US Startup - Low Tax

Won't really work like that, IRS will definitely spy on you

Sols said:

The C Corp is usually just a holding company, which receives the funding and then injects or lends money to the operating subsidiary/subsidiaries. How you'd structure IP holding depends on a lot of different factors. You might want to speak with a tax advisers/consultants.

US companies often put IP rights in Cayman Islands and other nearby places. Cyprus isn't quite so commonly used by US companies.

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What kind of amounts you can withdraw for “IP providing”? Any amounts?

For example, setup:
1. C-Corp Delaware - Holding entity - receiving investments and lends money to its trading subsidiary in Cyprus
2. Cyprus entity - Trading entity - processing transactions from customers and paying out its suppliers, everything as basic entity does, and the profit shifts to its subsidiary in Cayman Islands entity. To make substance we do nominees director, shareholders and secretary. Plus 1 “real worker” physically based in Cyprus with role “VC of operations” with salary of 3k EUR / monthly, office 4x4 with utility bills, UBO based in zero-taxed jurisdiction which isn’t aggressive like Georgia.
3. Cayman Islands entity - IP Providing entity - gets the 99% of profit of its Cyprus subsidiary trading company. Profit goes to UBO in Georgia with 0% taxes based on territorial taxation principle, because in Cyprus we have proper substance.

So that legally near to 0% corporate taxation (we can make it 0%, but we give 1% to Cyprus of profit taxable to make everything look natural) and 0% on withdrawing the profit.


I think it’s amazing route for almost anyone?

Yea, of course we need to pay a bit taxes on salary and contributions to the one person, but if we have real profit (not funny one), it won’t be a stop-factor.

Why big companies don’t do like that? Why they hire with employment contracts and paying high taxes if they can hire same skills workers as independent contractors on the paper and save a lot of taxes with exactly same results delivered?

With the said above, we can legally avoid paying any taxes for employees by hiring them as independent contractors, as well as make corporate tax 0%.

Please tell me, what wrong in that, why others don’t do like that?

inector said:

This would be a real red flag for US investors, imo. They basically put money into a vehicle of tax evasion with no operations.

Would be way nice if US corp had trading activities, and connected to something in Cayman like you and Sols mentioned.

With new case, of US Corp -> Cayman IP, how much can be fairly sent monthly? With IP agreements. Is like 25% revenue too much?


Is Cayman favorable over other places, or it's just 1 out of others?

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I wouldn't call it tax evasion, it's tax optimization. Everything is legal here. Optimizing taxes legally is not criminal offense yet, and even I suppose honored by investors, if they want to get profit from the business.