Best offshore jurisdiction for collecting AdSense income?

#41
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Thank you!

I am not very much oriented to Islamic jurisdictions since as a western I see them very far from my culture and thus I would not like to take up residence there.
I know for example in UAE you can come back 1 day every 6 months but if this rule changes in the future it may be an issue since I do not see myself spending time in Dubai now or in the future.

The reputation of the jurisdiction is not an issue (for example for Vanuatu) since Google or the other ad networks do not care where to send the payment.
The problem is when it comes to banking there since Google would need a bank located in Vanuatu, for example.

The Channel Islands may be interesting but I guess to completely avoid taxes I have to reside in another country.

I can take out 80-90% of the company revenue since we have only very little expenses to run the business that's why it is very important for our target country to have 0 corporate tax.

At the same time, I want to obtain a residency permit in a country, where in the future I may spend a few months living there but that does not require staying 180 days per year as an example.
For instance, I was looking at something like the Bahamas but this was just an idea.

The key points are a country with 0 corporate tax + local baking (for Google) and another country (or the same) with a more western-like lifestyle with a warm climate.

UAE is the perfect option apart from the fact that I do not like taking residency there.
 
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#42
hireblade89 said:
I am not very much oriented to Islamic jurisdictions since as a western I see them very far from my culture and thus I would not like to take up residence there.
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That is what I thought. But I have been surprised at the lack of any real presence of Islam. That is at least if you stay on the main roads and most of Dubai, Abu Dhabi. If you go into Sharjah and Ajman, you will see more of people I would describe as Islamic. People who have been living there for ten years have not been outside the Dubai conurbation.

At least in my experience Muslims in Dubai are more liberal than me, but that is not saying much . Girls in hijabs smoking shishas, Arabs done up like some plush beatnik, fat slobs with their trophy wives, prostitute calling cards all over the place in certain areas, likely-prostitutes strutting about in skimpy clothing all come to mind before Allah-u-abah. Have a look at the next ruler of Dubai's Instagram. I forget his name.

Marina seems to be the most liberal/Western place of all, and most European, but mostly Russian, Ukranian.

I know for example in UAE you can come back 1 day every 6 months but if this rule changes in the future it may be an issue since I do not see myself spending time in Dubai now or in the future.
Click to expand...

It's possible, but if it happens it will come from outside the country, so you probably won't be able to expect much better elsewhere.

The reputation of the jurisdiction is not an issue (for example for Vanuatu) since Google or the other ad networks do not care where to send the payment.
Click to expand...

That's what I thought until my USD wires began bouncing and two merchants cut me off. With what The IMF, OECD, WEF, UN etc. are up to I am not taking chances on backwaters again.


Maybe a consultant could put something together that is between countries. This company has been recommended on the forum - Jurisdictions - The Sovereign Group

There was a guy on here who did Isle of Man formations, forget the name.
 
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#43
So we can get a bank account for Google adsense in almost any country with Transferwise, Payoneer, or Bankera and use it to receive payments?
 
#44
@4br what about privacy when using a UAE company? Is your name on some register that anyone with half a brain and an internet connection can find? What appeals me about US LCCs such as New Mexico and Wyoming is the secrecy they offer from the average Joe (and then some more).

@hireblade89 sounds like you are getting close to your solution. Do you actually do work in your business? Are you in it with other people?
Because the UK could be a good place for you. Any foreign income doesn't even need to be declared, AS LONG AS you don't bring it in the UK (i.e. wire it to a UK bank account). The only catch would be CFC regulations. But if your ownership is less than a certain amount and maybe with the fact that you had that business from before, you could be ok.
 
#46
hireblade89 said:
@Asterion I am the owner of half the company so I think this will trigger CFC regulations? What you are meaning is having a UAE company and living in the UK as a non-dom? The problem is that I am a major shareholder of the company.
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Yes, that's what I meant. I think being an owner could be ok, it depends on the amount of work that you can demonstrably put into it. The fact that somebody else is also an owner sounds good to me. If you have employees, they could potentially do all the work and you might just be a fat cat owner cashing in. I can't give final advice, but the whole UK Resident-but-Non-Dom might be worth a check.
 
