Structure for Marketing Agency (Freelancer?)

[micgrez]

So I recently started my own marketing agency. Have currently 2 clients with an ongoing 400$ per week contract for marketing (yes, its not much but its only after 2 weeks). My goal is 5 more clients so I can have a steady income and be able to do all the work myself.

In addition I create 2-3 websites per week whichtotals around 1,000$.

I am a Norwegian citizen, but my clients are from Australia and USA. I have to declare all my foreign income and business tax is 30% in norway. No money is being sent to Norway, and no customers are from Norway.

I am looking to decrease this tax rate and keep most of what I can.

I have not registered my company yet as I am waiting to save up some more, and I am unsure where to incorporate.

Payments are via Wire (Transferwise)

What would be the best structure for me?

Appreciate any inputs!

 

[Martin Everson]

Your taking the write strategy of asking questions before you setup any structure

The money you are earning is a start and you will be your own boss. "not much" is relative to where you live I guess as there are people that don't earn half that in a month. If this is your main income then just pay Norway taxes as a self employed individual.

Examples on tax calculation Norway

Until your actual earnings match your predictions I would hold of doing anything rash as you could end up falling into the 120k NOK bracket rather than 480k NOK.

 

[anticfc]

You're already living in one of the most beneficial jurisdictions in Europe.

The taxes are the lowest of northern Europe, and the deductions are the highest. It's fairly easy to get a tax rate close to, or less than 0% in your situation.

 

[micgrez]

Your taking the write strategy of asking questions before you setup any structure

The money you are earning is a start and you will be your own boss. "not much" is relative to where you live I guess as there are people that don't earn half that in a month. If this is your main income then just pay Norway taxes as a self employed individual.

Examples on tax calculation Norway

Until your actual earnings match your predictions I would hold of doing anything rash as you could end up falling into the 120k NOK bracket rather than 480k NOK.

Gotcha, cheers. So I shouldn't even set up a company in your opinion? I also want to make it clear I do want to travel a lot while doing this. I'd only be in norway for 1-2 months at a time. I therefore thought having a company set up somewhere I could minimize taxes to the Norwegian Government as I pretty much only spend the summers there.

You're already living in one of the most beneficial jurisdictions in Europe.

The taxes are the lowest of northern Europe, and the deductions are the highest. It's fairly easy to get a tax rate close to, or less than 0% in your situation.

Is that by setting up a company or just by being self-employed?

Cheers

What if I create a holding company which is the owner of a Delaware company? Wouldn't I just be able to limit my pay to be under the treshold and then use the rest of the money to buy assets like car etc?

 

[Martin Everson]

Gotcha, cheers. So I shouldn't even set up a company in your opinion? I also want to make it clear I do want to travel a lot while doing this. I'd only be in norway for 1-2 months at a time. I therefore thought having a company set up somewhere I could minimize taxes to the Norwegian Government as I pretty much only spend the summers there.

Until you are officially de-registered from Norway and have filled your last set of taxes do nothing. Once you leave Norway then setup an offshore company account etc from your new tax friendly residence. If you leave Norway now whatever money you earn and whatever company you setup would still be considered taxable in Norway as you have spent the majority of the tax year so far there .

Time things right and do things properly and you will not run into any problems down the line .

 

[micgrez]

Until you are officially de-registered from Norway and have filled your last set of taxes do nothing. Once you leave Norway then setup an offshore company account etc from your new tax friendly residence. If you leave Norway now whatever money you earn and whatever company you setup would still be considered taxable in Norway as you have spent the majority of the tax year so far there .

Time things right and do things properly and you will not run into any problems down the line .

Thanks for that!

Im a bit confused now tbh, did contact the tax authorities in norway and they told me legally I would not be liable for any company tax in Norway if the company was located in a different country and none of my customers were in Norway + (no money would enter norway). I would just pay taxes on my income as the company wouldnt be a tax resident in norway?

 

[Martin Everson]

Thanks for that!

Im a bit confused now tbh, did contact the tax authorities in norway and they told me legally I would not be liable for any company tax in Norway if the company was located in a different country and none of my customers were in Norway + (no money would enter norway). I would just pay taxes on my income as the company wouldnt be a tax resident in norway?

