Page 1 of 2 12 LastLast
Results 1 to 40 of 56
  1. #1
    Join Date
    Mar 2013
    Posts
    50

    Unhappy Offshore company to avoid paying VAT?

    Hello,
    I am an EU citizen and I sell web hosting packages. My servers are in EU but my customers are from all around the world. Up until now my bussiness was so small that I did not to declare the revenue (nothing illegal)

    Now my hobby is turning into a business d I still want to do everything legal. On the other hand adding VAT to my packages will almost ruin all my tiny profit margin. In addition it makes it very annoying to ask each customer to send their passports to decide whether the transaction is VAT-eligible or not (something that OVH does).

    Regarding these i'm thinking of setting up an offshore company to cope with these and, I have some ambiguities:

    - If I set up an offshore company (say in Panama or Belize) do I still need to add VAT to my customer's invoices?
    - Where do you suggest to form such company?
    - I receive most my payments through Paypal. Does paypal accept companies based on tax haven that you suggest?
    - How should be my financial relation with the offshore company?
    - What part of my income will be taxable?

    I really appreciate your hints. I am null when it comes to money matters.

    p.s. Sorry Mods if posted in wrong forum. Probably this thread is more suitable for Running a Web Hosting Business forum.
    Last edited by dolfin; 12-18-2013 at 02:51 PM.

  2. #2
    - If I set up an offshore company (say in Panama or Belize) do I still need to add VAT to my customer's invoices?
    If they are in the EU, yes. VAT has NOTHING TO DO with your company's location. VAT is a consumer tax.

    - How should be my financial relation with the offshore company?
    It doesn't matter where your company is, your country's tax dep. will find you and hunt you down. (I am not joking)

  3. #3
    Join Date
    Mar 2013
    Posts
    50
    Quote Originally Posted by eva4eva View Post
    If they are in the EU, yes. VAT has NOTHING TO DO with your company's location. VAT is a consumer tax.
    Not sure you are right. as far as I understand, only when transaction is between an EU company and an EU costumer, you (as the company) are eligible for EU taxes.
    That is, if your company is not EU bases, you are not obliged to impose VAT to your customers. Correct me if I'm wrong.

  4. #4
    Join Date
    Jun 2007
    Location
    Estonia
    Posts
    69
    According to this webpage http://www.doingbusiness.org/data/ex...a/paying-taxes you have to pay 7%VAT even in Panama. That means, if your sales are big enough, u have to charge vat too.You have to find out what is the minimal amount since when you have to register vat there.
    EstNOC - providing hosting services since 2009!
    Dedicated server and VPS hosting in Estonia, Finland, Sweden, Norway, Russia, Poland, Germany, Netherlands, Czech Republic, Romania, Spain, Switzerland, Japan and Philippines.

  5. #5
    Join Date
    Mar 2013
    Posts
    50
    Quote Originally Posted by samoan View Post
    According to this webpage http://www.doingbusiness.org/data/ex...a/paying-taxes you have to pay 7%VAT even in Panama. That means, if your sales are big enough, u have to charge vat too.You have to find out what is the minimal amount since when you have to register vat there.

    I guess this %7 is applicable only to companies who do bussiness INSIDE Panama.

  6. #6
    Join Date
    May 2013
    Posts
    177
    No, that's not legal and is actually a very large offense once you are audited and found out. Tax evasion is illegal.

    Of course you can still register your company anywhere, as long as you still collect VAT (which I'm guessing isn't what you want to do).

  7. #7
    Join Date
    Jan 2011
    Location
    Varna, Bulgaria
    Posts
    1,270
    You could register a company in UK, they have the highest yearly threshold for having to register / collect VAT is the EU.

  8. #8
    Join Date
    Mar 2013
    Posts
    66
    Quote Originally Posted by eva4eva View Post
    If they are in the EU, yes. VAT has NOTHING TO DO with your company's location. VAT is a consumer tax.
    I think this is correct. For example, if your customer is in EU and use Bluesnap(formerly Plimus, an international company) to pay then the VAT is automatically added above your price on the checkout page and collected by Bluesnap, not you.
    Then if you use 2CO.com (USA company) then no VAT is added.

