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Optimal Tax Setup for Fully Digital Professional Services Firm
- Thread starter vs90
- Start date
Has someone ever looked into a US LLC as a passthrough entity + Malta non-dom resident?
Let's assume that 1) the US LLC is effectively managed by someone else in another non-US and non-Maltese country, so it does not trigger US or Malta tax residency, and 2) the person can sustain their annual expenses with remitted foreign capital gains from capital they had before entering Malta.
If the US LCC profits are sent to a non-Maltese bank account, could the Malta taxation be only the annual 5k?
Could the above work if the US LLC also has income from US clients?
This would be much simpler and cheaper than having a Malta trading + Cyprus/Estonia holding that provides foreign non-remitted dividends to a UBO that is still a Maltese resident.
Let's assume that 1) the US LLC is effectively managed by someone else in another non-US and non-Maltese country, so it does not trigger US or Malta tax residency, and 2) the person can sustain their annual expenses with remitted foreign capital gains from capital they had before entering Malta.
If the US LCC profits are sent to a non-Maltese bank account, could the Malta taxation be only the annual 5k?
Could the above work if the US LLC also has income from US clients?
This would be much simpler and cheaper than having a Malta trading + Cyprus/Estonia holding that provides foreign non-remitted dividends to a UBO that is still a Maltese resident.
It is it managed from outside Malta and outside the US, you need to know where it is managed from and check if it would trigger any PE there. If they won't care or otherwise not an issue. You can get "dividends" in Malta from your US LLC. You would only pay what they charge you in Malta. I think @disagree is considering the same to enjoy flat taxes at 5k EUR per year.
it's the super-duper-widely popular solutions for Malta non-dom residents. Basically Malta doesn't enforce PE at all. Plus, they treat LLCs as opaque entities.
They don't really care about what you're doing outside of Malta. They charge this 5k one shot fee per year if you declare you had foreign income above 35.000 €. At the same time they never had any type of enforcement activity for this, so the truth is that a lot of people just file at 0 every year also while making multiple six figures a year. Not suggesting to do this. Just telling what's happening.
It's one of those setups where the "they don't really care" concept find it's perfect application.
Edit: I have to be more precise about the 5K one shot tax and the 35K threshold.
As far as I know, if you don’t remit foreign income to Malta, you are not subject to the €5.000 minimum tax, even if your foreign income exceeds €35K
If you are a non-domiciled resident in Malta you are subject to a taxation system called remittance basis where you're only taxed on 1) income generated in malta and 2) foreign income remitted to Malta. Foreign income not remitted to Malta is completely exempt from taxes regardless of the amount.
The €5K one shot tax applies in some cases. For example: if your total taxable income (Malta-sourced income + foreign income remitted to Malta) exceeds €35K
If the total tax calculated on your taxable income is less than €5K, you will be required to pay the difference to meet the €5K minimum
That said... if you do not remit any foreign income to Malta, you are not subject to the €5K tax, even if your foreign income is above €35K. The issue (for someone) is that also paying for your rent or other services like internet, etc are theoretically "remitted"
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