Question about offshore company/ taxes

Dr. Tomahawk

Dr. Tomahawk

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Hello,

I'm running a few E-Commerce websites (lower 5-digits monthly revenue) and I don't sell any physical items, nor do I have any offices/ employees/ warehouse. That means, I'm fully digital.

I'm from a EU country where the taxes are very high and I don't understand why I have to pay such massive amounts of taxes, even though my business has nothing to do with my country. I'm just personally living here.

Some people told me to setup an offshore company (Dubai for example) but a tax advisor told me that this is only possible when I live there (most of the time). However, there are so many people out there with offshore companies but I dont think they are living in that state?

How are they doing it? Does anyone here have experience?

I would be thankful for every answer.

Thank you!
 
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Your personal income taxes won't change, you'll just improve your corporate tax and your social security contributions. Income, and dividend will still be taxed the same.

If you're trying to reduce your corporate tax rate, you can set your business abroad or offshore, just remember some places don't have the kind of infrastructure some of the EU countries have. You can always register a business in Dubai without being a resident here, just you won't have access to much in terms of payment processors. Also the hidden fees we have over here are probably bigger than the corporate tax you pay in your country.

My business in based in London, and I live in Dubai. I pay my business taxes in the UK (VAT, Corporation tax, etc..), but my personal income is not taxed. That's how I am doing it.
 
An offshore company won't help unless the company is actually operated from that country. Even after that, all the money you receive personally is going to be taxed by your home country.

The easiest way to reduce taxes would be to move to either Bulgaria or Romania.
 
there is an option to accept payments from customers through merchant accounts that are registered outside of Europe, so you will receive money in a way convenient for you. for example, withdraw your funds into bitcoins. or fashionably agree with the company through which you will work, so that you withdraw funds to a bank account. then you will pay less tax.
 
In my country (also the EU), in order not to pay tax in that country, you must lose your tax residence. What does it mean? You have to move the center of your life to another country.
So, to buy a house, have a family, a business there, probably live there for more than six months a year...


An interesting perspective for nomads, but such a move alone, without family or friends, could be difficult.
 
kvvni said:
In my country (also the EU), in order not to pay tax in that country, you must lose your tax residence. What does it mean? You have to move the center of your life to another country.
So, to buy a house, have a family, a business there, probably live there for more than six months a year...


An interesting perspective for nomads, but such a move alone, without family or friends, could be difficult.
Click to expand...
yes, it can certainly be very difficult for some. but it is a shame to give 30 40 50% of your hard earned money. here you already think what is more dear to you.
 
mariarti said:
there is an option to accept payments from customers through merchant accounts that are registered outside of Europe, so you will receive money in a way convenient for you. for example, withdraw your funds into bitcoins. or fashionably agree with the company through which you will work, so that you withdraw funds to a bank account. then you will pay less tax.
Click to expand...

Tax evasion is generally a bad idea nowadays if you are living in western Europe. Just not worth the risk.

yherrliche said:
Your personal income taxes won't change, you'll just improve your corporate tax and your social security contributions. Income, and dividend will still be taxed the same.

If you're trying to reduce your corporate tax rate, you can set your business abroad or offshore, just remember some places don't have the kind of infrastructure some of the EU countries have. You can always register a business in Dubai without being a resident here, just you won't have access to much in terms of payment processors. Also the hidden fees we have over here are probably bigger than the corporate tax you pay in your country.
Click to expand...

What he said. Just keep in mind that these days you need more than just a P.O. box for your business to be accepted by the tax authorities. You need to rent an office with telephone and internet, and in most countries you also need at least a part-time employee. Plus it should look plausible that the actual work is done in the country where the business is located, not where you live. So it's only worth the trouble if the difference between the business tax in your country and in the country where you incorporate is higher than the additional costs you have, given that you'll still pay your personal taxes in your home country.

@yherrliche Could you maybe tell me more about those hidden fees in Dubai? I am thinking about setting up a company not in Dubai but nearby, and on paper, the fees are not that high.
 
Dr. Tomahawk said:
Hello,

I'm running a few E-Commerce websites (lower 5-digits monthly revenue) and I don't sell any physical items, nor do I have any offices/ employees/ warehouse. That means, I'm fully digital.

I'm from a EU country where the taxes are very high and I don't understand why I have to pay such massive amounts of taxes, even though my business has nothing to do with my country. I'm just personally living here.

Some people told me to setup an offshore company (Dubai for example) but a tax advisor told me that this is only possible when I live there (most of the time). However, there are so many people out there with offshore companies but I dont think they are living in that state?

How are they doing it? Does anyone here have experience?

I would be thankful for every answer.

Thank you!
Click to expand...
They don't pay taxes in Dubai, and you can setup an offshore company without living your home, you can even get a virtual office if you like
I have dreams of relocating to UK with a self employed visa but the tax pissed me off
I'm staying, or move to country like Dubai
 
Songhort said:
Tax evasion is generally a bad idea nowadays if you are living in western Europe. Just not worth the risk.
Click to expand...
in general, tax evasion is a bad idea. but if everyone would live by the rules, then such forums simply would not exist. I just wanted to provide an alternative that you can use. but I completely agree with you.
 
mariarti said:
in general, tax evasion is a bad idea. but if everyone would live by the rules, then such forums simply would not exist. I just wanted to provide an alternative that you can use. but I completely agree with you.
Click to expand...

Yep, just saying that if you are living in the EU (like the OP), USA etc., tax authorities will find out sooner or later, especially nowadays with all the international reporting and data exchange. It's not like 10 or 20 years ago anymore, the OECD really cracks down on tax evaders. If you are living in India, Africa, or other developing regions, your chances to get away with methods like the one you mentioned are far better. Leaving morality aside here.
 
