell hashrate to other customers.

Any recommendations on where we should look for registration and or bank account?

Off course, we don't want to pay more taxes than needed.

For the banking service, we don't need a lot more crypto-related than being able to exchange the mined currency to fiat to pay for computing power. That is not a requirement since we also could in theory pay with crypto.

Jurisdiction: Dubai.

Company activity: software development (and as you mentioned, you have POW (Proof of work) because you actually develop a software, just in case anyone asks for it, but it's the UAE we are talking about, so nobody will ask)

Banking: Mashreqneobiz, build some history with them, have a good SOF, then switch to ENBD or ADCB.

 

[Clank]

Jurisdiction: Dubai.

Company activity: software development (and as you mentioned, you have POW (Proof of work) because you actually develop a software, just in case anyone asks for it, but it's the UAE we are talking about, so nobody will ask)

Banking: Mashreqneobiz, build some history with them, have a good SOF, then switch to ENBD or ADCB.

How many months should you stay with mashreq before trying to change bank?

 

[MiddleEuroAsia]

How many months should you stay with mashreq before trying to change bank?

6 months, that's the standard and that's what most FIs ask you to have if you want to open an account with them.

 

[ronthecry]

Jurisdiction: Dubai.

Company activity: software development (and as you mentioned, you have POW (Proof of work) because you actually develop a software, just in case anyone asks for it, but it's the UAE we are talking about, so nobody will ask)

Banking: Mashreqneobiz, build some history with them, have a good SOF, then switch to ENBD or ADCB.

Thank you. I will check it further. I didn't quite get what you meant with "you have POW because you actually develop software".

Jurisdiction: Dubai.

Company activity: software development (and as you mentioned, you have POW (Proof of work) because you actually develop a software, just in case anyone asks for it, but it's the UAE we are talking about, so nobody will ask)

Banking: Mashreqneobiz, build some history with them, have a good SOF, then switch to ENBD or ADCB.

Mainland, Free Zone, Offshore?

 

[MiddleEuroAsia]

I didn't quite get what you meant with "you have POW because you actually develop software".

"proof of work" would refer to documentation that demonstrates that work has been performed as intended.

For example, "proof of work" could include documents such as project plans, progress reports, source code, testing reports, and client sign-offs that demonstrate that the software development project was executed as promised. This documentation can be used to support an audit or compliance review and can help to mitigate the risk of fraud, misrepresentation, or other irregularities.

The goal of "proof of work" in software development is to provide an auditable trail of evidence that demonstrates that the software was developed according to industry best practices, customer requirements, and relevant laws and regulations. This can include evidence of code review and testing to demonstrate that the software functions as intended and is free of security vulnerabilities or other defects. Additionally, documentation of change management processes and release management can help to ensure that changes to the software are made in a controlled and auditable manner.

Overall, "proof of work" is important in software development to provide assurance that the software has been developed in a professional and compliant manner and that it meets the needs of its intended users.

But different tax agencies and regulatory bodies in different jurisdictions may have varying levels of scrutiny and expectations around "proof of work" documentation.

For example, tax agencies in Germany, the UK, and the US may have stricter requirements around "proof of work" documentation than agencies in other jurisdictions. This could mean that companies operating in these countries may need to provide more detailed documentation and evidence to support their tax filings and compliance obligations. This could include detailed documentation of transactions, expenses, and other financial information, as well as supporting evidence such as receipts, invoices, and other records. In contrast, regulatory bodies in jurisdictions such as Dubai and Labuan may be more lenient and may allow more flexibility in the types of "proof of work" documentation that companies are required to provide.

Regardless of the jurisdiction, it's important for you to understand the specific requirements and expectations of the regulatory bodies that oversee your operations. By doing so, you can ensure that you are providing the necessary "proof of work" documentation and evidence to support your compliance obligations and minimize the risk of regulatory fines, penalties, or other consequences.

 

[ronthecry]

Appreciate explanation. I got a bit confused since the company will mine algorithms is POW Proof of Work. The software development will be in distributing computing power and optimising it. I guess the whole point with Software Development as a company activity is to not have to get the new crypto mining license.?

Another question. Since I can't move there permanently i get that when we want to take dividends fees we have to pay taxes to our home country.

Since the company is mostly run from my home country. Can main tax residency demand corporate tax and taxation on mined BTC? Probably a silly question, wants to get some knowledge before talking with lawyers.

We do have the possibility to have a board meeting in Dubai every 6 months or less tho. So I guess it won't be an issue since we aim to hire with some time anyway.

DMCC offshore company right?

 

[MiddleEuroAsia]

Appreciate explanation. I got a bit confused since the company will mine algorithms is POW Proof of Work. The software development will be in distributing computing power and optimising it. I guess the whole point with Software Development as a company activity is to not have to get the new crypto mining license.?

So, it sounds like the primary purpose of the software development is to optimize the mining algorithms and distribute computing power, which as you already know, can help to increase the efficiency and profitability of the mining operation. This is a common strategy used by many cryptocurrency mining companies to reduce costs and increase profits.

With that said, By incorporating as software development company, you can avoid the need for expensive mining licenses and hardware investments, which can be a significant financial burden.

Another question. Since I can't move there permanently i get that when we want to take dividends fees we have to pay taxes to our home country.

