0% Tax Offshore Company

[GiveMeFreedom]

Hi everybody,

In which country could I set up an offshore company with a 0% tax set up where I’d pay no sales taxes, and no taxes when paying dividends? Is UAE the best option? I’d like something quick and simple to set up.

Also, if you could suggest some countries where I could live and receive dividends from that company (would it be considered foreign sourced income?) without having to pay any taxes, that would be great!

 

[aniglo22]

And I want a Unicorn !
You should describe your company business and if you will actively manage it , if you want someone to help you .

• What are your requirements for living standards ?
• What is your estimated annual turnover ?
• With which countries you will conduct business ( as some have laws against tax havens e.g "Steueroasenabwehrgesetz" in Germany ) ?
• What are you prepared to spend on your "setup" ( For low-earning businesses, the cost of complying with company regulations and maintaining an offshore structure can sometimes outweigh the tax savings, making it more economical to simply pay taxes in a low tax jurisdiction )
• What are the requirements for your business e.g Payment processing , multi currency banking etc.. ( Be prepared for significant costs for introductory services, "high" deposit requirements and high banking fees. )

You might be interested in Sark , Cayman Islands .
You should also beware of withholding taxes for royalties and analyze the DTA's of you chosen jurisdiction.
But you should also consider the significantly higher cost of living in tax-free jurisdictions, as well as indirect taxes such as import duties

 

[GiveMeFreedom]

Thanks for your help!

- For living standards, something like Mexico or Panama would be fine, but the higher, the better
- Business model: Website with affiliate marketing
- Annual turnover of +/- $250K
- Will conduct business with multiple countries, it depends on where the company paying the commissions is based
- I'm not sure about the costs of maintaining the business
- For banking I could use something like Wise, maybe?

 

[aniglo22]

Thanks for your help!

- For living standards, something like Mexico or Panama would be fine, but the higher, the better
- Business model: Website with affiliate marketing
- Annual turnover of +/- $250K
- Will conduct business with multiple countries, it depends on where the company paying the commissions is based
- I'm not sure about the costs of maintaining the business
- For banking I could use something like Wise, maybe?

Offshore structuring for such a turnover may not be feasible.
Instead I recommend traveling through Latin America and the Caribbean and to take advantage of digital nomad visas that offer tax exemptions.
List of possible Destinations : Anguilla, Antigua and Barbuda, Barbados, Bermuda, Cape Verde, Costa Rica, Curacao, Dominica, the Dominican Republic, Ecuador, Grenada, Montserrat, Panama, Peru, Seychelles, and Uruguay. (Source : https://nomadsembassy.com/digital-nomad-visas-with-no-tax/#hlfxj )
This list may be outdated, so you should check each visa program to confirm it still exists .
Be sure to check the visa duration, whether it's extendable, and the concrete tax exemptions(if it's also local sourced income ) each location offers. And also plan a route , because most visas are only valid for 1-2 years.

You could set up a U.S. LLC or a Belize LLC (important : "designate them as disregarded entity for tax purposes " ).
If you're able to "disguise" your crypto affiliate company as a normal marketing company , you might gain access to "normal" banking services .
You should read the policies of each EMI or bank, especially the section "Prohibited/Restricted Business Activities," to determine if you are eligible .(e.g. wise prohibits buying/selling crypto to exchanges even if crypto affiliate marketing is not directly banned you probably will face issues)
Alternatively, you still have the option of offshore banks that have higher risk appetites, such as Paxum . You will pay high fees so beware of that .

You could also try to live only on crypto and use a Seychelles IBC (search the forum for more infos ) and use crypto cards for daily expenses . But I would assume you will face some issues when trying to proof your income for visa applications .

You could also consider exploring Malta or Cyprus and operating your business through an offshore company and don't pay corp tax. This is illegal, but the tax authorities are not actively enforcing it. However, I would not recommend it.