Offshore company won't help in your situation.
people opening offshore company for different reason not only for tax.


If you now open a company in different country you will be charged tax twice. one for different country and one for when you moving money to your country.

Find a country where tax is little and start living there.
all set.
 
mariarti said:
there is an option to accept payments from customers through merchant accounts that are registered outside of Europe, so you will receive money in a way convenient for you. for example, withdraw your funds into bitcoins. or fashionably agree with the company through which you will work, so that you withdraw funds to a bank account. then you will pay less tax.
Click to expand...

But still, this is called tax evasion or something like that, I'm not in EU but in the US, to be honest, I will NEVER mess with the tax people, I will pay my due taxes 100%.
Here for example: you can move to Nevada and not pay income tax but still have to pay federal taxes (of course), this is good for people who live in CA for example because CA is bordered with Nevada and its easy to move.
Even if I myself in CA and move to Europe, I still have to pay my US federal taxes at 30%+ a year no matter what, but I will not pay CA taxes since I don't live there anymore, I'm not sure how much my federal taxes will end up if I for example move to another country but if I keep my US citizenship then I still need to report my income and pay taxes, which the accountant will determine how much, so I bet you will be in the same position, some people answered you here to move to Bulgaria or ... but again, if you are a UK citizen or any EU country and move to another country and you still hold your old country citizenship, then you may still have to pay some type of taxes.

It is complicated, you need to talk to a reputable accountant that have such experience.
I would NOT play with any blackhat suggested here, trust me on this, you could go to jail for hiding few dollars. A lot of people do it, but if they caught them, they are finished/ done.

I suggest that you calculate your income based on what you get minus 30% or more, LOL, I do that, if I make $5000, in my mind its like I made $3,500, live with such mentality and you will be happy.
 
AAW said:
But still, this is called tax evasion or something like that, I'm not in EU but in the US, to be honest, I will NEVER mess with the tax people, I will pay my due taxes 100%.
Here for example: you can move to Nevada and not pay income tax but still have to pay federal taxes (of course), this is good for people who live in CA for example because CA is bordered with Nevada and its easy to move.
Even if I myself in CA and move to Europe, I still have to pay my US federal taxes at 30%+ a year no matter what, but I will not pay CA taxes since I don't live there anymore, I'm not sure how much my federal taxes will end up if I for example move to another country but if I keep my US citizenship then I still need to report my income and pay taxes, which the accountant will determine how much, so I bet you will be in the same position, some people answered you here to move to Bulgaria or ... but again, if you are a UK citizen or any EU country and move to another country and you still hold your old country citizenship, then you may still have to pay some type of taxes.

It is complicated, you need to talk to a reputable accountant that have such experience.
I would NOT play with any blackhat suggested here, trust me on this, you could go to jail for hiding few dollars. A lot of people do it, but if they caught them, they are finished/ done.

I suggest that you calculate your income based on what you get minus 30% or more, LOL, I do that, if I make $5000, in my mind its like I made $3,500, live with such mentality and you will be happy.
Click to expand...

Hungary is the only EU country that taxes non-resident citizens unless the person is a dual citizen, or if they are in a country with a tax treaty with Hungary(foreign income is exempt)
 
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bdman said:
Offshore company won't help in your situation.
people opening offshore company for different reason not only for tax.


If you now open a company in different country you will be charged tax twice. one for different country and one for when you moving money to your country.

Find a country where tax is little and start living there.
all set.
Click to expand...

Actually, it might help him save a few bucks, but not much if he makes low five figures a month. You are always taxed twice if you have a corporation, no matter if it's in your home country or not, so there's no difference. At least if the country where you live and the country where you incorporate have a tax treaty.

AAW said:
Even if I myself in CA and move to Europe, I still have to pay my US federal taxes at 30%+ a year no matter what, but I will not pay CA taxes since I don't live there anymore, I'm not sure how much my federal taxes will end up if I for example move to another country but if I keep my US citizenship then I still need to report my income and pay taxes, which the accountant will determine how much, so I bet you will be in the same position, some people answered you here to move to Bulgaria or ... but again, if you are a UK citizen or any EU country and move to another country and you still hold your old country citizenship, then you may still have to pay some type of taxes.
Click to expand...

The messed up concept of attaching the tax liability to the citizenship fortunately only applies to the USA and Eritrea, the rest of the world doesn't do that :rolleyes: Still there are scenarios for people from other countries in which they have to pay taxes back home after moving abroad.
 
ExperimentalSEO said:
An offshore company won't help unless the company is actually operated from that country. Even after that, all the money you receive personally is going to be taxed by your home country.
The easiest way to reduce taxes would be to move to either Bulgaria or Romania.
Click to expand...
Very, very important point. In EU, if the management is operated from a country and the company incorporated in another one, the company will be taxed in the country of residence of the management (= 0% uplift/benefit). However, you can buy/rent a flat/office or have employees in the country of the company, it will justify the point of interest of the company in the specific country.
Your local tax office will be able to spot it in 2min, believe me.
 
Pay the taxes in whatever country your final location of the money goes, Your country bank account thats receiving the final money.

Why do you expect the government will let u run a high yield business without paying tax?

Your ss or pan or any thing that tracks ur income is always linked to banks. so they know what u r getting.

It will only piss them off & you can expect an audit if your turnaround it too high. ( you cannot win in that scenario )

I say your country government is your friend, just pay his share for not doing shit to help your business & they will stay out of ur way. ( thats the sad truth ).
 
Well based on my experience Dubai is your best choice, as long as your business is all digital the only thing you need to do is buy a digital account in Dubai. It costs around 5k but later you will get almost 0$ taxes because most of the business that operate the same way you do have moved all of their assets there. I know plenty of people who did the sameway and it works for Ecommerce & Big social media businesses etc..
 
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