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I think i might have made a big mistake.

M

mat3s

New member
Aug 6, 2019
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#1
Hello folks. I think i really need some help untangling myself from this mess. Heres my full history so you have all the details:

- Moved to canada. Went freelance as consultant.
- Sister started a business for me as she was a resident. Opened CA bank account.
- Left canada to move to Germany.
- Opened company in Seychelles. DIDNT get nominated director.
- Opened seychelles company bank with europac and leo pay
- Invoiced canada company for my yearly salary to europac
- Invoiced new clients to leopay.
- Got a cash card from Europac. Put my name and address to get it sent to me in germany.
- Went on vacation and withdrew cash from Europac
- Leopay shut down all seychelles accounts so moved money from leopay account to transferwise as was more trust worthy.
- Got new invoices paid to Transferwise.
- Need money to live so invoiced transferwise as individual freelancer
- Filed tax to germany on invoiced amount as freelancer. Rest of income still in corporate accounts.

Now im looking to move to portugal and become an NHR resident but my finances are so tangled!
- I have approx 100,000$ CAD in Canadian Company
- I have approx 80,000 Euro in Transferwise
- i Have approx 10,000 Euro in EuroPac

My question is what are the chances im going to get caught at a later date because i DIDNT use nominated director and because ive used my personal info when opening corporate bank accounts/cards.
Should i retroactively add a nominated director now?
Whats the best way to untangle myself? Can i just invoice Seychelles from Canadian corp. Then as an NHR resident invoice canadian corp for full amount?
Do not want to get my sis into trouble! And dont wanna get arrested!
 
#2
@mat3s I think your situation requires some careful consideration to ensure that how you untangle the process is done legally and does not cause you future issues. I would suggest further discussion is needed about your tax residency status throughout the process, but I am confident that things can be fixed for you without any future problems arising.
 
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#3
Would you be able to recommend someone that might be able to help James? Not even sure of who to turn to. Asked on a couple of corporate lead gen forms and was told that they don't have the expertise in international taxation law.
 
#7
maxmmm said:
doesn't make any difference, the bank still will know it's you behind the nominee and report you
Click to expand...
It's not about bank, but about taxes, simply if the country doesn't have a cfc law but has an effective management rule, does it makes any difference for a tax office if the company is being managed by a nominee director or by a beneficial owner itself?
 
#8
I'm not an expert but I'm pretty sure they will want to see some "substance" - office, employees on that country (be in Seychelles or wherever your company is). Having a nominee director will not cut it
 
#9
Your new residence will be Portugal and you will pay tax on income and dividends.
Plan your economy as a retired person and you can deplete those funds over time with very little tax.
If you want to cover all bases continue to file a personal tax return to Canada and Germany as zero income in those countries. This avoids a case where Portugal claims you have no tax residence outside Portugal. Remember you claim to be NHR. This will also support your claims to the Portuguese bank when funds are transferred from these countries.
A Portuguese accountant will give you better advise on moving larger sums since you are the beneficial owner and I suspect you will want to eventually close down the Canadian company. Keep it simple!
My guess is you will continue as a freelance consultant and start paying taxes to Portugal which is expected from you as a NHR. Win win.
I doubt Portugal will waste time on investigating what you stashed away in other countries since you will become a valued asset.
 
#10
Thanks for the attention and thoughtful replies. Will DM you now @James Turner .

Regarding CFC Laws. If I were to leave Germany now and deregister as a resident what are my chances of getting reported to Finanzamt in Germany do you think? Low/Med/High after 2 years living here. @Old Spice? @GrumpyMess?

I would close pay myself a salary from canada and close that businessness down, leave the money sitting in the Seychelles but dont add to it and just invoice all future income as an Individual Freelance Consultant in portugal.