    That's when you use 3rd party merchants, not sure what happens when you open your own merchant account, I think it is up to you whether to collect VAT or not.

  9. #9
    Join Date
    Dec 2006
    Location
    Europe
    Posts
    1,112
    It depends all on how you structure your company. However, if you incorporate in the EU you have to charge the VAT rate of the country where the company is incorporated.

  10. #10
    Join Date
    May 2013
    Posts
    177
    Quote Originally Posted by LeapWH View Post
    That's when you use 3rd party merchants, not sure what happens when you open your own merchant account, I think it is up to you whether to collect VAT or not.
    If 2CO doesn't collect it, then you do. Legally you cannot evade taxes. There's not much of a discussion to be made about that.

  11. #11
    Join Date
    Oct 2003
    Location
    Scotland, UK
    Posts
    2,900
    Quote Originally Posted by hannesp View Post
    Not sure you are right. as far as I understand, only when transaction is between an EU company and an EU costumer, you (as the company) are eligible for EU taxes.
    That is, if your company is not EU bases, you are not obliged to impose VAT to your customers. Correct me if I'm wrong.
    You're wrong.

    The EU requires any company selling into the EU to charge VAT. They have focused on the supply of digital services (given they can't stop these at the border for a customs check!) and they specifically include web-hosting services. This has been the case for over a decade.

    http://eur-lex.europa.eu/LexUriServ/...41:0044:en:PDF

    http://ec.europa.eu/taxation_customs...s/index_en.htm

    http://customs.hmrc.gov.uk/channelsP...HMCE_CL_001460

    Stop trying to evade tax, it's a headache and unless you spend a small fortune on advice, you'll land yourself in trouble. Given you say your profit margin is so small, I imagine you aren't in a position to do that.

    You should spend your time re-thinking your business to improve your margin so that VAT is not an issue for you, rather than trying to find a way to avoid VAT
    Alasdair

  12. #12
    What you are thinking is a great idea, in theory. In the real-world, it will not work. Here's a few reasons:

    - Getting money from your customers is almost impossible. It's very very difficult to find a good merchant account that will work with an offshore company. PayPal won't touch you. So how are you going to get money from your customers?

    - You local government will consider your offshore company to be YOURS. That means, you are considered the "mind and management" of the company, regardless of where it is incorporated. As such, the company will be considered to be incorporated locally, and you'll be assessed the taxes owed.

    - Let's say you figure out a nice offshore structure that doesn't directly involve you, so the above is not a problem. And then let's say you've figured out how to reliably accept payment from your customers. Now you need to get that money into your pocket in your country. How are you going to do that? If you transfer the money into your personal bank account, you must declare that as income. If you withdraw from a local bank machine, you run the risk of being caught by camera, transaction name is yours, etc. So let's say you figure out way to get the cash into your hand... what are you going to purchase with it? A car? A house? Good luck explaining to your local tax auditor how you "found" the cash for those purchases.

    It *is* entirely possible to do what you are asking.. but it takes significant planning and being very very careful. The difference between tax evasion and tax avoidance is sometimes very small.

    In all honestly, if you don't like the VAT then you should vote for politicians who agree with you. That's pretty much the only way to stop paying it.

    Good luck!
    Want to sell domain names? Sign up today for an eNom.com reseller account from a trusted eNom ETP provider.
    * We provide support and service to over 3245 happy eNom domain name and SSL certificate resellers!

  13. #13
    Join Date
    May 2013
    Posts
    177
    mrzippy - actually, what you described, and the careful planning of that, is called tax evasion and in the US is punishable by jail time.

    Tax avoidance is things such as how you can write off expenses etc, careful expense management, how much money to donate (thus you can at least donate the money to a cause you support and is a good publicity event) etc. Try to find loopholes such that you can pay a lower rate (for example, investments I believe have a lower tax rate). That's the absolute best you're going to get and that's what all of the professional tax advisors try to do for you - try to find these small loopholes in the law. If you don't want to do that, move to a different country.

