Where would you incorporate (real substance setup)?

[kayaked]

Hello there,

I'm looking to incorporate offshore and I'm currently debating what would be the best option because, as you know, there are so many factors to take into consideration. I've been looking at Andorra, Cyprus, Gibraltar, Costa Rica and Uruguay mainly. I'm based in Spain (I won't move – wife and kids), I'm Swiss and I have a company in Chile (with substance, 15 employees) and a US LLC (disregarded). So essentially, all that money would be foreign-sourced.

Basically, I would want this new company to become shareholder/holding (instead of myself as individual) of the Chile company + US LLC, and use that new structure to develop new services and business with an actual director and local employees, an office and all that is required to build substance. The day-to-day operations would be abroad, and I would only effectively work a few hours per week for strategic online meetings. Ideally single shareholder, but my current associate may join to make it two.

I'm currently under Beckham Law so I have a few years to plan and I know a lot can change, but where do you think I will get the best bang for my bucks? It's worth mentioning we are talking 250K USD sales a year a this point, but it grows 50% YoY on average. Banking and talent pool is also an important factor – not sure about Andorra and Gibraltar for the latter.

Tax goal: pay myself dividends in Spain instead of personal income tax for the US LLC revenue
Business goal: start a genuine operation in a zero/low tax country to grow my revenues

 

[Sols]

I'd rule out Andorra and Gibraltar on the basis of practical difficulties creating genuine (non-nominee) substance there and the special political relations between them and Spain.

Cyprus has a well established practice for creating substance. It's the nominee type where you establish substance through having a law firm or service provider get you a dedicated address, phone number, directors, and sometimes even some token employees.

Out of Uruguay and Costa Rica, both are quite easy to start businesses in and finding employees is quite easy with a slight edge for Costa Rica. Talent pools are pretty good in both, but it of course depends on what you're after. Banking is better in Uruguay than in Costa Rica.

Whatever you do, don't make it easy for the tax authority to claim that you control the companies and are involved in day to day management. You will be the weakest chain in the link.

 

[CyprusLaw]

Hello there,

I'm looking to incorporate offshore and I'm currently debating what would be the best option because, as you know, there are so many factors to take into consideration. I've been looking at Andorra, Cyprus, Gibraltar, Costa Rica and Uruguay mainly. I'm based in Spain (I won't move – wife and kids), I'm Swiss and I have a company in Chile (with substance, 15 employees) and a US LLC (disregarded). So essentially, all that money would be foreign-sourced.

Basically, I would want this new company to become shareholder/holding (instead of myself as individual) of the Chile company + US LLC, and use that new structure to develop new services and business with an actual director and local employees, an office and all that is required to build substance. The day-to-day operations would be abroad, and I would only effectively work a few hours per week for strategic online meetings. Ideally single shareholder, but my current associate may join to make it two.

I'm currently under Beckham Law so I have a few years to plan and I know a lot can change, but where do you think I will get the best bang for my bucks? It's worth mentioning we are talking 250K USD sales a year a this point, but it grows 50% YoY on average. Banking and talent pool is also an important factor – not sure about Andorra and Gibraltar for the latter.

Tax goal: pay myself dividends in Spain instead of personal income tax for the US LLC revenue
Business goal: start a genuine operation in a zero/low tax country to grow my revenues

As Sols has mentioned below, Cyprus still remains one of the go to places for creating substance and effective tax restructurings. Happy to send you a PM and discuss this.

 

[kayaked]

Thank you both. Cyprus is definitely interesting as it's in the EU. What about talent pool? I know for instance that Uruguay is a very good place for a SaaS business as there are lots of devs with a good level and it's not as expensive as in other countries.

I'm in the very early stages of my research trying to gather as much information as possible. I'm also conscious that down the line, the best option might still be to incorporate in Spain. I guess it will all come down to turnover over the next years.

 

[Sols]

Relative to its size and thanks to a healthy business sector, Cyprus has a good talent pool available in specific areas (finance, technology, legal, compliance, and call centers). It's also quite easy to relocate workers (especially younger ones) from mainland EU to Cyprus.

So it depends on what your needs are.