What nonsense is this they have told you. Please default to using common sense always in these situations and realize you cannot be living in Norway own an offshore company and think you won't get taxed on it...lol. Speak to a competent tax advisor. Your average tax authority employee is not a tax expert and should have advised you to speak to a tax advisor if they have not already done so. An offshore company is a Controlled Foreign Company (CFC).

"Norwegian residents are taxed directly on their allocable part of the profits from a CFC’s income if the company is resident in a low-tax country, irrespective of whether income is distributed to the Norwegian investor. A low-tax country, in this respect, is a country where the effective foreign income taxation of the company’s profits is less than two-thirds of the effective taxation that would have been due had the company been resident in Norway. A condition for such taxation is that 50% or more of the foreign company’s shares or capital is held or controlled, directly or indirectly, by Norwegian taxpayers (alone or together), based on the status at the beginning and end of the income year in question."

 

[fshore]

How much time do you sspen in Norway ? If you live there then any foreign company that you run (and doesn't have foreign office, directors etc) will be tax resident in Norway, and will not be a CFC. A CFC is only when the company is not tax resident in Norway.

The best way to structure this until you can get tax non resident after 3+ years, if you don't live in Norway anymore, is to use the "1 year rule" to exclude all tax on salary. Note that personal professional income, dividends etc is not covered by this rule, only salary.
The cheapest way is to setup a UK LTD that will pay you a good salary, not taxable in the uk, and not taxable in Norway when you spend less than 71 days in Norway, using the 1 year rule.

 

[micgrez]

How much time do you sspen in Norway ? If you live there then any foreign company that you run (and doesn't have foreign office, directors etc) will be tax resident in Norway, and will not be a CFC. A CFC is only when the company is not tax resident in Norway.

The best way to structure this until you can get tax non resident after 3+ years, if you don't live in Norway anymore, is to use the "1 year rule" to exclude all tax on salary. Note that personal professional income, dividends etc is not covered by this rule, only salary.
The cheapest way is to setup a UK LTD that will pay you a good salary, not taxable in the uk, and not taxable in Norway when you spend less than 71 days in Norway, using the 1 year rule.

I have been overseas studying for the past 4 years. I am currently in Australia, and going back to Norway for 2 weeks for christmas. Then I am moving over to America for an internship.

I am only in Norway a couple of weeks in the summer and in the winter.

What is this 1 rule about? When does it start?

Cheers for that comment, helped me out heaps and got me thinking

What nonsense is this they have told you. Please default to using common sense always in these situations and realize you cannot be living in Norway own an offshore company and think you won't get taxed on it...lol. Speak to a competent tax advisor. Your average tax authority employee is not a tax expert and should have advised you to speak to a tax advisor if they have not already done so. An offshore company is a Controlled Foreign Company (CFC).

"Norwegian residents are taxed directly on their allocable part of the profits from a CFC’s income if the company is resident in a low-tax country, irrespective of whether income is distributed to the Norwegian investor. A low-tax country, in this respect, is a country where the effective foreign income taxation of the company’s profits is less than two-thirds of the effective taxation that would have been due had the company been resident in Norway. A condition for such taxation is that 50% or more of the foreign company’s shares or capital is held or controlled, directly or indirectly, by Norwegian taxpayers (alone or together), based on the status at the beginning and end of the income year in question."

I should have stated I haven't been living in Norway for 4 years. But my home address is still registered at my parents. I have been overseas studying for the past 4 years. I am currently in Australia, and going back to Norway for 2 weeks for christmas. Then I am moving over to America for an internship.

I just don't understand why I would have to pay company tax in Norway when I am not there, nor is any business going on in Norway. The fact that the company would be Norwegian even tho I am always overseas but Norwegian citizen is ridicolous.

If I formed a Seychelles company with foreign Director, that company would not be a Norwegian company and I would only be outsourced and paid by the company for "consultant" fees. This would be taxable, but not the company profit. This is the impression I have gotten from the Norwegian Tax authorities who I spoke to.