    If you're scared of being caught, trying to stay hidden from ATM cameras etc then chances are that it's illegal.

    tldr; doing that is illegal, unless you still pay the tax, but then that destroys the purpose of doing that.
    Last edited by derp; 12-21-2013 at 04:52 PM.

  14. #14
    Join Date
    Apr 2008
    Location
    England
    Posts
    516
    If you register a business in for example the Seychelles you cannot charge VAT to your customers because there is not VAT in the Seychelles, VAT will also be removed from any invoices you need to pay because of your business location. There is also no corporation tax in the Seychelles.

    An offshore company will not work with Paypal you will need to use 2checkout as they have a Paypal option.

  15. #15
    Join Date
    May 2013
    Posts
    177
    Quote Originally Posted by parky1 View Post
    If you register a business in for example the Seychelles you cannot charge VAT to your customers because there is not VAT in the Seychelles, VAT will also be removed from any invoices you need to pay because of your business location. There is also no corporation tax in the Seychelles.

    An offshore company will not work with Paypal you will need to use 2checkout as they have a Paypal option.
    That's not true. If you are running your business from the UK then legally you have to pay VAT.

    Now if you actually physically went to Seychelles and ran your business there, you'd still have to pay income tax as a UK citizen but would probably not need to charge VAT.

  16. #16
    Quote Originally Posted by derp View Post
    That's not true. If you are running your business from the UK then legally you have to pay VAT.
    Correct. If you are physically resident in the UK, and you create an offshore company and you are the director/owner/shareholder of that offshore company... then the UK authority will consider it a local UK company. they won't recognize it as offshore. So, as a "considered" local UK company, is liable for VAT.

    Quote Originally Posted by derp View Post
    Now if you actually physically went to Seychelles and ran your business there, you'd still have to pay income tax as a UK citizen but would probably not need to charge VAT.
    If you physically went to the Seychelles, then you could declare yourself a non-resident of the UK. Now you would not need to pay any tax to the UK. (Unlike those poor Americans... most countries, including the UK, do not tax their citizens unless they are physically resident in their home country.) If you're a non-resident UK citizen (ie: you live in another country), then you don't need to pay tax to the UK.

    (Note: I recommend you consult a UK tax professional, then to listen to me.)
    Want to sell domain names? Sign up today for an eNom.com reseller account from a trusted eNom ETP provider.
    * We provide support and service to over 3245 happy eNom domain name and SSL certificate resellers!

  17. #17
    you run your business from anywhere you want and just don't pay tax or VAT because you receive the payments at any bank outside EU...

  18. #18
    Join Date
    Dec 2006
    Location
    Europe
    Posts
    1,112
    Well well, you need to do some ground breaking research beforeyou proceed, the comments here are a little vague and not comprehensive.

  19. #19
    Join Date
    May 2013
    Posts
    177
    Quote Originally Posted by buythiscomputer View Post
    you run your business from anywhere you want and just don't pay tax or VAT because you receive the payments at any bank outside EU...
    Yes, if you run your business somewhere else. That means you yourself have to physically be located in a different country, and residing in that country while conducting business. You cannot legally be physically residing in the UK, conducting your business in the UK, without paying VAT.

    Note that even if you pay someone else in a different country to register your business there, VPN to an internet connection there etc. You, your physical body, have to be in that country as a resident at the time of conducting business.
    @fionix - not sure how this is vague. It's as clear as it can possibly be. You have to take your physical person, on a plane or boat or some other means of transportation, move to that country, purchase or rent a residence, and live there. Conduct business there. You don't have to pay VAT.

  20. #20
    Join Date
    Dec 2006
    Location
    Europe
    Posts
    1,112
    As a non uk citizens you can have a company for instant in the Seychelles or BVI or anywhere else wher no VAT is applicable so you don't need to charge VAT. And the best is, for 7 years you don't have to pay tax in the UK while you life there! That's what so many are doing.

