Seeking Expert Advice on Structuring US App Companies for Tax-Efficient Global Revenue Transfers

[JustAnotherNomad]

If that was the case you could remit foreign sourced income tax free.

? Not sure what you mean. Singapore e.g. has a similar system.
There is a distinction between local and foreign and remitted and unremitted income.
Still, the source of the income is relevant.

I've never seen a serious business built on such a fragile foundation.

Then you haven't been to Dubai. It's very common for people to run US LLCs from there.

If you do the math you'll discover that OP would pay a whopping 1.75% total taxes without any refund process but paying 35% of the 5% on income left in Malta.

Not sure what you mean here.

 

[daniels27]

In Malta you could remit only capital gains tax free, any other foreign sourced income, if remitted, is taxed at income tax rates

Ok can we then have trading income not remitted?

 

[daniels27]

Singapore e.g. has a similar system.
There is a distinction between local and foreign and remitted and unremitted income.

They have FSIE which is for passive income. And then, they have foreign income which includes active income.

 

[daniels27]

I've never seen a serious business built on such a fragile foundation.

But you are on OCT. This place is full of such guys.

 

[Marzio]

Singapore e.g. has a similar system.

True, and it's not a territorial taxation system, it's "non-dom" for companies.

It's very common for people to run US LLCs from there.

I know but we can be smarther than that.

Not sure what you mean here.

I mean that if @littlerabbit as owner of IP licenses that IP to a company resident non domiciled in Malta he could get 95% of the income generated by the maltese company as royalty payment tax free in UAE.

The remaining 5% will be taxed in Malta and who cares about the full imputation system if even at highest tax bracket, which is 35%, in the end you will pay 1.75% total taxes?

Imagine one app generates $1.000.000.

95% of that $1mil goes to UAE as a royalty payment.

$50.000 are taxed in Malta.

For the sake of semplicity lets assume that all $50.000 will be taxed at 35% and this isn't obviusly the case but 50.000 * 35% = $17.500 of taxes

17.500*100/1.000.000 = 1.75% total taxes paid

But you are on OCT. This place is full of such guys.

Is 1.75% of taxes worth the risk of getting caught by a bedouin?

 

[JustAnotherNomad]

I mean that if @littlerabbit as owner of IP licenses that IP to a company resident non domiciled in Malta he could get 95% of the income generated by the maltese company as royalty payment tax free in UAE.

95% royalty fee? Not sure that would pass transfer pricing checks.
And how will he acquire the IP?

 

[Marzio]

95% royalty fee? Not sure that would pass transfer pricing checks.

Which transfer pricing checks are you talking about?

https://taxsummaries.pwc.com/malta/corporate/group-taxation

https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:32014R0651

And how will he acquire the IP?

If he develops his own apps then the IP is internally developed.

 

[JustAnotherNomad]

Lol, unbelievable that they basically don't have transfer pricing rules.
I guess it could work.
But it might be easier to just use a regular Maltese company with a non-Maltese holding company to just pay the 5%.

 

[Marzio]

But it might be easier to just use a regular Maltese company with a non-Maltese holding company to just pay the 5%.

I wouldn't do that, using the resident non domiciled setup allows you to stay flexible and move in the event Malta will update its tax regime as they already planned to do.

 

[JustAnotherNomad]

Book a paid consultation with the guys who wrote the article about resident non domiciled companies describing the propsed setup and report back their answer.

I really think someone should take one for the team and do that.

 

[Marzio]

I really think someone should take one for the team and do that.

@littlerabbit it's your turn now

 

[littlerabbit]

@Marzio @JustAnotherNomad You had a very nice discussion and I really learned a lot. Thank you so much for everything. Rest assured that I will make an appointment and share the results here.

 

[Marzio]

Rest assured that I will make an appointment and share the results here.

Awesome!