 

[Martin Everson]

I should have stated I haven't been living in Norway for 4 years. But my home address is still registered at my parents. I have been overseas studying for the past 4 years. I am currently in Australia, and going back to Norway for 2 weeks for christmas. Then I am moving over to America for an internship.

Thanks for sharing this. As you will soon be a U.S person I shall not be commenting any further. Any comments I have made should be disregarded. I wish you had said all this in the beginning .

 

[fshore]

I have been overseas studying for the past 4 years. I am currently in Australia, and going back to Norway for 2 weeks for christmas. Then I am moving over to America for an internship.

I am only in Norway a couple of weeks in the summer and in the winter.

What is this 1 rule about? When does it start?

Cheers for that comment, helped me out heaps and got me thinking



I should have stated I haven't been living in Norway for 4 years. But my home address is still registered at my parents. I have been overseas studying for the past 4 years. I am currently in Australia, and going back to Norway for 2 weeks for christmas. Then I am moving over to America for an internship.

I just don't understand why I would have to pay company tax in Norway when I am not there, nor is any business going on in Norway. The fact that the company would be Norwegian even tho I am always overseas but Norwegian citizen is ridicolous.

If I formed a Seychelles company with foreign Director, that company would not be a Norwegian company and I would only be outsourced and paid by the company for "consultant" fees. This would be taxable, but not the company profit. This is the impression I have gotten from the Norwegian Tax authorities who I spoke to.

If you form a Seychelles company it will be a CFC with much stricter rules than a UK or other not low tax country company.
If you form a non blacklisted country like labuan etc then the company will not be tax resident in Norway .however any dividends you draw will be taxed, and capital gains on the company will be taxed (if you let the company value grow). As I mentioned your salary from any country would not be taxed if you can use the 1 year rule (working abroad and spend max 71 days yearly in Norway, period can start anytime of year).

Anyway you have to deal with US irs so you'd better look into us tax law and how you could use a us LLC. Getting a us SSN can be nice to have for the future, for banking.

 

[micgrez]

Thanks for sharing this. As you will soon be a U.S person I shall not be commenting any further. Any comments I have made should be disregarded. I wish you had said all this in the beginning .

No I am glad gave me all that information. Who knows where I will end up living after my internship. Appreciate it really! I honestly have no clue where I will end up.

If you form a Seychelles company it will be a CFC with much stricter rules than a UK or other not low tax country company.
If you form a non blacklisted country like labuan etc then the company will not be tax resident in Norway .however any dividends you draw will be taxed, and capital gains on the company will be taxed (if you let the company value grow). As I mentioned your salary from any country would not be taxed if you can use the 1 year rule (working abroad and spend max 71 days yearly in Norway, period can start anytime of year).

Anyway you have to deal with US irs so you'd better look into us tax law and how you could use a us LLC. Getting a us SSN can be nice to have for the future, for banking.

Awesome thanks for that. Does the 1 year rule last forever? Or it it a duration of only one year?

So I can have my company registered in a different country than norway, and if I spend less than 71 days in Norway a year I am not paying any tax to Norway? Is that correct? Can this go for several years?

Thanks again!

 

[fshore]

No I am glad gave me all that information. Who knows where I will end up living after my internship. Appreciate it really! I honestly have no clue where I will end up.



Awesome thanks for that. Does the 1 year rule last forever? Or it it a duration of only one year?

So I can have my company registered in a different country than norway, and if I spend less than 71 days in Norway a year I am not paying any tax to Norway? Is that correct? Can this go for several years?

Thanks again!

It can last forever. You can read about this by some easy googling.
As I said, this only relates to salary income. All other income would be taxable.
A foreign company would not be taxable in Norway unless it's tax resident in Norway. A CFC would mean that you would have to pay tax from the companys profits. So you should start a company that would not be a CFC, so should be in a country that has a tax treaty with Norway, or on the white list, or not low tax country.
If your doing this DIY then you should read alot about all this to get a good understanding on how it works .

 

[micgrez]

It can last forever. You can read about this by some easy googling.
As I said, this only relates to salary income. All other income would be taxable.
A foreign company would not be taxable in Norway unless it's tax resident in Norway. A CFC would mean that you would have to pay tax from the companys profits. So you should start a company that would not be a CFC, so should be in a country that has a tax treaty with Norway, or on the white list, or not low tax country.
If your doing this DIY then you should read alot about all this to get a good understanding on how it works .

