Left UK, now Looking for Ideal Jurisdiction to Incorporate Consulting Company

[GPT]

wow this got so many responses! I'm shocked, don't know even where to start!! thank you to everyone!

almost all of my work would be done for UK clients / companies and we'll most likely end up back there as I said (though I've heard the UHNW cycle 180 / 120 / 120 days a year without becoming resident but i think the ties test would get me before that generous allowance)

I agree with the overall sentiment - don't complicate things and don't work with jurisdictions that will just cause hassle. I think that might mean stay out of Caribbean altogether, but that leaves HK, SG, UAE... and surprisingly US, yes

Specifically for the UK, Cyprus isn’t the worst solution. It pretty much depends on the numbers..

 

[bdt]

Now you've gone and done it! My dad was actually raised in Guernsey and my wife fell in love with it when i took for her for our honeymoon - it seemed quite opaque a system to get your head around, but I was confusing this maybe with residency requirements.

Checking now it's 0% tax on foreign sourced income, but I'm seeing a lot of chatter about how economic substance requirements, which consulting would absolutely fall within:

a. Substance Requirements​

• Guernsey has implemented economic substance requirements to comply with international tax standards (e.g., OECD and EU rules).
• If your Guernsey company is considered a relevant entity (e.g., it conducts certain types of business activities), it must demonstrate economic substance in Guernsey. This may involve:
  
  • Having a physical office.
  • Employing staff in Guernsey.
  • Conducting management and control activities in Guernsey.
• If your company does not meet these requirements, it could face penalties or be deemed non-compliant.

Do you have any experience with this? And how practically it's enforced?

But this could definitely be a contender for not going back to england long term! Won't tell my wife as it would become a certainty!!

 

[bdt]

Specifically for the UK, Cyprus isn’t the worst solution. It pretty much depends on the numbers..

Ah the 2012 Bail In permanently crossed Cyprus off my list - sure it wouldn't happen again (and you'd want to not hold money in the country) but it sets precedent

 

[GPT]

Ah the 2012 Bail In permanently crossed Cyprus off my list - sure it wouldn't happen again (and you'd want to not hold money in the country) but it sets precedent

I lived in Cyprus in 2012 and that bail-in indeed caused issues, BUT keep one thing in mind; having a company there is one thing. It doesnt mean that you have to bank there. All companies that had non-cyprus banks were not affected. It's in that sense always better to never bet on one horse

Re substance and presence; just keep in mind that those requirements are everywhere and if they are not yet enforced that will change over the next couple of years.

Pick a place where you would be able to fulfil the substance / presence requirements yourself. Especially if your numbers are not high enough.

 

[bdt]

Wow

I lived in Cyprus in 2012 and that bail-in indeed caused issues, BUT keep one thing in mind; having a company there is one thing. It doesnt mean that you have to bank there. All companies that had non-cyprus banks were not affected. It's in that sense always better to never bet on one horse

Re substance and presence; just keep in mind that those requirements are everywhere and if they are not yet enforced that will change over the next couple of years.

Pick a place where you would be able to fulfil the substance / presence requirements yourself. Especially if your numbers are not high enough.

very good point - when you start to look into moving abroad and optimising strategies, you often do an all or nothing approach, whereas both the US suggestion and Cyprus show that you can potentially pick what works.

I guess i need to do a lot more research as I was only starting to get my head around personal taxation, now companies add all sorts of nuance!

My only concern is whether another country would allow a bank account for a foreign company without a presence in that country too... which again starts to get very complex

Other option, like i said is to just ensure that the Cypriot account pays out dividends rather swiftly. Kind of in the same way one uses a crypto exchange intermittently, and in full knowledge it might blow up tomorrow!

 

[JustAnotherNomad]

Am i right in thinking that you'd be able to register in Delaware and then only pay federal tax, but get a foreign tax credit, bringing you to about 10% taxes?

No. Unless you explicitly want your company to pay tax in the US as a corporation, but why would you want that?
You pay zero tax in the US if the LLC is tax-transparent.
See my detailed explanation here:

J

Post in thread 'Wyoming LLC vs UK LLP'

Mar 3, 2025

A transparent single-member US LLC pays tax in the US as if it was the member that had provided the service/sold the goods.
So if you or your Montenegran company owns the US LLC, the US will "look through" the US LLC and decide if you/the Montenegran company should pay tax in the US.
If you sold to a US client under your own name from Montenegro, or your company did, would there be tax in the US? No. Therefore, there would be no tax with a US LLC either.
But if anything was happening physically in the US (employees, freelancers, an office or warehouse, ...), the situation could be...

• JustAnotherNomad

• 

I suppose the fear is that the any of this changes (a lot is certainly changing stateside at the moment!) and you're left in the same position as the UK (20-25%)

I don't think this will change. If you don't work physically in the US, it should work well.

 

[GPT]

Wow

very good point - when you start to look into moving abroad and optimising strategies, you often do an all or nothing approach, whereas both the US suggestion and Cyprus show that you can potentially pick what works.

I guess i need to do a lot more research as I was only starting to get my head around personal taxation, now companies add all sorts of nuance!