  21. #21
    Quote Originally Posted by fionix View Post
    As a non uk citizens you can have a company for instant in the Seychelles or BVI or anywhere else wher no VAT is applicable so you don't need to charge VAT. And the best is, for 7 years you don't have to pay tax in the UK while you life there! That's what so many are doing.
    No, sorry but this is incorrect. It's misleading at best.

    If you physically live in the UK, and you own a business in ANY country in the world... you must pay tax in the UK.

    It's as simple as that. If you think this is incorrect, then feel free to post whatever snippet of the tax laws you feels exempts you from this.

    Also, if you live in the UK (or any EU country) and you have a business incorporated in another country.. you should seek the advice of a qualified tax professional. One thing I can guarantee you, is that if you are audited, you will receive a bill from your government for taxes due.

    Look up the rules of "mind and management". It doesn't matter if you are citizen of UK or not. (Assuming your country doesn't have a double-tax treaty, etc.. in which case you would still need to file a tax return in the UK, and then claim an exemption for whatever is the amount you paid to your home country.

    Please, do NOT take tax advice from forums like this where it's obvious many people don't know what they're talking about. (And anyone trying to sell you an offshore company is not likely to give you full and knowledgeable advice...)
    Want to sell domain names? Sign up today for an eNom.com reseller account from a trusted eNom ETP provider.
    * We provide support and service to over 3245 happy eNom domain name and SSL certificate resellers!

  22. #22
    Join Date
    Dec 2006
    Location
    Europe
    Posts
    1,112
    If you don't know what you speak about then don't post here. You may speak with a tax consultant in the UK and ask hi for advise, the information i posted is 100% correct as an matter of fact of what thousands do in the UK!

    Maybe you read it wrong (it seems from what you wrote) but then read again what I posted.

    Quote Originally Posted by mrzippy View Post
    No, sorry but this is incorrect. It's misleading at best.

    If you physically live in the UK, and you own a business in ANY country in the world... you must pay tax in the UK.

    It's as simple as that. If you think this is incorrect, then feel free to post whatever snippet of the tax laws you feels exempts you from this.

    Also, if you live in the UK (or any EU country) and you have a business incorporated in another country.. you should seek the advice of a qualified tax professional. One thing I can guarantee you, is that if you are audited, you will receive a bill from your government for taxes due.

    Look up the rules of "mind and management". It doesn't matter if you are citizen of UK or not. (Assuming your country doesn't have a double-tax treaty, etc.. in which case you would still need to file a tax return in the UK, and then claim an exemption for whatever is the amount you paid to your home country.

    Please, do NOT take tax advice from forums like this where it's obvious many people don't know what they're talking about. (And anyone trying to sell you an offshore company is not likely to give you full and knowledgeable advice...)

  23. #23
    Join Date
    Oct 2003
    Location
    Scotland, UK
    Posts
    2,900
    Everyone seems to be making a confusing discussion, even more complicated. And are also getting mixed up with tax obligations of a person vs tax obligations of a separately incorporated company.

    It is perfectly possible to manipulate the levels of tax your business pays by registering the company elsewhere. As an individual, you can vary your personal tax obligations by changing where you are considered to live (which will generally involve going and living somewhere else, and having to plan the number of day(s) you spend in different countries). Each country involved is then going to try and fight for their "cut", which means you need to spend more and more on legal and tax advice beforehand, and then even more again when you are inevitably challenged. And regardless of where your business is registered or where you are resident/domiciled, the EU expects a business to charge VAT if it is selling digital goods (specifically including web hosting) to EU consumers. So this whole discussion is rather pointless...
    Alasdair

  24. #24
    Join Date
    Dec 2004
    Posts
    526
    Quote Originally Posted by tickedon View Post
    Everyone seems to be making a confusing discussion, even more complicated. And are also getting mixed up with tax obligations of a person vs tax obligations of a separately incorporated company.

