Best offshore structure for our Amazon FBA (Advice is appreciated)

[moonrail555]

Hello everyone,

We are two Scandinavian residents that have been working closely with our Chinese supplier for 6 months now, and we have developed a unique product that we want to launch on Amazon FBA US Marketplace.
And of course, we are looking for a good offshore structure for our business.

After some research, we found that a Gibraltar company could be good option, as it foreign income is not taxed in Gibraltar. We currently have 2 structures in mind, but we aren't sure what the best option is and we would appreciate any input from people that have experience and knowledge in this area. We are also open to any other ideas so feel free to let us know your thoughts.


1. Gibraltar holding company --> Owns a SMLLC (Disregarded entity) --> SMLLC Owns the US trademark/brand of our product. In this option, we would register an Amazon Seller Account using our US LLC and with its details.

The LLC would function as a "pass-through entity" and profits would be sent to the Gibraltar company.

2. Gibraltar company ONLY ---> Owns the US trademark/brand of our product. In this option, we would register an Amazon Seller Account using the Gibraltar company details.

This is possible, because Gibraltar is on the Amazon Accepted Countries List.


In terms of banking, we have solutions for both options, so we are not concerned about that.
Again, we would appreciate any feedback or recommendations.

Thanks for your time.

 

[daniels27]

I see some issues here.

• Gibraltar is quite expensive and has an audit requirement above 1.5M GBP turnover.
• The US LLC is most often useless on Amazon and does not give any real advantage. In the tax reporting section on Amazon, you need to list the underlying entity and not the US LLC.
• If you are residents in Scandinavia and running the company from there, you are supposed to have a company there and pay taxes there. Running a foreign company in Scandinavia still makes you tax resident there.

 

[moonrail555]

I see some issues here.

• Gibraltar is quite expensive and has an audit requirement above 1.5M GBP turnover.
• The US LLC is most often useless on Amazon and does not give any real advantage. In the tax reporting section on Amazon, you need to list the underlying entity and not the US LLC.
• If you are residents in Scandinavia and running the company from there, you are supposed to have a company there and pay taxes there. Running a foreign company in Scandinavia still makes you tax resident there.

Thanks for the info.

We know about the tax resident part. But would this structure not provide benefits such as Tax Deferral, so as long as the income is not brought back to our country, then they don't get taxed? We do have plans on getting residency in a more tax friendly Jurisdiction. We don't want to live here, but we are looking for a structure that will defer the tax (for example the profits remaining in Gibraltar) until we can move elsewhere.

Regarding the US LLC. The reason we also considered this option was that should we ever decide to "exit" and sell our Amazon business, it will be much easier to do so (in terms of buyers) that it has a US "front". Most buyers prefer to deal with US entities and the selling process will be easier.

 

[daniels27]

Thanks for the info.

We know about the tax resident part. But would this structure not provide benefits such as Tax Deferral, so as long as the income is not brought back to our country, then they don't get taxed? We do have plans on getting residency in a more tax friendly Jurisdiction. We don't want to live here, but we are looking for a structure that will defer the tax (for example the profits remaining in Gibraltar) until we can move elsewhere.

Then the company would need to be managed by somebody else from somewhere else. If you manage it from Scandinavia, you are a Scandinavian company.

If you want to move away, then just do it. Otherwise, you do not really want to move.

Regarding the US LLC. The reason we also considered this option was that should we ever decide to "exit" and sell our Amazon business, it will be much easier to do so (in terms of buyers) that it has a US "front". Most buyers prefer to deal with US entities and the selling process will be easier.

In theory yes, but you do not have anything in the company other than some trademarks and an Amazon shop. If you sell this, the buyer just takes the trademarks and lists the same items on his Amazon account. If you have operations with employees in the US that you want to sell, then a Delaware LLC would be good, but you do not have that. Buyers of Amazon businesses are just looking at your Amazon sales and then ask you to close it while they start selling with their account. They are not allowed to have two accounts on Amazon.

 

[moonrail555]

Then the company would need to be managed by somebody else from somewhere else. If you manage it from Scandinavia, you are a Scandinavian company.