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#47
@hireblade89, did you make any research about UAE company taxation on US income?

All your ad networks like Applovin, Admob, etc. require to fill a US tax form (W8-ben-e or smth). The United Arab Emirates have not sign a double taxation agreement with the United States of America yet. So it looks like you have to pay up to 30% of all revenue generated by US users (in-apps and ad revenue). It will be deducted from your earnings by ad networks.

Does anybody know how to be exempt from this tax for UAE company?
 
#48
@krowxela I read about this and it can be an issue with networks like AppLovin. Admob is not an issue since in UAE you will be paid by Google Ireland Ltd, not the US entity, I read it in their terms and conditions by setting the billing country as UAE: Google AdSense - Terms and Conditions

The problem still remains with other US-based Ad-Networks (like AppLovin etc), but since the only one which is not flexible was Google for the other I think you can create a foreign company with UAE shareholder & director in the BVI for example, or other tax-heaven jurisdiction that has a tax treaty with the US and billing the Ad-network from it?

Is this a feasible solution?
 
#49

Not sure about Admob. They are collecting your US tax info. Seems like they will deduct it from your US income. It's better to ask someone with real experience of such setup.



Company in the BVI may be a solution for other ad networks. Even though I don't know how difficult it will be to open a bank account for such setup - BVI company with nomenee director and UAE company, as beneficial owner.
The other issue is automatic exchange of information for tax purposes (oecd?). if you have a residency in UAE, then UAE banks will not send the info to your country. Have no idea how it will change if you add the BVI company into the formula.

Any ideas? We can go to PM. I can't PM you here by some reason.
 
#50

Yeah there are asking for tax information but I do not think that it is the Google LLC US entity that will pay you, but I really do not know if they will apply the 30% cut on US revenue even if they pay you with their Ireland subsidiary.

I can't PM you either. I left you my contact on your profile to further discussion.
 
#51
what about Georgia? they have 0% WHT on royalties and their DTA is soviet-union USA tax treaty (no LOB)

You may have a 1% freelance setup in georgia and get the royalties wht free at 1% or an international company at 5%. In theory also a virtual private zone but that seems to be difficult nowadays due to an aggressive position taken form their revenue service on it.
 
#52
If there is no LOB that sounds like a very good option. However I can't imagine the US has not put something into place to counter this.

I am not really into the tax rates in Georgia? Is there somewhere I can find information about this?
 
#54
Hello, I studied the US LLC setup with UAE residency but Adsense will apply the withholding tax, unfortunately. When you complete the tax form on the AdSense dashboard you have to enter the LLC as a disregarded entity and then they ask your residence when you input UAE they said there is no tax treaty with the US and apply the 30% tax.
If you input your UAE company created as a UAE resident it is the same, in the form it shows that the US does not have a tax treaty with UAE so Google applies the 30% tax.

Is there any 0 tax solution for Adsense at the moment? The only way we can achieve that I think is through a country that has 0 % tax but also a treaty with the US, don't know if it exists.
Otherwise, there is the Malta solution with NHR in Portugal for example but it is not a 0 % tax solution.

Even opening a UAE company as a UAE resident would trigger the 30% tax.
 
#55
Hi diginomad,

I read your post just now, and with horror. I can't believe different people belonging to the same professional body can give such completely different answers. Seriously, they should be put in a cage with no food or water until they have agreed on something. Thank you for sharing your experience with these "professionals".

I'm in your same situation (soon to be launched app-based business whose revenue will necessarily have to come from IAP with Google and Apple, so no way to have it through Stripe or the like).

Did you have any progress?