    It is perfectly possible to manipulate the levels of tax your business pays by registering the company elsewhere.
    It is not that simple.
    Even if the company is registered abroad, if the management of the company is located in your home country, your home country can assert the right to tax the company.


    For historical reasons one of the companies we are related to is a UK Ltd, but the company pays its corporation tax (and all other taxes like VAT) in the Netherlands as that's where the company director lives.
    Last edited by Maxnet; 12-25-2013 at 10:44 PM.

  25. #25
    Join Date
    Oct 2003
    Location
    Scotland, UK
    Posts
    2,900
    Quote Originally Posted by Maxnet View Post
    It is not that simple.
    Even if the company is registered abroad, if the management of the company is located in your home country, your home country can assert the right to tax the company.
    I didn't say it was simple... just that it was possible! And note that I very clearly said: "Each country involved is then going to try and fight for their "cut", which means you need to spend more and more on legal and tax advice beforehand, and then even more again when you are inevitably challenged."
    Alasdair

  26. #26
    Join Date
    May 2011
    Posts
    471
    Quote Originally Posted by hannesp View Post
    Now my hobby is turning into a business d I still want to do everything legal. On the other hand adding VAT to my packages will almost ruin all my tiny profit margin. In addition it makes it very annoying to ask each customer to send their passports to decide whether the transaction is VAT-eligible or not (something that OVH does).
    Sounds like an annoyance to be honest. However, I have to deal with "GST" and you simply have to push up your prices to accommodate for this.
    I have never heard of anyone needing to get a passport to buy webhosting? But i have seen others asking for drivers license. But this is silly, as well, one person here once had a drivers license submitted by a client that had a photo of charlie sheen (it was a clear fake) but other fakes you arent able to spot.

    But either way, if you are looking at:
    - alot of work and hassle looking at potentially fake, home made passports
    - low profit margins
    - additional costs of paperwork, legal fees etc etc

    Then maybe you need to rethink your company plan here before you go any further. Seriously, just looking at the headaches you have listed here, I would consider selling the business. Your gonna get something like $50 per client, and you might be able to get them to keep you on as a paid employee.

  27. #27
    Join Date
    May 2013
    Posts
    177
    - If you physically reside in the EU then you will collect and pay VAT for any digital good you sell to a EU customer, and anyone else will have to prove that they aren't an EU customer (and you have to keep proof of that) via something such as a driver's license. End of that discussion. The law's pretty clear on that.

    - If you're running a very large business, you can hire a tax professional to try to deduct some taxes via workarounds such as incorporating a different country etc. That has nothing to do with VAT, that's your corporate tax, etc and unless you're making millions chances are you won't be able to afford proper consulting that will actually save you money (you don't want to hire a consultant for $5000 who ends up saving you just $500 etc)

  28. #28
    From what I understand :
    1) You have issues to pay VAT but not income tax.
    2) Your idea of VAT is wrong. VAT is not to be paid by you as the seller. You are responsible for collecting it and paying it to the Govt on the buyers behalf. So lets say your invoice is of $10 and VAT is applicable @ 20%. Then you have to show this in the invoice as $10 + $2 (20% of $10) as VAT. This will not affect your profits in any manner as they are now.

    Going offshore is a headache. Customers might also not like it. Avoid it.

    Fortunate / unfortunate, most of us live in countries where politicians form rules to have higher taxes so that they can benefit the poor. But as a matter of fact that money NEVER helps the poor.
    Softaculous - Auto Installer for cPanel, Direct Admin, InterWorx, Plesk, H-Sphere
    The only Auto Installer that installs 260+ scripts. Install in just ONE STEP!
    Virtualizor - VPS Control Panel supporting OpenVZ, Xen, KVM and has 60+ OS Templates
    Webuzo - Softaculous for the Cloud i.e. Softaculous Standalone

  29. #29
    Join Date
    May 2013
    Posts
    177
    Quote Originally Posted by alons View Post
    From what I understand :
    1) You have issues to pay VAT but not income tax.
    2) Your idea of VAT is wrong. VAT is not to be paid by you as the seller. You are responsible for collecting it and paying it to the Govt on the buyers behalf. So lets say your invoice is of $10 and VAT is applicable @ 20%. Then you have to show this in the invoice as $10 + $2 (20% of $10) as VAT. This will not affect your profits in any manner as they are now.

