Tax Free Structure for B2B Consulting biz

[Reinassance]

Hi guys,
let's say i'm starting a consulting b2b business working with EU and Asia based companies. (i'm a non dom)
Some jobs will be done remotely but some will be done in client's office.
What is the best and most versatile tax free structure to do just pure consulting invoices?
Would be amazing having super cheap maintenance, no audits, and no vat if possible.
Privacy is not a must.
Volumes are in the 40-50K € a year and hopefully will grow in the future.

Thank you very much, hope this will help fellow hustling entrepreneurs!

 

[fshore]

USA LLC?
In any case you shouldn't have to charge VAT if it's B2B.

 

[Tax Cow]

In case of providing services to EU clients, if you issue an invoice to a corporate client from another EU country at 0% rate, your client is obliged to do a reverse charge. If you sell your services for whatever price, your client will have to pay their local VAT on top of it, on avg. about 20%. Your services worth of 100K will cost EUR ~120,000 to your EU clients. Either you or your client will pay some tax, in ideal scenario, only VAT applies. But in more than 50% of cases, corporate tax also applies due to permanent establishment rules. There's much more than a physical office that can constitute a permanent establishment for tax purposes.

There are no convenient legal tax free solutions in existence for selling B2B services to EU clients. If such a solution existed, companies would be happy to pay a million and much more for "advice".

 

[fshore]

In case of providing services to EU clients, if you issue an invoice to a corporate client from another EU country at 0% rate, your client is obliged to do a reverse charge. If you sell your services for EUR 100,000, your client will have to pay their local VAT on top of it, on avg. about 20%. Your services worth of 100K will cost EUR ~120,000 to your EU clients. Either you or your client will pay some tax, in ideal scenario, only VAT applies. But in more than 50% of cases, corporate tax also applies due to permanent establishment rules. There's much more than a physical office that can constitute a permanent establishment for tax purposes.

There are no convenient legal tax free solutions in existence for B2B services to EU clients. If such a solution existed, companies would be happy to pay a million and much more for "advice".

But the business clients can deduct the VAT they need to pay from the VAT the charge their clients, so they will not end up paying any VAT, except in cases where they don't have any income.

 

[Tax Cow]

@fshore Yes it's correct. Down the line, the ultimate consumer will suffer the consequences who has to pay more for the service (or product). For any value-adding companies in the middle, it would still be nicer to get services that would not eat away on VAT deductible...

 

[negon]

In case of providing services to EU clients, if you issue an invoice to a corporate client from another EU country at 0% rate, your client is obliged to do a reverse charge.

Do you mean VAT ? If so, if the corporate client provides a VAT number to your EUR company then no VAT has to be charged!

 

[Tax Cow]

Do you mean VAT ? If so, if the corporate client provides a VAT number to your EUR company then no VAT has to be charged!

Then the corporate client declares service received and pays their local VAT on top of the invoice amount. If it's local corp to local corp B2B, the end customer will pay. Money-wise, it makes no difference if your highway tax is collected as you're entering the road, somewhere in the middle as an advance payment, or after leaving the road.

 

[Reinassance]

Thanks for the answers!

1) Excluding Seychelles Ibcs for their perceived shadyness (personally, my favourite) Are Wyoming/Nevada LLC, being whitelisted, still doable?

2) Let's say i want to be pay VAT only:
German GMBH Invoices Wyoming LLC for services adding 19% VAT? How can i pay it? Should i register for a VAT number?
What if my German client instead do not invoice with VAT, they will kick them in the butt?

I'm sorry, i don't understand much of this crazy VAT system.

If i can't find a solution, in order to be 100% compliant i'll open a Cyprus ltd but its a bit expensive to mantain for my low volumes.

 

[fshore]

You pay vat only if the Germany Company adds vat to their invoice. Normally they will not if you the customer is outside the EU.

 

[JohnLocke]

Then the corporate client declares service received and pays their local VAT on top of the invoice amount.

When I pay for hosting with a German company, then the invoice is paid without VAT because my local company is registered for VAT and they have my VAT number. Do you mean that the German company still pay the VAT locally in Germany?

 

[Tax Cow]

When I pay for hosting with a German company, then the invoice is paid without VAT because my local company is registered for VAT and they have my VAT number. Do you mean that the German company still pay the VAT locally in Germany?

In which country is the buyer and in which country is the seller? If you the buyer are in Cyprus and seller is in Germany, then you as the buyer have the obligation to pay VAT on top of the invoice amount (to Cyprus).

1. Cross-border (not same country) invoices, intra-EU, corp-to-corp sale where both participants are registered for EU VAT are charged at 0%. The buyer is immediately obliged to reverse charge and pay their local VAT rate on top of it. No exceptions.
2. IN-border (same country) invoices, intra-EU, corp-to-corp sale where both participants are registered for VAT are charged at XX% where xx is their local VAT rate. The buyer can request a VAT refund (from government) or deduct VAT paid if the expense was in direct connection of producing taxable services or products.

First is to prevent other member states from benefiting from lower VAT rates and thus gaining an advantage. Second is the corp-to-corp VAT as usual.