Best management location for US LLC

[Marzio]

Gibralter could simply declare the company tax resident as well.
Then if there is a treaty between Gibraltar and Malta, they will have to figure out who wins. If there is none, then the company may end up being double taxed and you can only reclaim tax paid twice as foreign tax credits under domestic law (if such a law exists).
But I don't know how aggressive the tax authority in Gibraltar is.

Gibralter needs a very good reason to declare company tax resident.

If the resident non domciled company wouldn't have the tax residency certificate then they could go after him claiming that since it's not tax resident anywhere then it's fair to assume it's tax resident in Gibraltar.

Gibraltar isn't know to be an aggresive jurisdiction or at least i don't know anybody that says otherwise.

I don't see such a limit in Gibraltar.

https://www2.deloitte.com/content/d...nts/Tax/dttl-tax-gibraltarhighlights-2024.pdf

ATAD 2 contains rules against hybrid mismatches:

This is not about hybrid mismatch but internal rules (this table is from UK internal manual)

Of course they can claim that, then it will be up to him to prove otherwise.

If they really investigate him

But why would they?

Investigations cost money and they need a reason to go after somebody.

Would you, as a tax agency, go after a random guy that cross the Spain border just for fun?

For them he is a ghost, he doesn't have anything in his name in Spain, he doesn't exists.

But Malta is a Schengen country - he could do what you are suggesting even living in Malta. Claim to be living in Malta, but just travel to Spain without flying and stay there.

Of course he can but going back every night to Gib is safer.

Sure, but unless you go back to sleep in Gibraltar every day... probably not legally.

Did i misunderstand you or are you saying that going back to sleep in Gibraltar every day is not legal?

 

[JustAnotherNomad]

Gibraltar isn't know to be an aggresive jurisdiction or at least i don't know anybody that says otherwise.

That would be good.

https://www2.deloitte.com/content/d...nts/Tax/dttl-tax-gibraltarhighlights-2024.pdf

Looks good as well.
https://www2.deloitte.com/content/d...nts/Tax/dttl-tax-gibraltarhighlights-2024.pdf

This is not about hybrid mismatch but internal rules (this table is from UK internal manual)

A hybrid mismatch is always about internal rules?
A hybrid mismatch happens when the internal rules of both countries lead to some profits not being taxed at all (double non-taxation).

Would you, as a tax agency, go after a random guy that cross the Spain border just for fun?

For fun? No. But if I as a tax inspector get paid a commission for how much tax I can get (which they do in Spain) and someone looks like a good target for me, for sure.

For them he is a ghost, he doesn't have anything in his name in Spain, he doesn't exists.

Like I said, he can do that from Malta.

Of course he can but going back every night to Gib is safer.

Yes. But then as well, the question could arise if the company isn't tax resident or has a PE in Spain.
He probably doesn't work for the company in his sleep...

Did i misunderstand you or are you saying that going back to sleep in Gibraltar every day is not legal?

Of course it's legal to sleep in Gibraltar, and probably his personal tax residency would be Gibraltar in that case.
But that doesn't mean Spain couldn't try to tax the companies in some way.
Would he be able to fly under the radar? Most likely. But would Spain really be unable to tax the company? I'm not sure.

 

[Marzio]

A hybrid mismatch happens when the internal rules of both countries lead to some profits not being taxed at all (double non-taxation).

I don't see the payment of dividends from the Maltese company to a Gib holding resulting in a double deduction or a tax deduction without inclusion of some sort.

The fact that the Maltese income is not taxed because it's not remitted in Malta it's only about Malta, not about a mismatch between Malta and Gibraltar.

But if I as a tax inspector get paid a commission for how much tax I can get (which they do in Spain) and someone looks like a good target for me, for sure

Well if you are paid on a commission basis would you concentrate on high profile targets or a random chap crossing the border in Gibraltar?

If you want to put bread on the table you would concentrate on Shakira.

Of course if he rents a limo and drives around in Marbella screaming "hacienda de mierda" could attract some unwanted eyeballs.

He probably doesn't work for the company in his sleep...

I don't know what kind of work he does but unless he is closing contracts on behalf of the Maltese company there's no PE of any kind in Spain and even if that would be the case, how in the world could you, as tax agency, identify such PE?

Right now it's pretty mich impossibile imho.

 

[JustAnotherNomad]

I don't see the payment of dividends from the Maltese company to a Gib holding resulting in a double deduction or a tax deduction without inclusion of some sort.

If the US LLC is tax resident in Malta, no.
I was talking about a case where they don't accept the substance in Malta.
But you're probably right, if it is seen as opaque, then the US LLC should be paying corporate tax in Gibraltar, it would not be a hybrid mismatch.

The fact that the Maltese income is not taxed because it's not remitted in Malta it's only about Malta, not about a mismatch between Malta and Gibraltar.

I agree.

Well if you are paid on a commission basis would you concentrate on high profile targets or a random chap crossing the border in Gibraltar?

If you want to put bread on the table you would concentrate on Shakira.

Of course if he rents a limo and drives around in Marbella screaming "hacienda de mierda" could attract some unwanted eyeballs.

But he could fly under the radar in Spain with a paper residency in Malta as well.

I don't know what kind of work he does but unless he is closing contracts on behalf of the Maltese company there's no PE of any kind in Spain and even if that would be the case, how in the world could you, as tax agency, identify such PE?

You just claim something and let him fight the decision in court.
I'm not saying it will happen, just that this is not necessarily 100% waterproof.