If we get Nominee directors and shareholders so that we aren't listed in the company docs, would that solve this issue? Or this would not satisfy the substance requirement.

 

[daniels27]

If we get Nominee directors and shareholders so that we aren't listed in the company docs, would that solve this issue? Or this would not satisfy the substance requirement.

No, nominee directors are not directors. If you get some nominee service at a well-known nominee address, you would run immediately into troubles when your government finds out. And they will eventually when you bring back and tax your dividends. You better have a real director with our without substance. Also, you cannot have the director in Gibraltar as if it was, the company would be liable to 15% tax in Gibraltar.

 

[Marzio]

Gibraltar company could be good option, as it foreign income is not taxed in Gibraltar.

The problem is that your US LLC owned by GIB company is not foreign sourced income.

Well in a way it is becuse you are managing it from Scandinavia so your US LLC is technically Scandinavian tax resident.

The problem is that you will have to pay Scandinavian taxes then on all US LLC income

If you manage your US LLC from GIB by hiring a director it will be local sourced income subject to GIB corporate income tax.

You need to hire a manager for your US LLC (preferably in a tax free jurisdiction) so that it will not be considered Scandinavian tax resident and income could be classified as foreing sourced in GIB.

 

[moonrail555]

No, nominee directors are not directors. If you get some nominee service at a well-known nominee address, you would run immediately into troubles when your government finds out. And they will eventually when you bring back and tax your dividends. You better have a real director with our without substance. Also, you cannot have the director in Gibraltar as if it was, the company would be liable to 15% tax in Gibraltar.

And I am assuming this real director would be the one opening the Amazon seller account and the corporate bank account with his details, right? So someone that is a tax resident of a 0-low tax Jurisdiction.

The problem is that your US LLC owned by GIB company is not foreign sourced income.

Well in a way it is becuse you are managing it from Scandinavia so your US LLC is technically Scandinavian tax resident.

The problem is that you will have to pay Scandinavian taxes then on all US LLC income

If you manage your US LLC from GIB by hiring a director it will be local sourced income subject to GIB corporate income tax.

You need to hire a manager for your US LLC (preferably in a tax free jurisdiction) so that it will not be considered Scandinavian tax resident and income could be classified as foreing sourced in GIB.

I see. And would the manager/director also need to open the Amazon Seller account using his details, and also the GIB Bank account in his details?

 

[daniels27]

And I am assuming this real director would be the one opening the Amazon seller account and the corporate bank account with his details, right? So someone that is a tax resident of a 0-low tax Jurisdiction.

For Amazon, it is on the company. You can technically do it yourself.

For the bank account, he would have to do it. He can share his login with you.

I see. And would the manager/director also need to open the Amazon Seller account using his details, and also the GIB Bank account in his details?

I would recommend using an EMI that offers US bank details. If you use a Gibraltar bank, you probably waste north of 5% on foreign exchanges.

 

[MarkusCostigan]

You need to hire a manager for your US LLC (preferably in a tax free jurisdiction) so that it will not be considered Scandinavian tax resident and income could be classified as foreing sourced in GIB.

Can you give some examples?

Thank you Marzio.

 

[Marzio]

The best solution in this case would probably be switching the management and control to Malta making the US LLC resident but not domiciled in Malta.

 

[daniels27]

Can you give some examples?

Monaco, Sark, perpetual travellers, third world countries, etc.

The best solution in this case would probably be switching the management and control to Malta making the US LLC resident but not domiciled in Malta.

Malta. Yes, but they cost is quite high.

 

[MarkusCostigan]

The best solution in this case would probably be switching the management and control to Malta making the US LLC resident but not domiciled in Malta.

In theory does transparent US LLC + Maltese company resident but not domiciled really work? Wouldn't this be double non-taxation?

 

[Marzio]

Why it shouldn't work?

It's their law.

To be fair they talk about company "incorporated" outside of Malta and US LLC is not incorporated so it's a grey area.

Maybe it would be better to use a LTD as a resident non-domiciled company for example a Singapore non resident company.

It's not double non-taxation because in Malta taxation is based upon remittance.

If you remit money in Malta, everything will be taxed so no loopholes here.

