UK resident with clients in the US. What the best setup for a dual citizen?

[CaptK]

I'm a tax resident in Spain now, unfortunately. I have left 2 months ago to the DR which is my "home" at the moment but I am not staying here later than December 2020. So that makes Spain my tax residency, right?




I was paying my taxes in Spain but have left 2 months ago. I am now in the DR but won't stay for long. I won't be here long enough to become a tax resident... unless there's a tremendous advantage in doing so. Spain requires a "bridge" country before they let me go, so perhaps it wouldn't be a bad idea after all.

I became very disenchanted with Spain this year and refuse to contribute to the current government which is taking the country down a social and economic abyss that will be impossible to recover from. This is the reason why I am seeking to take refuge elsewhere, with the possibility of traveling and not really having a "home", while I find a new home.

I don't mind high taxes as long as my money is used in the creation of value and not feeding a government fixated on destroying everything that makes a civilization cohesive.

Anonymity is not really an issue for me, in case that helps.

Anyway...

What would be the advantages of a UK LLP? I have heard that it's impossible to open any type of EMI account or bank account for those. So I would use my personal accounts?

Freelance in the UAE in my opinion would suit you best. Plus it allows you to enjoy a nomadic lifestyle.
No tax so your not contributing to anything but of course set up is about 5K so by default your tax.

An apartment will cost you 12K per annum including bills. A one bed in the Marina is a lovely place to live.

 

[saintjohnny]

Freelance in the UAE in my opinion would suit you best. Plus it allows you to enjoy a nomadic lifestyle.
No tax so your not contributing to anything but of course set up is about 5K so by default your tax.

An apartment will cost you 12K per annum including bills. A one bed in the Marina is a lovely place to live.

I'm also going to receive some stock in one of my client's company. It's a US c-corp. The UAE doesn't excite me the least bit to be completely honest. I wouldn't go there at all. Any other options?

 

[CaptK]

Yes closer to home are your only other real options in the Carribbean or
Guernsey, Jersey, Gibraltar or Isle of Man.
I still believe that this can work using the DR as the base

Dominican Republic has a territorial tax system, meaning that if you live there, you would only be subject to pay taxes if you had local income. You can earn what you like outside the country and you don't even have to declare it, yet alone pay any taxes. This applies to both individuals and companies.

 

[saintjohnny]

Yes closer to home are your only other real options in the Carribbean or
Guernsey, Jersey, Gibraltar or Isle of Man.
I still believe that this can work using the DR as the base

Dominican Republic has a territorial tax system, meaning that if you live there, you would only be subject to pay taxes if you had local income. You can earn what you like outside the country and you don't even have to declare it, yet alone pay any taxes. This applies to both individuals and companies.

Thanks for your reply.

 

[saintjohnny]

Johnny if I'm not mistaken DR has a territorial tax system. US LLC will only help you with non US clients. UK LLP only works for non UK clients but if you intend to live here then it's not going to work.
LLP and LLC only work if you dont live nor have an office in that country.

I personally would stay well away from US LLC and take advantage of your DR citizenship by incorporating a company there and using a limited company as the marketing office of the DR company.

I will double check but that sounds similar to what I have done before for a client of mine but it was a few years back. Need to check how that works for CFC now.

Why would I need to open a DR entity if I could just go ahead and open a UK LLP and do my banking via TFW? I only have US clients now that I have dropped all UK ties.

Or that was only an option because I intended to become a UK resident in the past?

Either way, I like both options and could use both if I end up moving to the UK.

Thank you so much.

 

[CaptK]

Do both

It will always help to have both in the future.

 

[saintjohnny]

Do both

It will always help to have both in the future.

1. Open a new UK LLP to use as my client-facing company.
2. Open a DR SRL and later figure out how to use it. I suppose this will be useful if I move to the UK?

Is that correct? Thank you so much for your help.

 

[CaptK]

So, my best prescription is:

1. Become DR tax resident
2. Open a new UK LLP to use as my client-facing company.
3. Open a DR SRL and later figure out how to use it. I suppose this will be useful if I move to the UK?

Is that correct? Thank you so much for your help.

Perfect set up.
You could even help us guys here if we ever needed assistance in the DR. Because you would have been through the process you can guide us on the best banks and company establishment.

We are all looking for online account opening especially with the international banks in DR.

Obviously we would all expect mates rates lol.

 

[saintjohnny]

Perfect set up.
You could even help us guys here if we ever needed assistance in the DR. Because you would have been through the process you can guide us on the best banks and company establishment.

We are all looking for online account opening especially with the international banks in DR.

Obviously we would all expect mates rates lol.

