0% tax for digital nomad achievable?

[baio12]

Payment agent receives money on behalf of the other company and its not declared as income.

If you're receiving, processing, or remitting your own money, it falls out of regulatory scope in some jurisdiction. But if it's someone else's money, it's a regulated financial service which in EU/EEA/UK requires some form of license.

Is payment agent same thing as merchant of record? Such companies pay VAT on your customers behalf and send you the payment amount less a few % fee for their service.

You can agree with another company to be your merchant of record and transfer the remaining amount to your company in different country?

 

[Don]

Is payment agent same thing as merchant of record? Such companies pay VAT on your customers behalf and send you the payment amount less a few % fee for their service.

You can agree with another company to be your merchant of record and transfer the remaining amount to your company in different country?

No its not the same.

The former deals only with the payment processing part of the transaction and not with tax, fulfillment, compliance, and disputes.

 

[baio12]

No its not the same.

The former deals only with the payment processing part of the transaction and not with tax, fulfillment, compliance, and disputes.

Does merchant of record have same license requirement as payment agent? If no you can start your own merchant of record or partner with another one in high tax country and have your actual company be in low tax country. Is there big downside to this or can it be the best solution that payment agent was trying to solve?

 

[Macy]

That's the whole point of a payment agent. They only serve a single customer: its parent (and other group entities). That's what exempts it from being a financial service provider requiring a license.

Kindly note that it works the opposite way - payment agent provides service to another company for payment processing.
Payment agent receives money on behalf of the other company and its not declared as income.

Could a payment agent agreement also be done in the reverse of the way it is applied usually?

I.e., if I have a Cypriot holding company that owns a licensed broker in the Seychelles (or whatever country) and the broker cannot get good banking, but the Cypriot holding can, can I use the HoldCo to process funds? Usually the application is the opposite, where the offshore company owns an EU subsidiary to clear the funds, but I don't really understand the reason, the opposite would seem to be more cost-effective?

I also saw @Compliance Circle making some posts about payment agent, maybe you can help to explain? Thx.

 

[daniels27]

Could a payment agent agreement also be done in the reverse of the way it is applied usually?

I.e., if I have a Cypriot holding company that owns a licensed broker in the Seychelles (or whatever country) and the broker cannot get good banking, but the Cypriot holding can, can I use the HoldCo to process funds? Usually the application is the opposite, where the offshore company owns an EU subsidiary to clear the funds, but I don't really understand the reason, the opposite would seem to be more cost-effective?

I also saw @Compliance Circle making some posts about payment agent, maybe you can help to explain? Thx.

A payment agent by definition is only here for payments. A holding is a holding.

Apart from the terms, you could also use your parent company to process payments. It would definitely be possible. It is like a parent company buying services for all its subsidiaries in bulk to benefit from bigger volume discounts. Like you have Lufthansa negotiating fuel for Swiss, Austrian, Bruxelles, Dolimiti, etc. Or having them process all payments (which is bad example as airlines have distinct MCC codes, but Meta, etc. would work).

 

[Sols]

Could a payment agent agreement also be done in the reverse of the way it is applied usually?

I.e., if I have a Cypriot holding company that owns a licensed broker in the Seychelles (or whatever country) and the broker cannot get good banking, but the Cypriot holding can, can I use the HoldCo to process funds? Usually the application is the opposite, where the offshore company owns an EU subsidiary to clear the funds, but I don't really understand the reason, the opposite would seem to be more cost-effective?

It's unusual which will raise eyebrows and can make the structure more inconvenient to use day to day.

However, in Cyprus, it's unlikely to be a concern. There are other places where a holding company must be just a holding company or it will lose some type of special status. That doesn't exist in Cyprus. So you can use your holding company as a payment agent as well.

However, I wouldn't recommend it.