 

[Shories]

Hey hey so some quick recommendations that you can consider are:

- Maybe in your case I would have as primary location RAK (Ras Al Khaimah). Why? Fast setup, zero tax, no requirement for physical presence. You can even get residency visa but don't need to live there.
- I don't recommend Wise at all nowadays, high risk of account freezes and limited for business. As primary bank I would try United Arab Bank in UAE (easier than EMIs, only thing is that minimum deposit is about $25k and requires physical visit). As backup you can go Bank of Georgia or TBC in Georgia (but you need to get the Georgia residency card, open an LLC there, first open a personal account then business account, make a consulting agreement between RAK and Georgian LLC and bank through Georgian LLC). If you want to try an EMI, FIO Bank (in Czech Republic) will probably accept you, no physical presence needed ofc but you will need an agent which can cost about €2000. As last option I would also look into MCB Bank in Mauritius (they accept RAK companies), full remote opening, just need a local company secretary which can cost around $1500, but it's pretty stable banking.
- As for residence in your case, you could look into Paraguay instead of Panama/Mexico. Why? With this setup, you would pay 10% tax on foreign income, easy residency, only need to visit once every 3 years, can get citizenship in 3 years, much cheaper than Panama and Mexico and no CRS reporting yet.

Ideally:
- UAE Company collects affiliate revenue
- Pay yourself "consulting fees" instead of dividends
- Get Paraguay residency

 

[aniglo22]

Hey hey so some quick recommendations that you can consider are:

- Maybe in your case I would have as primary location RAK (Ras Al Khaimah). Why? Fast setup, zero tax, no requirement for physical presence. You can even get residency visa but don't need to live there.
- I don't recommend Wise at all nowadays, high risk of account freezes and limited for business. As primary bank I would try United Arab Bank in UAE (easier than EMIs, only thing is that minimum deposit is about $25k and requires physical visit). As backup you can go Bank of Georgia or TBC in Georgia (but you need to get the Georgia residency card, open an LLC there, first open a personal account then business account, make a consulting agreement between RAK and Georgian LLC and bank through Georgian LLC). If you want to try an EMI, FIO Bank (in Czech Republic) will probably accept you, no physical presence needed ofc but you will need an agent which can cost about €2000. As last option I would also look into MCB Bank in Mauritius (they accept RAK companies), full remote opening, just need a local company secretary which can cost around $1500, but it's pretty stable banking.
- As for residence in your case, you could look into Paraguay instead of Panama/Mexico. Why? 0% tax on foreign income, easy residency, only need to visit once every 3 years, can get citizenship in 3 years, much cheaper than Panama and Mexico and no CRS reporting yet.

Ideally:
- UAE Company collects affiliate revenue
- Pay yourself "consulting fees" instead of dividends
- Get Paraguay residency

Are you sure about that he doesn't need to pay Paraguayan tax ?

Asimismo, se considerarán rentas de fuente paraguaya las obtenidas por la realización de actividades en el exterior no comprendidas en los numerales precedentes por parte de los contribuyentes de este impuesto, salvo que por las mismas el contribuyente haya pagado en el exterior un Impuesto a la Renta, cualquiera sea su denominación, a una tasa igual o superior a la tasa de este impuesto. Para este efecto y a fin de evitar la doble imposición internacional se aplicará lo dispuesto en el artículo 134 de la presente ley y la Administración Tributaria establecerá los requisitos y el procedimiento para la demostración del pago.

Translation :

Likewise, income obtained from the performance of activities abroad not included in the preceding paragraphs by the taxpayers of this tax shall be considered as income from Paraguayan source, unless the taxpayer has paid an Income Tax abroad, regardless of its denomination, at a rate equal to or higher than the rate of this tax. For this purpose and in order to avoid international double taxation, the provisions of Article 134 of this law shall apply and the Tax Administration shall establish the requirements and the procedure for the demonstration of the payment.

Source : Ley Nº 6380/19 "DE MODERNIZACIÓN Y SIMPLIFICACIÓN DEL SISTEMA TRIBUTARIO NACIONAL.",Artículo 64. Renta Neta. (source : https://www.dnit.gov.py/web/portal-institucional/w/d-ley-n-6380-19)


According to my judgement he would need to pay tax in Paraguay and this setup wouldn't work.

 

[Shories]

Are you sure about that he doesn't need to pay Paraguayan tax ?

Translation :

Source : Ley Nº 6380/19 "DE MODERNIZACIÓN Y SIMPLIFICACIÓN DEL SISTEMA TRIBUTARIO NACIONAL." (source : https://www.dnit.gov.py/web/portal-institucional/w/d-ley-n-6380-19)


According to my judgement he would need to pay tax in Paraguay and this setup wouldn't work.