For sure, I'd love to help. I have very good connections over here, especially for banking.

Thank you so much.

 

[John Andrews]

You could use the DR company as the other partner for the UK LLP, no? That way you get some asset protection as well

 

[saintjohnny]

Perfect set up.
You could even help us guys here if we ever needed assistance in the DR. Because you would have been through the process you can guide us on the best banks and company establishment.

We are all looking for online account opening especially with the international banks in DR.

Obviously we would all expect mates rates lol.

By the way, the territorial tax ends when you've been a resident for 3 years, but apparently, the status never ends for companies, foreign or not.

You could use the DR company as the other partner for the UK LLP, no? That way you get some asset protection as well

Thank you.

 

[CaptK]

You could use the DR company as the other partner for the UK LLP, no? That way you get some asset protection as well

Bank account would be a nightmare.
Open the LLP in your name for example John Smith LLP. That way paying into your personal account won't look weird.

 

[John Andrews]

Do you see any problems with this?

Well are you sure DR treats UK LLPs as companies? If not then you might have to pay tax on this income after 3 years as you say

It would probably be fine as well but I would personally much rather go with a company as the partner

 

[CaptK]

By the way, the territorial tax ends when you've been a resident for 3 years, but apparently, the status never ends for companies, foreign or not.
So this is basically a silent Panama. Well played DR.



Perhaps. I was planning on forming the LLP with my mother who is a Spanish citizen, DR resident. Do you see any problems with this?

Thank you.

I was telling you this for a month lol.
The company is the main thing but by then you would have moved to the UK by then unless DR tax works out better.

Alternatively it allows you to live a nomadic lifestyle with no issues.

Using your mum would be fine but as @John Andrews said a company is always better.

 

[JustAnotherNomad]

By the way, the territorial tax ends when you've been a resident for 3 years, but apparently, the status never ends for companies, foreign or not.

Did you check how they classify foreign source income?

 

[CaptK]

Tax is only levied on capital gains, stocks, bond, shares.
Income derived from business outside the DR is not taxable for the first 3 years for residents and not at all for non residents.
182 days in the DR makes you a tax resident but for DR nationals the 3 year rule starts from the day you land.

 

[saintjohnny]

Well are you sure DR treats UK LLPs as companies? If not then you might have to pay tax on this income after 3 years as you say

It would probably be fine as well but I would personally much rather go with a company as the partner

This is from a tax code translation: Corporations and any other for-profit organizations pay a flat 25% income tax on net taxable income (Art. 297). Unlike in the United States and other countries, in the Dominican Republic, the tax treatment for corporations, partnerships, and limited liability companies is exactly the same.

I was telling you this for a month lol.
The company is the main thing but by then you would have moved to the UK by then unless DR tax works out better.

Alternatively it allows you to live a nomadic lifestyle with no issues.

Using your mum would be fine but as @John Andrews said a company is always better.

Yes, you were. I probably looked at your message and googled "territorial tax countries" and DR wasn't on the list... and now I know why.

 

[CaptK]

This is from a tax code translation: Corporations and any other for-profit organizations pay a flat 25% income tax on net taxable income (Art. 297). Unlike in the United States and other countries, in the Dominican Republic, the tax treatment for corporations, partnerships, and limited liability companies is exactly the same.


Yes, you were. I probably looked at your message and googled "territorial tax countries" and DR wasn't on the list... and now I know why. It's because of the 3-year thing. It's a not-so-well-kept secret and that's why so many billionaires from Spain relocate their home base here. To Casa de Campo specifically.

Even the King himself was going to head down here when he fled the country last August but he settled in the UAE instead.

I was planning to leave the country by November but it looks like I'll be in the Caribbean for a lot longer until 182 days have passed. Not too bad. It's also a good place to cut my tax ties with the Kingdom of Spain through the consulate.

Life's good.

Exactly because it's not easily found people don't know. Plus if you live there for 2 years is spend 182 days per year there you are automatically eligible for citizenship.

It's a little gem.

 

[JustAnotherNomad]

Income derived from business outside the DR

Yes, my question was if you checked the definition of that.
If you spend >183 years there and especially if you’re a citizen, then they might consider your foreign-registered business as local income. Or they might not. Worth talking to an accountant about at least.

 

[CaptK]

Yes, my question was if you checked the definition of that.
If you spend >183 years there and especially if you’re a citizen, then they might consider your foreign-registered business as local income. Or they might not. Worth talking to an accountant about at least.

I checked it's basically the same as Panama and HK set up. Any funds derived from a DR client or a DR bank account is taxable. You can run your business from DR but you can not have DR clients.