I was thinking about a SM US LLC that either owns or that extracts revenue from an Estonian limited company, which publishes the app. You'd be dealing with European Google and Apple (based in Ireland or Luxembourg I think) and the only source of income of the US LLC would come from Estonia.
The Estonian limited company would not have any tax on profit until they are paid as dividends. All retained earnings are untaxed. It is to be seen if having another company as the shareholder works in terms of privacy, because that's almost more important than low taxation to me.
 
#56
I read the whole thread, I found a lot of mistakes, errors, misleading, misinterpreted information.
so I want to clarify some things here
let's break it down one by one:
diginomad said:
I get consistent and solid revenue from AdSense (Technically AdMob), and I need to register an offshore company to collect this revenue (Yes, I have no other choice. I need to go offhsore).
Click to expand...
diginomad said:
Bacause beside Adsense income (I also offer "In-App-Purchases on my apps) and sometimes US users make these purchases.
Click to expand...
first of all, we have to distinguish between Admob and AdSense :
Google AdMob is a mobile advertising company(it's an ad-networks like AppLovin..)while Google Adsense is for websites.
that's why we have to understand the difference between Admob and AdSense because each one has its own tax rules and regulations
AdSense POV: in that case, Google will deduct taxes when NRA creators earn income from viewers in the US.as you said:
diginomad said:
Basically I will need to pay withholding taxes only for the US audience and I don't actually care... because it's small audience (no need treaties... I will just pay, no problem).
Click to expand...
that's correct only from AdSense perspective (if you are a YouTuber, blogger, content creator and you have a US audience)
But then you said :
so it appears that you are dealing with Admob, AppLovin.. Not Adsence
in that particular situation :
Admob POV: Google consider your earnings as Royalties (which is an FDAP, and FDAP Income is subject to US Taxes) that's why US Company(in that case Google) will deduct up to 30% as withholding tax; Meaning your earnings would be subject to a 30% withholding tax(it can be reduced(tax treaty)).
 
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#57
Thank you for clarification @Zaki
 
#58
The second thing I want to clarify is:
who told you that? that's wrong
You are an ECI/ETBUS:
-->if you have at least one dependent agent(Companies or individuals who provide services exclusively to you; I mean dedicated service for you and only you)
-->or if you operate in the US through a “permanent establishment;(an office or other fixed place of business).
-->or you performed services inside of the US.
-->if you lived in the US long enough to pass the “substantial presence test.”
My sources are IRS resources; code sections, Court cases
https://www.irs.gov/individuals/international-taxpayers/effectively-connected-income-eci
Fulton Abraham Sanchez said:
US SMLLC will be tax free if the income received is not US sourced and it will require tax filing form 5472 only.
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as an NRA owns a US SMLLC if the income received is US Sourced it doesn't mean you are subject to US taxes, in most cases even with US Source income you Won’t pay any taxes.
You are subject to US Taxes Only if you have:
  1. ETBUS /ECI
  2. FDAP
Resources:
https://www.irs.gov/individuals/international-taxpayers/effectively-connected-income-ecihttps://www.irs.gov/individuals/international-taxpayers/nonresident-aliens-source-of-incomehttps://www.irs.gov/individuals/int...ed-determinable-annual-periodical-fdap-income It's clear to me(I am a foreigner too just like you)I hope it'll be clear for you.
like I stated before it's not ECI it's FDAP(Royalty)
regarding "CPAs": well well well hahaha, let's break them down one by one
in your particular situation there are two types of revenue
Ad revenue and IAP revenue:
Ad revenue from Admob is considered as royalties.
regarding IAP: IDK (I am eager to know)

diginomad said:
Robert:
"From what I understand the earnings from the App Store, Google Play etc. are considered royalties and taxed as such. Meaning they would be subject to a 30% withholding tax.
Click to expand...
That's correct Unless there is DTA.
it's not your choice to decide whether to pay taxes or not
in that case google/apple decides to withhold taxes or not.
diginomad said:
, there is absolutely no need to file 1040nr.
Click to expand...
Correct.
diginomad said:
Larry:
"You did right submitting a W-8 form to Google, because although you have a company in the US, that is a disregarded entity and you are a foreign owner living outside the US"
Click to expand...
Correct.
US SMLLC owned by a person files W8BEN.
US SMLLC owned by a foreign company files W8BEN-E.