Ah yeah you are right, I wanna mention that I'm not giving a consultancy here in the forum tho but just structure ideas to brainstorm.

I guess we could replace Paraguay with Malaysia (MM2H), Georgia (but would pay 1% tax and if dividends, another 5%) or UAE at this point

 

[aniglo22]

Ah yeah you are right, I wanna mention that I'm not giving a consultancy here in the forum tho but just structure ideas to brainstorm.

I guess we could replace Paraguay with Malaysia (MM2H), Georgia (but would pay 1% tax and if dividends, another 5%) or UAE at this point

MM2H program is not a good option , as it requires a mandatory property purchase and a fixed deposit(150k + 134 property purchase in lowest tier (Silver )).
Also you would still be taxed on Malaysian-source income, and without a work permit ( applied for separately) you are not allowed to work from Malaysia.

But you can buy an overpriced (run down) apartment in Forest city and live there under the newly established SEZ (Special Economic Zone)/ SFZ (Special Finance Zone).
Maybe you can fulfill your childhood dream of becoming a Ghostbuster in Forest city — that could make it all worth it!

Anyway, thanks for your input and for contributing

 

[DeepDrilling]

As far as I can understand from the many threads we already have here on OCT, there is now a 9% corporate tax in the UAE, so it is not exactly a 0% tax as OP asks about in the headline.

One would probably have to go to Monaco to achieve 0% taxation across the board, or are there other countries?

 

[GiveMeFreedom]

Thank you so much for your helpful replies!

From reading around, what I had thought about was living in maybe Panama, or Costa Rica-which I believed don't tax foreign sourced income-and have the company in the UAE, but if they're now taxing businesses 9%, maybe there are some better options.

Regarding the funds that I have available for depositing in a bank, or buying a house, I have around €700K, and in crypto I have a lot more than that, but I'd rather hold onto it.

I'd like a country where I could settle for some time since we have a cat and it's quite stressful having to travel with him, so hopping from country to country wouldn't be great.

I also have an Estonia e-company which I created years ago but haven't used, but in that case the corporate tax alone when distributing dividends would be 20%... so, not really an option either

 

[Shories]

Thank you so much for your helpful replies!

From reading around, what I had thought about was living in maybe Panama, or Costa Rica-which I believed don't tax foreign sourced income-and have the company in the UAE, but if they're now taxing businesses 9%, maybe there are some better options.

Regarding the funds that I have available for depositing in a bank, or buying a house, I have around €700K, and in crypto I have a lot more than that, but I'd rather hold onto it.

I'd like a country where I could settle for some time since we have a cat and it's quite stressful having to travel with him, so hopping from country to country wouldn't be great.

I also have an Estonia e-company which I created years ago but haven't used, but in that case the corporate tax alone when distributing dividends would be 20%... so, not really an option either

You could look into the Caribbean too

 

[GiveMeFreedom]

You could look into the Caribbean too

How would that work? From what I understand I would have to get a CBI, and then have the company somewhere else, right?

 

[Shories]

How would that work? From what I understand I would have to get a CBI, and then have the company somewhere else, right?

In Dominican Republic there are many ways to easily get residency, DR only taxes local source income if you keep the money in a foreign bank account, no DR clients and no DR operations. (But you can have your personal local bank account).

And for company structure, there is so much to brainstorm, but even a setup in Nevis could be interesting, and for corporate banking you could look into https://republiconline.republictt.com/kn/

 

[GiveMeFreedom]

In Dominican Republic there are many ways to easily get residency, DR only taxes local source income if you keep the money in a foreign bank account, no DR clients and no DR operations. (But you can have your personal local bank account).

And for company structure, there is so much to brainstorm, but even a setup in Nevis could be interesting, and for corporate banking you could look into https://republiconline.republictt.com/kn/

DR sounds like a good plan!

I have no DR clients, and the revenue comes from the website, which technically I'd manage from home, but I don't think that'd be considered DR operations, and there would be no way of them knowing, probably.