 

[Marzio]

he could fly under the radar in Spain with a paper residency in Malta as well

That's the difference right there:
1. Malta is paper residency
2. Gibraltar real residency

By going back to sleep in Gibraltar and having his passport scanned he is building his proof just in case anybody will question him.

I'm not saying it will happen, just that this is not necessarily 100% waterproof.

As you surely know this is a spectrum, there are various degrees of risk involved.

He could lower the risk by lowering the time spent in Marbella by only going every other day or spending only weekends and holidays.

 

[A1988]

That's the difference right there:
1. Malta is paper residency
2. Gibraltar real residency

By going back to sleep in Gibraltar and having his passport scanned he is building his proof just in case anybody will question him.



As you surely know this is a spectrum, there are various degrees of risk involved.

He could lower the risk by lowering the time spent in Marbella by only going every other day or spending only weekends and holidays.

Wow, amazing discussion. I have 3 kids as well lol. Definitely cannot send them to school in Spain. I'm by default a tax resident then.

As far as gib company with director in Malta and managed from Malta is the best solution. Also can be a US LLC, with managed from Malta and director in Malta. I am not signing any contracts, I have a IP holding company plus an investment company which invests capital and generates a mix of capital gains and passive income from trading.

Gibraltar is still a non cooperative jurisdiction as per the Spain tax law if I am not wrong.

 

[Marzio]

As far as gib company with director in Malta and managed from Malta is the best solution. Also can be a US LLC, with managed from Malta and director in Malta

I don't know how easy would it be to find a bank for a non resident GIB company.

US LLC has way more options when it comes to banking.

I have a IP holding company plus an investment company which invests capital and generates a mix of capital gains and passive income from trading.

Then GIB is a no go for you as CFC rules will kick in at 75K passive income.

 

[A1988]

US LLC managed from Malta is the ultimate solution for banking and tax optimisation purposes

 

[JustAnotherNomad]

Then GIB is a no go for you as CFC rules will kick in at 75K passive income.

Usually if it's not an "artificial arrangement", the company may escape the CFC rules.

 

[Marzio]

US LLC managed from Malta is the ultimate solution for banking and tax optimisation purposes

If it's not too much of a hassle could you please ask your lawyer:

1. if a LLP could also be used for the resident non domiciled company strategy
2. what are the requirements for the resident non domiciled company to get a tax residency certificate.

 

[JustAnotherNomad]

You only need to add a Gibraltar holding company to your actual setup, hire a Maltese director for you resident non domiciled company, move to Gibraltar and get dividends tax free.

Why the holding company btw? If Gibraltar views US LLCs as opaque and the company is clearly resident in Malta, he should be able to just receive dividends directly from the US LLC as a tax resident of Gibraltar?

 

[Marzio]

Why the holding company btw?

Since @A1988 has a EU passport he can't stay in GIB without a working presence so the company serves that function primarily.

 

[daniels27]

If it's not too much of a hassle could you please ask your lawyer:

1. if a LLP could also be used for the resident non domiciled company strategy
2. what are the requirements for the resident non domiciled company to get a tax residency certificate.

I assume that Singapore + Malta would also work as you suggested for another a bit more complicated setup:
https://www.offshorecorptalk.com/threads/.46412/#post-326869

 

[Marzio]

I assume that Singapore + Malta would also work

Yes, i completely forgot about SG non resident company!

US LLC will still be the leanest vehicle as it doesn't require any local director or secretary.

@daniels27 how easy is to to get a SG bank account for a SG non resident company?

I assume that since the SG company is not resident, remitting money in SG will not trigger any taxation event.

 

[daniels27]

@daniels27 how easy is to to get a SG bank account for a SG non resident company?

I assume that since the SG company is not resident, remitting money in SG will not trigger any taxation event.

Any revenue remitted to Singapore will be subject to taxation there. Hence you may want to avoid this at any cost.

https://www2.deloitte.com/content/d...ternational-tax-singapore-highlights-2021.pdf
Tax is imposed on all income accruing in or derived from Singapore and all foreign income remitted or deemed remitted to Singapore in the preceding year

I am not sure about EMIs registered in Singapore, how they are treated. Maybe, you can use a US bank account of an EMI (but most are registered in Singapore). Also what about PayPal revenue? Maybe you need to add a US LLC on top for banking?

 

[Marzio]

Any revenue remitted to Singapore will be subject to taxation there.

You're right! I supposed that a non resident company wouldn't be taxed in SG.

 

[JustAnotherNomad]

That's the beauty of it: Most civil-law countries consider companies resident by default, on the basis of incorporation.
Some common-law countries like Singapore don't have such rules, for them, tax residency is determined by where management is located.
I have heard lawyers from civil-law countries advise against running such companies as a nomad, as the tax residency of the company would be unclear (no fallback to the country of incorporation).
But with Malta, this should work well, and you probably wouldn't even have to go through a lengthy process of making the company resident in Malta under a treaty, as it would be viewed as resident in Malta under the domestic law of both countries.

 

[daniels27]

You're right! I supposed that a non resident company wouldn't be taxed in SG.

Yes, but you could just not remit it and then it would work?

 

[Marzio]

Yes, but you could just not remit it and then it would work?

Yes it would work wonderfully like @JustAnotherNomad just said, i was only hoping to use the excellent SG banking system

 

[FZSAAS]

How about UAE FZCO and LLC, with 95% of business in rest of the world and only 5% retained?