My only concern is whether another country would allow a bank account for a foreign company without a presence in that country too... which again starts to get very complex

Other option, like i said is to just ensure that the Cypriot account pays out dividends rather swiftly. Kind of in the same way one uses a crypto exchange intermittently, and in full knowledge it might blow up tomorrow!

Be careful with excessive dividend payments. I mean with that on a monthly basis.

It is a clear sign that something shady is going on.

Normal dividend intervals are quarterly, bi annually or annually. If paying more than once a year after finishing your accounts it is often an interim dividend. From legal perspective that means it’s not a final payment and that means that in the case of investigations it could be clawed back. If you then cannot pay it immediately extends liability to you as a person as well.

Dividend are NOT the holy grail when you operate in a shady area.

 

[bdt]

No. Unless you explicitly want your company to pay tax in the US as a corporation, but why would you want that?
You pay zero tax in the US if the LLC is tax-transparent.
See my detailed explanation here:

J

Post in thread 'Wyoming LLC vs UK LLP'

Mar 3, 2025

A transparent single-member US LLC pays tax in the US as if it was the member that had provided the service/sold the goods.
So if you or your Montenegran company owns the US LLC, the US will "look through" the US LLC and decide if you/the Montenegran company should pay tax in the US.
If you sold to a US client under your own name from Montenegro, or your company did, would there be tax in the US? No. Therefore, there would be no tax with a US LLC either.
But if anything was happening physically in the US (employees, freelancers, an office or warehouse, ...), the situation could be...

• JustAnotherNomad

• 

I don't think this will change. If you don't work physically in the US, it should work well.

thanks - I've had a look at your very detailed post and it's very intriguing (actually, I fell down the non-resident UK company rabbit hole, but I don't trust HMRC one bit haha). Will pick through it properly this week but just wanted to say I appreciate it - makes the US very interesting.

 

[bdt]

Be careful with excessive dividend payments. I mean with that on a monthly basis.

It is a clear sign that something shady is going on.

Normal dividend intervals are quarterly, bi annually or annually. If paying more than once a year after finishing your accounts it is often an interim dividend. From legal perspective that means it’s not a final payment and that means that in the case of investigations it could be clawed back. If you then cannot pay it immediately extends liability to you as a person as well.

Dividend are NOT the holy grail when you operate in a shady area.

Yup, didn't know that and I can easily do quarterly if that makes it look less concerning, even halfly / yearly if you think it is needed?

 

[GPT]

Yup, didn't know that and I can easily do quarterly if that makes it look less concerning, even halfly / yearly if you think it is needed?

The issue is interim. If your company doesn’t earn enough to justify the dividend you pay yourself. Then you will face problems.

My honest recommendation is to stay away from dividend payments.

 

[JustAnotherNomad]

thanks - I've had a look at your very detailed post and it's very intriguing (actually, I fell down the non-resident UK company rabbit hole, but I don't trust HMRC one bit haha). Will pick through it properly this week but just wanted to say I appreciate it - makes the US very interesting.

You're very welcome.
US LLCs are super simple to set up. You can use a service like Northwest Registered Agent or IncFile, it's about $150 or so.
If nothing happens in the US, the annual paperwork is usually minimal, so you can either do it yourself or pay someone $300-500 a year to handle it.

If you live in a country that doesn't have taxes (Caribbean, Bahrain, ...) or that doesn't really care (LatAm, Southeast Asia, Africa, ...), it's a simple, cheap and tax-free setup with relatively easy access to banking.

 

[bdt]

The issue is interim. If your company doesn’t earn enough to justify the dividend you pay yourself. Then you will face problems.

My honest recommendation is to stay away from dividend payments.

Not even yearly dividends? How else does one extract money from a company? Just as pay?

 

[GPT]

Not even yearly dividends? How else does one extract money from a company? Just as pay?

Salary / Management fee.

Excessive dividends, which happens in sme's, are always scrutinised because of dodging taxes.

Owh and keep in mind that consulting companies in general struggle to quickly and easy open a bankaccount. Have a proper business plan available when applying. It's likely the first question you receive.

 

[bdt]

You're very welcome.
US LLCs are super simple to set up. You can use a service like Northwest Registered Agent or IncFile, it's about $150 or so.
If nothing happens in the US, the annual paperwork is usually minimal, so you can either do it yourself or pay someone $300-500 a year to handle it.

If you live in a country that doesn't have taxes (Caribbean, Bahrain, ...) or that doesn't really care (LatAm, Southeast Asia, Africa, ...), it's a simple, cheap and tax-free setup with relatively easy access to banking.

Thanks again for the recommendations. I suppose my wife will want me to ask, what happens when we move back to the UK? Is there a way to pass this through to another company perhaps in a favourable jurisdiction and leave it to accrue for the next time I'm based somewhere more favourably?

 

[bdt]

Salary / Management fee.

Excessive dividends, which happens in sme's, are always scrutinised because of dodging taxes.

Owh and keep in mind that consulting companies in general struggle to quickly and easy open a bankaccount. Have a proper business plan available when applying. It's likely the first question you receive.

Thanks so much for this! Shouldn't be an issue only taking a salary when I'm in a favourable residency location! Great advice about the consultancy too! I imagine this will be even harder given that I'm not a US citizen / resident? They normally ask for social security or ITN but I did manage to get a personal bank account sorted without!