If instead you want to just use a US LLC hire a manager in Panama, Paraguay, places like that.

 

[moonrail555]

For Amazon, it is on the company. You can technically do it yourself.

For the bank account, he would have to do it. He can share his login with you.


I would recommend using an EMI that offers US bank details. If you use a Gibraltar bank, you probably waste north of 5% on foreign exchanges.

So the EMI would need to have US details like routing number, account number etc. So an EMI with a multi-currency international IBAN won't work?

 

[daniels27]

So the EMI would need to have US details like routing number, account number etc. So an EMI with a multi-currency international IBAN won't work?

For Amazon US you need a US bank account to receive USD. They accept real bank accounts (with bank account statements with the bank's own logo) and any EMI that has been approved by Amazon:

Amazon

as you can see, they are mostly Chinese, serving Chinese sellers, but there are some which may work for you: WorldFirst, Payoneer, Ariwallex, Curreixie, Zyla, OFX, Wise, Ebury (note that all but the latter 3 are also Chinese companies).

 

[moonrail555]

For Amazon US you need a US bank account to receive USD. They accept real bank accounts (with bank account statements with the bank's own logo) and any EMI that has been approved by Amazon:

Amazon

as you can see, they are mostly Chinese, serving Chinese sellers, but there are some which may work for you: WorldFirst, Payoneer, Ariwallex, Curreixie, Zyla, OFX, Wise, Ebury (note that all but the latter 3 are also Chinese companies).

Thanks for the response. I noticed a few things. If I use Gibraltar bank, the Amazon conversion will be 1.5% for their conversion service as stated here: ACCS. Secondly, I noticed Airwallex accepts Seychelles IBC, so that could be an alternative to Gibraltar, unless you know any problems with that.

 

[EliasIT]

Hello everyone,

We are two Scandinavian residents that have been working closely with our Chinese supplier for 6 months now, and we have developed a unique product that we want to launch on Amazon FBA US Marketplace.
And of course, we are looking for a good offshore structure for our business.

After some research, we found that a Gibraltar company could be good option, as it foreign income is not taxed in Gibraltar. We currently have 2 structures in mind, but we aren't sure what the best option is and we would appreciate any input from people that have experience and knowledge in this area. We are also open to any other ideas so feel free to let us know your thoughts.


1. Gibraltar holding company --> Owns a SMLLC (Disregarded entity) --> SMLLC Owns the US trademark/brand of our product. In this option, we would register an Amazon Seller Account using our US LLC and with its details.

The LLC would function as a "pass-through entity" and profits would be sent to the Gibraltar company.

2. Gibraltar company ONLY ---> Owns the US trademark/brand of our product. In this option, we would register an Amazon Seller Account using the Gibraltar company details.

This is possible, because Gibraltar is on the Amazon Accepted Countries List.


In terms of banking, we have solutions for both options, so we are not concerned about that.
Again, we would appreciate any feedback or recommendations.

Thanks for your time.

Which Scandinavian country are you from? I'm originally from Denmark (relocated and signed off there some years ago), so if you're from there, you need to be very careful with all the otherwise excellent suggestions that come from here. Your setup needs to be entirely different from what is described here, and you should expect a much larger budget than the $3000 setup you find described here.

This is just a friendly message from me, take it or leave it! You can find many good cases on OCT about Danes who have run into trouble with the extremely inventive H.C. Andersen Tax Authority in Denmark.

 

[moonrail555]

Why it shouldn't work?

It's their law.

To be fair they talk about company "incorporated" outside of Malta and US LLC is not incorporated so it's a grey area.

Maybe it would be better to use a LTD as a resident non-domiciled company for example a Singapore non resident company.

It's not double non-taxation because in Malta taxation is based upon remittance.

If you remit money in Malta, everything will be taxed so no loopholes here.

If instead you want to just use a US LLC hire a manager in Panama, Paraguay, places like that.

Hi, do you know where we can find such a manager /director service or where to start looking at least.

 

[daniels27]

Hi, do you know where we can find such a manager /director service or where to start looking at least.

Freelancer websites like fiverr. Otherwise, you can travel there and find somebody in person. Or international tradeshows, etc.