Easy 0 VAT Jurisdiction Needed

[daniels27]

You forget that there are lot's of people reading these threads also new members arriving to the forum, good answers helps everyone looking for the right answer.

Totally true. But do you think he will come back to answer the question of @EliasIT

Easy 0 VAT Jurisdiction Needed

Hi I want to run some online ads, and if I select the UK, or any other country, they're charging a 20% VAT on the ad spend. I'd like to incorporate a company in a jurisdiction that has a 0 rate, like Hong Kong, Dubai, etc. However, it needs to be cheap and relatively easy to setup a new...

www.offshorecorptalk.com

 

[internationalgangster]

I think there is a lot of misinformation in this thread.

For Ad Spend it makes total sense to do it from a jurisdiction where you don't have to pay VAT on it.
Ad Spend can go into the millions per year quickly.
Why would you pay an additional 20% and then claim it back a year after that?
Very bad for cashflow.

OP specifically asked for Ad Spend, not for VAT on Sales. That's another thing.
There is nothing wrong with having the Ad Spend on one company and Sales on another company...

To answer OP question:
US LLC (cheapest)
HK Limited

 

[daniels27]

I think there is a lot of misinformation in this thread.

For Ad Spend it makes total sense to do it from a jurisdiction where you don't have to pay VAT on it.
Ad Spend can go into the millions per year quickly.
Why would you pay an additional 20% and then claim it back a year after that?
Very bad for cashflow.

You are missing some points.

• If your VAT expense is high, your filling will quickly be monthly. Hence no issue as you most like get back only VAT before your credit card bill is due.
• 20% more expense means 20% more cash back on your card.
• For all EU, with the exception of Ireland, you won't be charged VAT as it is an intra-community supply.

Apart from that I have reasonable doubt that OP is reclaiming VAT.

OP specifically asked for Ad Spend, not for VAT on Sales. That's another thing.
There is nothing wrong with having the Ad Spend on one company and Sales on another company...

Yes, except that it does not make sense tax wise as most likely you won't be able to claim business expenses.

To answer OP question:
US LLC (cheapest)
HK Limited

I already wrote that week's ago, US HK CH wood all do the job. But it is not necessary. He can just use same company and put HK as country in the address.

I stand by my point, OP is either trying to quirk the system or did not understand VAT.

 

[EliasIT]

for everyone questioning VAT on selling products and impacting your business, read what @daniels27 just wrote!

 

[fanban]

i dont get the issue, if fb charges you 20% vat then you claim it back as input tax so net is zero.

or if facebooks bills you from country A, just incorporate in country B inside EU then its also zero and its just paperwork for a vat return

exactly, not sure why VAT in this case is anything to discuss.

 

[internationalgangster]

so many guys don't understand how online business with advertising works.
If you find a good product you can go from 100k to 1M€ ad spend within one month.

and if you have to pay 20% on top of your ad spend, this fucks your cashflow.

eVeN iF YoU cAn ClaIM iT bAcK LaTEr

 

[Armani]

I think there is a lot of misinformation in this thread.

For Ad Spend it makes total sense to do it from a jurisdiction where you don't have to pay VAT on it.
Ad Spend can go into the millions per year quickly.
Why would you pay an additional 20% and then claim it back a year after that?
Very bad for cashflow.

OP specifically asked for Ad Spend, not for VAT on Sales. That's another thing.
There is nothing wrong with having the Ad Spend on one company and Sales on another company...

To answer OP question:
US LLC (cheapest)
HK Limited

What about creating a company that solves this problem for multiple clients worldwide asking for a small commission of the total ad spend?
Does it makes sense?

 

[daniels27]

What about creating a company that solves this problem for multiple clients worldwide asking for a small commission of the total ad spend?
Does it makes sense?

No. See my post above. There is no such problem.

Also, if you open a Hong Kong company do buy ads for a UK company. Indeed Google won't change you VAT. However, you have to charge you UK client VAT.

 

[fanban]

so many guys don't understand how online business with advertising works.
If you find a good product you can go from 100k to 1M€ ad spend within one month.

and if you have to pay 20% on top of your ad spend, this fucks your cashflow.

eVeN iF YoU cAn ClaIM iT bAcK LaTEr

But no business pays VAT you get it back... even if you pay 250,000 EUR in VAT you get it back!

 

[Marzio]

even if you pay 250,000 EUR in VAT you get it back!

this fucks your cashflow.

 

[daniels27]

and if you have to pay 20% on top of your ad spend, this fucks your cashflow.

Actually no.

First of all, in most cases, VAT helps your cashflow as you collect from your customers more than you pay to suppliers. You get up to 3 months of cashflow from government.

And then for the very rare case that you only sell VAT/GST/sales tax free (which is very, very unlikely for amounts where the VAT on ad spend would matter), you can apply for monthly invoicing with Google and many other advertisers.

 

[internationalgangster]

Actually no.

First of all, in most cases, VAT helps your cashflow as you collect from your customers more than you pay to suppliers. You get up to 3 months of cashflow from government.

And then for the very rare case that you only sell VAT/GST/sales tax free (which is very, very unlikely for amounts where the VAT on ad spend would matter), you can apply for monthly invoicing with Google and many other advertisers.

actually OP asked specifically about VAT on ADs.

You can apply for monthly invoicing with many other advertisers... uh huh... you need a long history with them and with meta it's a complete gamble.

you clearly don't run any international business with paid ads so i don't understand why you give advice on that topic.

 

[daniels27]

actually OP asked specifically about VAT on ADs.

You can apply for monthly invoicing with many other advertisers... uh huh... you need a long history with them and with meta it's a complete gamble.

you clearly don't run any international business with paid ads so i don't understand why you give advice on that topic.

Honestly, you are wrong. Google does it fairly quickly and apart from that they all take credit cards. 1M ad turnover per year is 30k cashback for a lack of cashflow of about 20k. It really does not make sense to talk about the cashflow issue. Having at least 3M of sales, the delayed payout from Amazon etc. are tenfold.

And if you really need to solve the chashflow issue, you can still opt to open a HK company, charge all ads through them and then invoice your own company. Just beware that you need to register your HK company for VAT and charge VAT to your own company. But you can claim it back with less delay.

If you find a good product you can go from 100k to 1M€ ad spend within one month.

and if you have to pay 20% on top of your ad spend, this fucks your cashflow.

Let me explain. There are only a few EUR countries with 20% VAT, none of them being Ireland.

Now, you know what? Google, Meta, Amazon... You know what? They do not charge VAT! There is no cash flow issue. Have you ever checked your invoices? All without VAT and a note to reverse charge. It is you tax office that you pay the VAT to and they give it back to you at the same time!