Right now, since I have a sole proprietorship in Italy while taking advantage of a 90% tax exemption, I have all my funds spread across different personal bank accounts here so that I never surpass €100K on each bank, when moving abroad I'd probably move all my funds to a Swiss bank, or whatever is safer, not sure about that either.

The tax exemption ends in 2026, meaning 2025 is the last year I can live here and take advantage of it, so I'm planning ahead in order to move before 2026.

Going to look into the Nevis company and DR residency now!

Any other suggestions are welcome!

 

[aniglo22]

In Dominican Republic there are many ways to easily get residency, DR only taxes local source income if you keep the money in a foreign bank account, no DR clients and no DR operations. (But you can have your personal local bank account).

And for company structure, there is so much to brainstorm, but even a setup in Nevis could be interesting, and for corporate banking you could look into https://republiconline.republictt.com/kn/

This won't work .

En atención a su inquietud, le informamos que, las personas naturales residentes o domiciliadas en el país se encuentran sujetas al pago del Impuesto sobre la Renta sobre su renta bruta, la cual incluye el total de sus ingresos indistintamente la fuente que lo originen, se obtengan por medio de un contrato laboral, las derivadas del ejercicio de una profesión, así como las provenientes de servicios de asistencia técnica, sean prestados desde el exterior o en el país, en el entendido de que la renta que recibe como remuneración de la prestación de servicios no es de fuente extranjera sino dominicana. En ese sentido, los ingresos recibidos por usted están sujetos al referido impuesto, por lo que constituye renta de fuente dominicana sujeta al referido impuesto por la condición de residente y domiciliado fiscal en la República Dominicana, de conformidad con las disposiciones de los artículos 267, 268 y literal f) del Artículo 272 del Código Tributario, formando parte de su renta bruta conforme lo establecido en el Artículo 283 del citado Código.

Translation :

Regarding your concern, we inform you that natural persons who are residents or domiciled in the country are subject to Income Tax on their gross income, which includes all their income regardless of its source, whether obtained through an employment contract, derived from practicing a profession, or from technical assistance services, whether provided from abroad or within the country, with the understanding that income received as remuneration for services rendered is not from a foreign source but Dominican. In this sense, the income received by you is subject to the aforementioned tax, as it constitutes Dominican-source income subject to said tax due to your status as a tax resident and domicile in the Dominican Republic, in accordance with the provisions of Articles 267, 268, and section f) of Article 272 of the Tax Code, forming part of your gross income as established in Article 283 of the cited Code.

My conclusion :
Affiliate marketing income by Dominican residents is considered Dominican-source income because:

1. The service (managing the website/marketing) is managed from Dominican territory
2. The Tax Code (Articles 267, 268, 272f) classifies all services performed by residents as Dominican-source, regardless of where the payment comes from

Source : (https://ayuda.dgii.gov.do/conversat...os-fuente-extranjera/63bf541b3fece76798a39b78)
Simply receiving payment from abroad worldwide doesn't make it foreign-source income - what matters is where the service is managed from.
And also the tax law got modernized this year . Which also includes more concrete definitions on digital services and the definition as domincan sourced income ( "Fiscal Modernization Bill for the Dominican Republic" :https://www.hacienda.gob.do/wp-cont...zacion-Fiscal-version-remision-Congreso-1.pdf)

Artículo 272.- Rentas De Fuente Dominicana.

---

En general, y sin perjuicio de las disposiciones especialesque se establecen, son rentas de fuente dominicana las siguientes:
j) Los que provienen de ingresos derivados de la venta de bienes y/o prestación de servicios a través de plataformas o tecnología utilizadas por internet u otras redes, desde el exterior, vendidos o prestados a usuarios ubicados en la República Dominicana, en beneficio de personas físicas, jurídicas o entidades no residentes o no domiciliadas en la República Dominicana;

k) Las provenientes de pagos o abonos acreditados en cuenta por concepto de la venta de bienes y/o prestación de servicios a través de plataformas o tecnología utilizada por internet u otras redes, desde el exterior con destino a República Dominicana, realizados por personas físicas, jurídicas o entidades no residentes o no domiciliadas en la República Dominicana a favor de clientes y/o usuarios domiciliado o residente en el territorio nacional;

l) Las que provienen del comercio electrónico en general, realizadas a través de plataformas o tecnología utilizada por internet u otras redes.