Since the company is mostly run from my home country. Can main tax residency demand corporate tax and taxation on mined BTC? Probably a silly question, wants to get some knowledge before talking with lawyers.

Regarding taxes, it is important to understand the tax laws in your home country and the UAE to ensure that you are complying with all relevant regulations. If you are using your Emirates ID to form the company and have UAE bank accounts, you may be able to establish tax residency in the UAE, which could help to reduce (eliminate) your tax liability in your home country.
anyway, if you use your emirates ID which comes after forming the company, and you have UAE bank accounts and keep money there, you will be treated as a an Emirati resident in the eyes of the bank and no reporting (CRS) happen if you have a proper substance.

We do have the possibility to have a board meeting in Dubai every 6 months or less tho. So I guess it won't be an issue since we aim to hire with some time anyway.

this is a good strategy to demonstrate substance and establish a business presence in the UAE. By conducting regular meetings and business activities in the UAE, you can demonstrate that your company has a genuine business purpose and is not simply being used as a tax shelter or offshore entity. This can help to minimize the risk of regulatory scrutiny or challenges to your tax residency status.

DMCC offshore company right?

DMCC can be an expensive option and an overkill in my humble opinion, and DSOA (Dubai Silicon Oasis) may be a more cost-effective choice. DSOA offers a range of benefits for businesses, including tax exemptions, a favorable regulatory environment, and access to a skilled workforce. Additionally, setting up a Free Zone Company (FZC) in DSOA can provide you with a flexible and cost-effective structure that is well-suited to your needs.

Overall, it is important to carefully consider your business strategy and tax planning when establishing a presence in the UAE or any other jurisdiction. so work with experienced professionals (who have actual experience on the ground and can read between the lines of the law and act on them) and conducting thorough research, you can ensure that you are making informed decisions that will help you to achieve your business goals while remaining compliant with all relevant regulations.

 

[yoyodubai]

Jurisdiction: Dubai.

Company activity: software development (and as you mentioned, you have POW (Proof of work) because you actually develop a software, just in case anyone asks for it, but it's the UAE we are talking about, so nobody will ask)

Banking: Mashreqneobiz, build some history with them, have a good SOF, then switch to ENBD or ADCB.

I don't mean to highjack the thread.

If you don't mind can you expand on why switch to ENBD or ADCB?

 

[MiddleEuroAsia]

I don't mean to highjack the thread.

If you don't mind can you expand on why switch to ENBD or ADCB?

Sure.

Firstly, when it comes to banks in the UAE, it's important to note that different banks have different policies regarding cryptocurrency-related activities. Some banks have a more lenient approach towards cryptocurrency, while others have more strict policies.

and it's important to keep in mind that the banking landscape in the UAE is constantly changing, and policies can differ from one bank to another, and can also change over time. It's always a good idea to do some research and check with the bank directly before making any decisions or transactions related to cryptocurrency.

about Mashreq neo Bank, it's true that they have a very modern and user-friendly platform, but their customer support has been known to be lacking (or to be blunt, they completely suck). This can be a concern for those who may need assistance or have issues with their account.

Regarding the specific question about switching to ENBD or ADCB, I can share that in my personal experience, these banks have been more crypto-friendly compared to other banks in the UAE. This is particularly true for ENBD, which has been known to have a more positive attitude towards cryptocurrency-related activities, and I personally transferred more than 6 figures from Crypto exchanges (like NEXO) back and forth without any issues. However, it's important to note that I use their products, such as credit cards, mortgage loans, and private loans, and I pay some fees to maintain my account. so if you are not comfortable with paying additional fees, you should carefully consider their options before making a decision.

 

[yoyodubai]

Sure.

Firstly, when it comes to banks in the UAE, it's important to note that different banks have different policies regarding cryptocurrency-related activities. Some banks have a more lenient approach towards cryptocurrency, while others have more strict policies.

and it's important to keep in mind that the banking landscape in the UAE is constantly changing, and policies can differ from one bank to another, and can also change over time. It's always a good idea to do some research and check with the bank directly before making any decisions or transactions related to cryptocurrency.

about Mashreq neo Bank, it's true that they have a very modern and user-friendly platform, but their customer support has been known to be lacking (or to be blunt, they completely suck). This can be a concern for those who may need assistance or have issues with their account.

Regarding the specific question about switching to ENBD or ADCB, I can share that in my personal experience, these banks have been more crypto-friendly compared to other banks in the UAE. This is particularly true for ENBD, which has been known to have a more positive attitude towards cryptocurrency-related activities, and I personally transferred more than 6 figures from Crypto exchanges (like NEXO) back and forth without any issues. However, it's important to note that I use their products, such as credit cards, mortgage loans, and private loans, and I pay some fees to maintain my account. so if you are not comfortable with paying additional fees, you should carefully consider their options before making a decision.

Interesting. Thanks for sharing. May follow-up with a few more questions, but I'll do so in a separate thread in that case, and tag you if that's cool.

And agree on mashreq's customer support.

 

[ronthecry]

Regarding establishing. Seems like they made it pretty simple. Is https://invest.dubai.ae/ the standard route to form a DSOA entity? Simple enough to do my self for now?

Another question. Initially, when I formed my entity which is going to be the owner of the new business I got funding for shares. So I have 10 2-5% shareholders in the to-be mother company of the forming company. Do I need passports from all of them?