    Going offshore is a headache. Customers might also not like it. Avoid it.

    Fortunate / unfortunate, most of us live in countries where politicians form rules to have higher taxes so that they can benefit the poor. But as a matter of fact that money NEVER helps the poor.
    He's saying he doesn't want to have to pass such a high price increase to his users on the fear that his users might think it's too expensive and find another provider that isn't required to charge VAT.

    Going offshore: to avoid VAT, is illegal.

    Regarding your last statement, it does go to the poor, but sometimes the poor in that case are the people who aren't even trying to be helpful to society, living off of welfare because they know that they're guaranteed their welfare check and therefore don't need to do work.

  30. #30
    Join Date
    Dec 2006
    Location
    Europe
    Posts
    1,112
    Can only repeat my self, I will urge you to find a tax consultancy, and you need to do some ground breaking research beforeyou proceed, the comments here are a little vague and not comprehensive. Most are even off topic!

  31. #31
    Quote Originally Posted by derp View Post
    He's saying he doesn't want to have to pass such a high price increase to his users on the fear that his users might think it's too expensive and find another provider that isn't required to charge VAT.

    Going offshore: to avoid VAT, is illegal.

    Regarding your last statement, it does go to the poor, but sometimes the poor in that case are the people who aren't even trying to be helpful to society, living off of welfare because they know that they're guaranteed their welfare check and therefore don't need to do work.
    Well as far as I know corporates registered under VAT need to pay VAT even if the vendor is not charging for the same. So they wouldnt mind paying for the same as the get a credit against their own VAT requirements. So individuals / companies who are not registered under VAT and are buying from you will have to bear the extra cost. The best thing to avoid this is incorporate another company and divide your sales if possible and you will be above the VAT Limit.

    About money going to the poor. I agree with you to some extent. At the end, if the money didnt help them to become capable to earn money it didnt help them at all. But in many countries, the poor never even get the money. Not all countries implement Social Security like the US.
    Softaculous - Auto Installer for cPanel, Direct Admin, InterWorx, Plesk, H-Sphere
    The only Auto Installer that installs 260+ scripts. Install in just ONE STEP!
    Virtualizor - VPS Control Panel supporting OpenVZ, Xen, KVM and has 60+ OS Templates
    Webuzo - Softaculous for the Cloud i.e. Softaculous Standalone

  32. #32
    Join Date
    Oct 2003
    Location
    Scotland, UK
    Posts
    2,900
    Quote Originally Posted by alons View Post
    Well as far as I know corporates registered under VAT need to pay VAT even if the vendor is not charging for the same. So they wouldnt mind paying for the same as the get a credit against their own VAT requirements.
    That's not the case in the UK for most transactions - transactions where VAT isn't charged, however, will possibly reduce the amount of VAT that a business can recover.

    So individuals / companies who are not registered under VAT and are buying from you will have to bear the extra cost. The best thing to avoid this is incorporate another company and divide your sales if possible and you will be above the VAT Limit.
    Artificially creating more than one company and attempting to stay below the VAT limit is generally against anti-avoidance legislation, and you'll find the tax authorities will later come after you and ask YOU to pay the VAT you should have collected from your customers.
    Last edited by tickedon; 12-31-2013 at 09:02 AM.
    Alasdair

  33. #33
    Join Date
    May 2013
    Posts
    177
    Quote Originally Posted by alons View Post
    Well as far as I know corporates registered under VAT need to pay VAT even if the vendor is not charging for the same. So they wouldnt mind paying for the same as the get a credit against their own VAT requirements. So individuals / companies who are not registered under VAT and are buying from you will have to bear the extra cost. The best thing to avoid this is incorporate another company and divide your sales if possible and you will be above the VAT Limit.
    From what I understand, VAT is a customer tax, you are required to collect it from your customers (as another column on the invoice) and submit it to the government on their behalf. Or from what I understand of your post, companies are exempt from VAT and even if they pay it, they get it back later.