diginomad said:
Simon:
"You don't have ECI, but besides 1120 and 5472 It's much better to file also 1040NR as a protective measure, in case the IRS will come to you"
Click to expand...
Correct.
P.S: 1040NR you don't have to file it as Neil said.

diginomad said:
Loren:
"You have a registered address in the US and you have a US bank account, therefore all your income will be automatically taxed as US source income"
Click to expand...
that's silliness.

diginomad said:
Cindy:
"You have a US entity with a US bank account. All your income will be seen as US-source income. Plus you might need to file form 8832. For sure all your income will be subject to a 30% taxation"
Click to expand...
nonsense

diginomad said:
Thomas:
"You have a company in the US so you should submit a W-9 to Google... not a W-8"
Click to expand...
no comment

read my first and second replies

If your goal is to pay less/avoid withholding taxes by setting up a company in UK or Cyprus or even The moon, it doesn't matter at all. because at end of the day google/apple will withhold taxes whether your offshore company is in UAE, UK, USA...
regarding DTA with the US; what matters is UBO residency.
P.S: UAE doesn't have a tax treaty with the US
Thai has one.
hireblade89 said:
If you input your UAE company created as a UAE resident it is the same, in the form it shows that the US does not have a tax treaty with UAE so Google applies the 30% tax.
Click to expand...
Exactly.
I hope you read my first and second replies
Now I'll reveal my solutions to this particular problem(30% withholding tax).
  1. Make a claim (a tax treaty benefit) for a reduction on the tax withheld from U.S. income you may receive in your account. United States Income Tax Treaties: United States Income Tax Treaties - A to Z | Internal Revenue Service
  2. Use a US C-Corp so that you can give them(the Withholding Agent i.e Google)a W-9; if you operate out of a corporation, you give them a W-9 they won't withhold taxes, and then you can either pay yourself as expensive OR pay all of your profits to your LLC (LLC would be tax-free)
  3. As an SMLLC owner, you can elect to treat your LLC as a corporation for tax purposes. If you do, the corporation must file Form 1120 (U.S. Corporation Income Tax Return) to report and pay tax on corporate income. Form 5472 must be included with Form 1120 to report your ownership interest. the goal of that election is to provide a W-9 form.
P.S: these solutions require you to work with US Accountant
 
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#59
Thank you for your suggestions.

The problem is if the US C-Corp is managed and directed outside the US are we sure it can be seen as a US opaque entity even if it is a C-corp?
From what I understood the place of management and controls determine where the company resides.
In your particular case, you can reside in a country that has no tax treaty since the revenue you take from the C-corp to your LLC is not considered royalties, right? So no 30% will be withheld.
Can't this structure be seen by IRS as a way to circumnavigate the 30% tax since you basically create a C-corp but take all the revenue of it outside of the company with your LLC and the C-corp is also managed outside US. Is this the solution you are using for your company?

At this point the same may work for an LTD for example or any other opaque company that has a tax treaty with US and then you take out all the revenue as expenses before paying the corporate tax.
 
#60
Another consideration for people earning royalties through adsense that I just wanted to add.

"A C with 60% or greater total yearly $ passive revenues (royalty income) represents a personal holding company ("PHC") for US tax purposes. A PHC has restrictions on accumulating profits. (1) So, a PHC has to pay out all of its taxable income each year as a dividend. This statement means the C cannot let the excess cash stay in the C. The C pays out the profits each year or if not, the C will face a 20% penalty tax on profits not paid out when its files its corporate tax return. (2)"

(1)Treasury Regulation Section 1.543-1(b)(3)
(2) Section 541
 
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