Damn, I had heard about it but didn't know it was valid for citizens as well. Thanks for that. When you say "A foreign company would not be taxable in Norway unless it's tax resident in Norway.", how could I do that? Any country you would recommend? UK as you mentioned before? I wouldn't have to pay any corporation tax there as I am not a UK citizen and the company wouldn't have any activities in the UK correct?

"As I said, this only relates to salary income. All other income would be taxable." What other income would I have than salary from my own company?

Sorry if I sound retarded, it's all a bit confusing and I will read on it tonight.

Cheers man

 

[anticfc]

If you form a non blacklisted country like labuan etc then the company will not be tax resident in Norway .however any dividends you draw will be taxed, and capital gains on the company will be taxed (if you let the company value grow). As I mentioned your salary from any country would not be taxed if you can use the 1 year rule (working abroad and spend max 71 days yearly in Norway, period can start anytime of year).

The labuan company would be tax resident in Norway (assuming the OP was living in Norway).

Though the CFC rules in Norway disregards any ownership during the year, so if you remove the CFC company before end of year (and re-create another one the next year), then it's not CFC - assuming you can make it non-tax resident.

 

[fshore]

The labuan company would be tax resident in Norway (assuming the OP was living in Norway).

Though the CFC rules in Norway disregards any ownership during the year, so if you remove the CFC company before end of year (and re-create another one the next year), then it's not CFC - assuming you can make it non-tax resident.

Yes as I wrote this applies if OP don't live in Norway.

Damn, I had heard about it but didn't know it was valid for citizens as well. Thanks for that. When you say "A foreign company would not be taxable in Norway unless it's tax resident in Norway.", how could I do that? Any country you would recommend? UK as you mentioned before? I wouldn't have to pay any corporation tax there as I am not a UK citizen and the company wouldn't have any activities in the UK correct?

"As I said, this only relates to salary income. All other income would be taxable." What other income would I have than salary from my own company?

Sorry if I sound retarded, it's all a bit confusing and I will read on it tonight.

Cheers man

A foreign company not managed and run from Norway is not tax resident in Norway.
A uk company would be taxable in the UK on its profits. If you have expenses like your own salary there might not be any profit.

Other income might be dividends, professional income if you work as a sole proprietor. Capital gains.

 

[negon]

A foreign company not managed and run from Norway is not tax resident in Norway.

That's true, but how are you going to proof that the company isn't controlled and managed from norway?

 

[fshore]

That's true, but how are you going to proof that the company isn't controlled and managed from norway?

By not living in Norway and change your official address from Norway. You can also keep travel/flight confirmation in case they would dig into this.

 

[micgrez]

The labuan company would be tax resident in Norway (assuming the OP was living in Norway).

Though the CFC rules in Norway disregards any ownership during the year, so if you remove the CFC company before end of year (and re-create another one the next year), then it's not CFC - assuming you can make it non-tax resident.

So you're saying I can live in Norway and just set up a new company each year and it wont be a CFC?

Yes as I wrote this applies if OP don't live in Norway.


A foreign company not managed and run from Norway is not tax resident in Norway.
A uk company would be taxable in the UK on its profits. If you have expenses like your own salary there might not be any profit.

Other income might be dividends, professional income if you work as a sole proprietor. Capital gains.

Setting up a company in the UK, then sending all income to myself as a Salary would be the trick hey?

But what's so much different about setting it up in Seychelles or any 0% tax haven and doing the exact same thing? Then I wouldn't have to bother with taxes and accounting as I would have to in the UK?

 

[fshore]

So you're saying I can live in Norway and just set up a new company each year and it wont be a CFC?



Setting up a company in the UK, then sending all income to myself as a Salary would be the trick hey?

But what's so much different about setting it up in Seychelles or any 0% tax haven and doing the exact same thing? Then I wouldn't have to bother with taxes and accounting as I would have to in the UK?

Seychelles would be a cfc with additional complications and requirements .
You could also consider a US LLC.