    What OP is saying: He both cannot afford to absorb the cost of the VAT (he can't afford to consider VAT as included in the original price) and he also cannot increase the prices customers pay as it would be too expensive and a deterrent to sales, so he wants to find a way around paying it altogether.

    Quote Originally Posted by alons View Post
    About money going to the poor. I agree with you to some extent. At the end, if the money didnt help them to become capable to earn money it didnt help them at all. But in many countries, the poor never even get the money. Not all countries implement Social Security like the US.
    It can help them, but they choose not to use that help. There's a lot of people in the US who literally actively refuse to do work because they know they're guaranteed to get a welfare check if they don't. So in that case, the welfare check is actually a deterrent against them finding a job, because they aren't working due to the check, but if they didn't receive welfare then they would have an incentive to find work.

    In some more corrupt countries you can also bribe the tax official so it goes both ways.

    Quote Originally Posted by tickedon View Post
    Artificially creating more than one company and attempting to stay below the VAT limit is generally against anti-avoidance legislation, and you'll find the tax authorities will later come after you and ask YOU to pay the VAT you should have collected from your customers.
    I don't know the law in the UK too well, but in the US if you created multiple companies for the purpose of lowering your tax rate you can be put in jail.

  34. #34
    Join Date
    Mar 2013
    Posts
    50
    Quote Originally Posted by fionix View Post
    As a non uk citizens you can have a company for instant in the Seychelles or BVI or anywhere else wher no VAT is applicable so you don't need to charge VAT. And the best is, for 7 years you don't have to pay tax in the UK while you life there! That's what so many are doing.
    Sorry I did not get your point.
    Do you mean: a non-uk, eu citizen who choose to live in the uk will be exempt from tax for 7 years?
    That would be very generous incentive

  35. #35
    Join Date
    Mar 2013
    Posts
    50
    Quote Originally Posted by mrzippy View Post
    What you are thinking is a great idea, in theory. In the real-world, it will not work. Here's a few reasons:

    - Getting money from your customers is almost impossible. It's very very difficult to find a good merchant account that will work with an offshore company. PayPal won't touch you. So how are you going to get money from your customers?

    - You local government will consider your offshore company to be YOURS. That means, you are considered the "mind and management" of the company, regardless of where it is incorporated. As such, the company will be considered to be incorporated locally, and you'll be assessed the taxes owed.

    - Let's say you figure out a nice offshore structure that doesn't directly involve you, so the above is not a problem. And then let's say you've figured out how to reliably accept payment from your customers. Now you need to get that money into your pocket in your country. How are you going to do that? If you transfer the money into your personal bank account, you must declare that as income. If you withdraw from a local bank machine, you run the risk of being caught by camera, transaction name is yours, etc. So let's say you figure out way to get the cash into your hand... what are you going to purchase with it? A car? A house? Good luck explaining to your local tax auditor how you "found" the cash for those purchases.

    It *is* entirely possible to do what you are asking.. but it takes significant planning and being very very careful. The difference between tax evasion and tax avoidance is sometimes very small.

    Good luck!
    Thanks man. I really enjoy your thoughts!

    But for the sake of argument, let's say:

    Instead of paying VTA unitl I exhaust this small capital, I decide to follow the small fish routs and pay about $1k to move the entire company into offshore. I ask some friend to run the bussiness and do not bring back any of the profits into eu. I just buy more servers by the profit.

    Can not stop thinking of caraebean pirates and hiding tressures hahah ...

    anyway, then, maybe after a few years, I fly to my dream island and, hopefuly if the bank is still there, I get the cash out and buy a house and a perhaps a yacht and after being tanned enough, I will come back home with many good memories. This may seem too fancy to come true but the question is: is this approach tax avoidance or tax evasion?
    Last edited by dolfin; 01-02-2014 at 01:19 AM.