Thanks again for the responses
 
#11
mat3s said:
Hello folks. I think i really need some help untangling myself from this mess. Heres my full history so you have all the details:

- Moved to canada. Went freelance as consultant.
- Sister started a business for me as she was a resident. Opened CA bank account.
- Left canada to move to Germany.
- Opened company in Seychelles. DIDNT get nominated director.
- Opened seychelles company bank with europac and leo pay
- Invoiced canada company for my yearly salary to europac
- Invoiced new clients to leopay.
- Got a cash card from Europac. Put my name and address to get it sent to me in germany.
- Went on vacation and withdrew cash from Europac
- Leopay shut down all seychelles accounts so moved money from leopay account to transferwise as was more trust worthy.
- Got new invoices paid to Transferwise.
- Need money to live so invoiced transferwise as individual freelancer
- Filed tax to germany on invoiced amount as freelancer. Rest of income still in corporate accounts.

Now im looking to move to portugal and become an NHR resident but my finances are so tangled!
- I have approx 100,000$ CAD in Canadian Company
- I have approx 80,000 Euro in Transferwise
- i Have approx 10,000 Euro in EuroPac

My question is what are the chances im going to get caught at a later date because i DIDNT use nominated director and because ive used my personal info when opening corporate bank accounts/cards.
Should i retroactively add a nominated director now?
Whats the best way to untangle myself? Can i just invoice Seychelles from Canadian corp. Then as an NHR resident invoice canadian corp for full amount?
Do not want to get my sis into trouble! And dont wanna get arrested!
Click to expand...

You forgot to state your nationality and remember NHR is only valid for a period of 10 consecutive years.
The tax you pay also depends on the type of income, salary, dividends, royalties etc.
 
#12
Great point @Reboot thanks for asking. Im originally British but haven't been home to the uk properly for 10 years apart from 2 weeks every few years. No family, bank or property ties to the UK. Recently got my Irish passport and citizenship too for Brexit.

Income would be as salary as a Digital Marketing Designer / Developer I imagine. Invoice my sis Canadian Corp and then my other clients in Norway, UK, Germany (1 small client).

Jack
 
#13
Also @Reboot should mention that im not looking to avoid taxes in future as much as i'm just looking to buy this property and streamline my approach in the best way possible for right now. Don't want to risk the farm. The whole Seychelles thing came around from not knowing where i would live these last few years and receiving some poor advice. These ease of tax reporting + the getting more saved up for my property plan in southern europe seemed appealing - ive since learned a bit about CFC law and its put the fear in me. Now im putting roots down the 10 years should more than cover my off grid dreams :)
 
#15
NHR though.
Reboot said:
Depends on the monthly volume you invoice. You can open a company in Portugal and make yourself an employee.
Click to expand...
Since my income comes from outside Portugal and is in a "special category" required i think it would be better to be consultant. Happy to be corrected though as this was just from my own internet sleuthing.
 
#16
If you are an independent consultant all your income is taxed either for IRS and Social Security, if you have a company you have more control over what you are taxed ;)
 
#17
It seem you've paid your taxes in Germany which is also what you reported to your banks. That doesn't seem too bad.

Now when you move to a 3rd country, and if you keep your german tax id with the banks, then you might even avoid CRS. I think you'll be fine - just create some extra bank accounts while you're still in Germany and then move out.
 
#18
I think what people may be missing about CFC legislation is that it is just that; legislation. As such their are rules attached to it which a lot of people can fit into and utilise to their advantage so that what may seem like a CFC on the face of it no longer is and this changes the way that you are legally required to disclose the companies activity and income. It is not necessary to operate in the dark and fail to report things accurately. You can utilise the rules to allow you to operate legally but at the same time not cause an issue for you.
 
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#19
I think the CRC only really becomes an issue when you transfer money to your personal account. I've spoken to bank managers in Spain about the limit where they report to your tax residence which you provide. The limit in this case 4000 euros in total or as a transfer. Anything less is not of significance to act on. Spain is not Portugal but they might have similar guild lines as Spain. My guess is to ask the bank manager in Portugal what limits (if any) are reported.
If the account is used to pay for bills and normal local banking activity it won't raise any red flags.
 
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