Párrafo.- El contribuyente o responsable está obligado a probar el origen de las transferencias de fondos del o al exterior cuando se considere necesario para la liquidación o fiscalización del impuesto. Si la prueba presentada por el contribuyente o responsable no es satisfactoria, la Administración podrá considerar que existe vinculación económica y que los fondos provienen de beneficios de fuente dominicana, conforme se establezca en el Reglamento.

Translation:

Article 272 - Dominican Source Income.

---

In general, and without prejudice to the special provisions established, the following are considered Dominican source income:
j) Those originating from income derived from the sale of goods and/or provision of services through platforms or technology used on the internet or other networks, from abroad, sold or provided to users located in the Dominican Republic, for the benefit of individuals, legal entities, or entities that are not residents or domiciled in the Dominican Republic;

k) Those originating from payments or deposits credited to an account for the sale of goods and/or provision of services through platforms or technology used on the internet or other networks, from abroad, destined for the Dominican Republic, made by individuals, legal entities, or entities that are not residents or domiciled in the Dominican Republic, in favor of clients and/or users domiciled or residing in the national territory;

l) Those originating from e-commerce in general, conducted through platforms or technology used on the internet or other networks.

Paragraph: The taxpayer or responsible party is obligated to prove the origin of the fund transfers to or from abroad when necessary for the settlement or audit of the tax. If the evidence presented by the taxpayer or responsible party is not satisfactory, the Administration may consider that there is an economic link and that the funds originate from benefits of Dominican source, as established in the Regulations.

So no it would be Dominican sourced income and would be taxed accordingly .

 

[sanja]

Are you sure about that he doesn't need to pay Paraguayan tax ?

Translation :

Source : Ley Nº 6380/19 "DE MODERNIZACIÓN Y SIMPLIFICACIÓN DEL SISTEMA TRIBUTARIO NACIONAL.",Artículo 64. Renta Neta. (source : https://www.dnit.gov.py/web/portal-institucional/w/d-ley-n-6380-19)


According to my judgement he would need to pay tax in Paraguay and this setup wouldn't work.

I'm in the process of obtaining TR in Paraguay and I was wondering about the tax so I put the law text into Claude and asked for an analysis (since I don't speak Spanish well yet).

It gave me this reply about the tax law text I copied from your source: "Looking at this carefully, I notice something important in the text. The law is talking about "IRE" (Impuesto a la Renta Empresarial), which is specifically the Corporate/Business Income Tax. This is clear from Article 1 which creates the "Impuesto a la Renta Empresarial (IRE).""

I'm still searching for the IRP - Impuesto a la Renta Personal text but I think the part you translated only applies to Paraguayian companies, not individuals with a foreign company.

 

[Mary P]

The following countries also provide 0% tax abilities:
British Virgin Islands (BVI): Known for its simplicity and low costs.
Cayman Islands: Offers strong asset protection and a stable environment.
Seychelles: Easy incorporation and low maintenance costs.
Hong Kong: A global financial hub with a favorable tax regime.
Singapore: Offers various tax incentives and exemptions.

 

[bountymounty]

The following countries also provide 0% tax abilities:
British Virgin Islands (BVI): Known for its simplicity and low costs.
Cayman Islands: Offers strong asset protection and a stable environment.
Seychelles: Easy incorporation and low maintenance costs.
Hong Kong: A global financial hub with a favorable tax regime.
Singapore: Offers various tax incentives and exemptions.

From this list what country would you say is the less tax expensive country / island ?

 

[JackAlabama]

From this list what country would you say is the less tax expensive country / island ?

youd need to factor in your personal residency too and/or being a true nomad (which not everyone wants).

 

[Mary P]

From this list what country would you say is the less tax expensive country / island ?

Among the listed jurisdictions, British Virgin Islands (BVI) and Cayman Islands are often considered to have the simplest incorporation processes and lowest ongoing costs. They are popular choices for setting up offshore companies due to their minimal tax requirements and strong legal frameworks.

However, it's important to note that the "best" jurisdiction can vary depending on individual circumstances and specific business needs. Factors such as banking accessibility, regulatory environment, and long-term strategic goals should be considered.