  36. #36
    Quote Originally Posted by hannesp View Post
    I ask some friend to run the bussiness and do not bring back any of the profits into eu. I just buy more servers by the profit.
    It is evasion, since you are telling the government that you don't manage or control the business, yet you still do. So you are lying. If you manage and control the business, then it doesn't matter where it is registered. The UK government will consider it a local entity and will be liable for taxes due, even if all profit stays out of the country.

    So you would be evading taxes since you are lying about where the "mind and management" of the business is located.

    EDIT: If you are careful and you do not leave any evidence that you are in fact the "mind and management" of the business, then you could probably get away with it. however, how are you going to show where your income comes from to pay your gas, house, car, groceries, etc? Are you going to send yourself a paycheck from the company? Who will sign the check? Who is the signatory/beneficial owner of the account sending you the money? Those are the ways the government will track down that you are in fact the true owner...
    Want to sell domain names? Sign up today for an eNom.com reseller account from a trusted eNom ETP provider.
    * We provide support and service to over 3245 happy eNom domain name and SSL certificate resellers!

  37. #37
    Join Date
    Jul 2009
    Location
    Kshatriya
    Posts
    2,725
    If you don't want to Pay tax,vat then permanently move to Bahamas.

    Tax in Bahamas is 0% and Payroll tax is 9.x%.
    Dewlance® Cheap Windows VPS - Chicago/Orlando/Vegas/AZ - SSD
    WHMCS ReadyMadeKB - Tutorials for cPanel/InterWorx/Softaculous& Growing..
    Super Cheap Annually Shared Hosting - Canada/US/UK

  38. #38
    Join Date
    Mar 2013
    Posts
    50
    Quote Originally Posted by DewlanceHosting View Post
    If you don't want to Pay tax,vat then permanently move to Bahamas.

    Tax in Bahamas is 0% and Payroll tax is 9.x%.
    Actually moving to a tax haven is one option that I'm thinking of. How is the cost of living in Bahamas?
    One other option that I consider is moving to Malta. Any other options?

  39. #39
    Join Date
    Jul 2009
    Location
    Kshatriya
    Posts
    2,725

    Wink

    Quote Originally Posted by hannesp View Post
    Actually moving to a tax haven is one option that I'm thinking of. How is the cost of living in Bahamas?
    One other option that I consider is moving to Malta. Any other options?
    India

    12.36% TAX and 5% VAT on Software,etc but If you have a hosting company then you don't need to pay VAT.

    Living in other country is risky for you so I will suggest you to find a other way to pay less VAT(If possible)
    Dewlance® Cheap Windows VPS - Chicago/Orlando/Vegas/AZ - SSD
    WHMCS ReadyMadeKB - Tutorials for cPanel/InterWorx/Softaculous& Growing..
    Super Cheap Annually Shared Hosting - Canada/US/UK

  40. #40
    Join Date
    Mar 2013
    Posts
    50
    Any other ideas?

Page 1 of 2 12 LastLast

Similar Threads

  1. Colocating in Europe - how do you get around paying VAT on imported servers?
    By webedgeco in forum Colocation and Data Centers
    Replies: 7
    Last Post: 12-02-2013, 02:35 PM
  2. Can we buy from vh without paying VAT?
    By hardjoko in forum Dedicated Server
    Replies: 9
    Last Post: 05-29-2013, 11:54 AM
  3. US Hosts Paying EU VAT Tax?
    By kopptech in forum Running a Web Hosting Business
    Replies: 10
    Last Post: 10-08-2006, 04:58 AM
  4. Customer says he died to avoid paying bill
    By Learning_as_I_go in forum Running a Web Hosting Business
    Replies: 24
    Last Post: 09-29-2005, 07:37 PM
  5. Replies: 5
    Last Post: 07-30-2004, 12:18 PM

Tags for this Thread

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •