Countries with low taxes or no taxes
#1
This topic is missing in here. So I thought I would make the first step.
I think as people who like to travel and people who are into crypto, working independently, working online or just in general on our path to become well-off, it is essential to have a list with certain countries, where we can protect our wealth and use the tax laws to our advantage.

Sure, a lot depends on your nationality (US Americans have to pay due to their citizenship), your type of business, how many days you plan on staying somewhere, which assets you have and whatnot.

It has been a few months or even years where I started to research differen tax systems of different places of the world (while continously growing my own net worth). I found that Bulgaria offers in most cases a flat tax of 10%, which is good if you are an EU citizen and plan on staying in the EU. A country like Panama has a territorial tax system, which means that income from abroad would be taxed at 0%. Panama is also known for the Friendly Nations Visa, but apparently they will make huge changes to it. Paraguay had also an easy way to get residence and a territorial tax system, but they changed it last year I think. There is still the UAE with no tax, but personally the UAE isn't a place I wish to go to.

Do you guys know of some places where one can effectively pay 0% taxes for income earned from abroad? Or countries that have low taxes as freelancer and easy ways to get residence status in there?
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#2
@Foothunter, I assume you are Dutch. Have you looked at the Estonian e-resident tax status, whereby a foreigner like you and I could set up a legal entity and enjoy 0% tax on all re-invested profits, but have to pay 20% on dividends etc. You'll have to read up on the small print etc.

And Estonia is a stable country, very close and assessable physically (in non-Covid periods), with beautiful women. Hey....nothing wrong with mixing a bit of pleasure with business :-)
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#3
Americans earning income abroad can qualify for a Foreign Earned Income Tax Exemption. Like first $100k iirc.
If you haven't met anyone, I'll assume you're lying (h/t to Teedub from the old forum)
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#4
It sounds like you're referring to personal income tax. The trick is to not have that come into play at all. Have your company owned by another company. The second company pays for your "office" (apartment), communications (phone + internet), and transportation (flights + car). In other words, you should find a way not to have profits so there is no tax.

Whenever I have any expense, my first thought is "How can I make this a business expense?". Even a passport renewal fee is a business expense since you need to travel for work, right?
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#5
(06-05-2021, 05:44 AM)WorldConquest Wrote: It sounds like you're referring to personal income tax. The trick is to not have that come into play at all. Have your company owned by another company. The second company pays for your "office" (apartment), communications (phone + internet), and transportation (flights + car). In other words, you should find a way not to have profits so there is no tax.

Whenever I have any expense, my first thought is "How can I make this a business expense?". Even a passport renewal fee is a business expense since you need to travel for work, right?

Are you able to share recommended resources for establishing that setup?
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#6
(06-08-2021, 07:58 PM)OviOs Wrote:
(06-05-2021, 05:44 AM)WorldConquest Wrote: It sounds like you're referring to personal income tax. The trick is to not have that come into play at all. Have your company owned by another company. The second company pays for your "office" (apartment), communications (phone + internet), and transportation (flights + car). In other words, you should find a way not to have profits so there is no tax.

Whenever I have any expense, my first thought is "How can I make this a business expense?". Even a passport renewal fee is a business expense since you need to travel for work, right?

Are you able to share recommended resources for establishing that setup?

It's not complicated -- just set up a company or two. Then you're a shareholder (not employee -- higher taxes then) in each. A invoices B for some type of service. Your customers pay B. Profits flow from B to A by invoicing the money (so it's just revenue). A could be located in a company with super favorable tax laws and privacy, while B is located in a "clean" country (your customers may not want to do business with a company located in A).
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#7
(06-09-2021, 05:22 PM)WorldConquest Wrote:
(06-08-2021, 07:58 PM)OviOs Wrote:
(06-05-2021, 05:44 AM)WorldConquest Wrote: It sounds like you're referring to personal income tax. The trick is to not have that come into play at all. Have your company owned by another company. The second company pays for your "office" (apartment), communications (phone + internet), and transportation (flights + car). In other words, you should find a way not to have profits so there is no tax.

Whenever I have any expense, my first thought is "How can I make this a business expense?". Even a passport renewal fee is a business expense since you need to travel for work, right?

Are you able to share recommended resources for establishing that setup?

It's not complicated -- just set up a company or two. Then you're a shareholder (not employee -- higher taxes then) in each. A invoices B for some type of service. Your customers pay B. Profits flow from B to A by invoicing the money (so it's just revenue). A could be located in a company with super favorable tax laws and privacy, while B is located in a "clean" country (your customers may not want to do business with a company located in A).

Agreed that conceptually it's not challenging to understand but if you are beholden to the U.S. IRS, you stand a very high chance of audit if something doesn't pass their "smell test".  I'd rather go through an enema than deal with those fools.  I'd prefer to trust an experienced company to setup everything up including responding to IRS RFIs than run of the risk of missing some important reporting items.
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#8
(06-09-2021, 10:11 PM)OviOs Wrote:
(06-09-2021, 05:22 PM)WorldConquest Wrote:
(06-08-2021, 07:58 PM)OviOs Wrote:
(06-05-2021, 05:44 AM)WorldConquest Wrote: It sounds like you're referring to personal income tax. The trick is to not have that come into play at all. Have your company owned by another company. The second company pays for your "office" (apartment), communications (phone + internet), and transportation (flights + car). In other words, you should find a way not to have profits so there is no tax.

Whenever I have any expense, my first thought is "How can I make this a business expense?". Even a passport renewal fee is a business expense since you need to travel for work, right?

Are you able to share recommended resources for establishing that setup?

It's not complicated -- just set up a company or two. Then you're a shareholder (not employee -- higher taxes then) in each. A invoices B for some type of service. Your customers pay B. Profits flow from B to A by invoicing the money (so it's just revenue). A could be located in a company with super favorable tax laws and privacy, while B is located in a "clean" country (your customers may not want to do business with a company located in A).

Agreed that conceptually it's not challenging to understand but if you are beholden to the U.S. IRS, you stand a very high chance of audit if something doesn't pass their "smell test".  I'd rather go through an enema than deal with those fools.  I'd prefer to trust an experienced company to setup everything up including responding to IRS RFIs than run of the risk of missing some important reporting items.

Except.. the IRS has very few people who actually understand international personal income taxes. My strategy is to declare and then declare some more. I flood them with forms on my tax return, which ends up being at least 50 pages. For example, if you own a controlling interest in a foreign company, you need to file a Form 5471. It's got 10 different schedules. Even the Category of Filers on that form is so complicated that few can figure it out. If you can't easily figure it out, then the bureaucrat at the IRS can't figure it out either. Remember, it's not a criminal offense to provide them with too much information. The IRS typically goes after unreported or underreported income. I don't hide my income, I just make sure to keep it as low as possible using company structures, which is perfectly legal.

Also, be sure to file by paper not electronically. Their audit triggers are largely tied to e-filing, and what usually triggers it is if you didn't report income that a third-party reported on you (for example, forgetting to report a 1099). Even if your paper return is scanned, they're only going to key in on the main forms like the 1040. I'm skeptical they even have any "audit logic" in place for less-used forms like Form 2555 (US citizens abroad file this one).

The IRS is under-staffed, and they're more likely to go for the low-hanging fruit. Much easier to audit a small restaurant owner or dry cleaner since those businesses tend to hide income (not declaring cash revenue) and it's simple to understand, than some extremely complex international return.
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#9
Question - doesn't personal income tax still come into play? I mean, sure you can run your business through an offshore corporation incorporated in a zero corporate tax jurisdiction. And that business can do some things in a gray area like pay expenses that are both business and personal like your cell phone and internet, but don't you have to dividend enough to yourself to pay the rent, etc. and doesn't that incur local peronsal income tax?
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#10
(06-09-2021, 05:22 PM)WorldConquest Wrote:
(06-08-2021, 07:58 PM)OviOs Wrote:
(06-05-2021, 05:44 AM)WorldConquest Wrote: It sounds like you're referring to personal income tax. The trick is to not have that come into play at all. Have your company owned by another company. The second company pays for your "office" (apartment), communications (phone + internet), and transportation (flights + car). In other words, you should find a way not to have profits so there is no tax.

Whenever I have any expense, my first thought is "How can I make this a business expense?". Even a passport renewal fee is a business expense since you need to travel for work, right?

Are you able to share recommended resources for establishing that setup?

It's not complicated -- just set up a company or two. Then you're a shareholder (not employee -- higher taxes then) in each. A invoices B for some type of service. Your customers pay B. Profits flow from B to A by invoicing the money (so it's just revenue). A could be located in a company with super favorable tax laws and privacy, while B is located in a "clean" country (your customers may not want to do business with a company located in A).

Okay let's say my company B would be somewhere in the EU, but company A could be in Panama?
And what about the income? And let's say I will have two different types of services, how can I combine it? Let's say I want to have a company that does crypto trading and another does consulting (nothing to do with crypto), how could that work?
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#11
In Europe I'd look at Montenegro, Portugal and Malta for low taxes. I'm no expert, but my brother as a crypto guy recently looked into it thoroughly and came to that conclusion.
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#12
You have to look at this in terms of corporate taxes and personal taxes, the rates are different.

For personal taxes, you have
UAE (Dubai)
Monaco
Bermuda
BVI
Caymans
a few more in the Persian Gulf.

Monaco is cost prohibitive for most people
Dubai is expensive but doable with a good income and you can make it your tax home without living every day there, possibly as little as 2 days a year.
The Carribean options can be expensive and are also quite small and limited.

Some people are looking at mid-shoring instead of offshoring. That's where you go to a low tax jurisdiction because things like quality of life, cost of living, and residency, are easier even though its not zero tax. Montenegro is 9%. Georgia, Malta, Bulgaria are other options, there are lot more.
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