I see a lot of topics on this issue and new ones popping up every week, it might be nice to just have one thread to discuss this topic and list all possible solutions.
The problem
Withholding of 30% on all US revenue generated from YouTube / Google ad earnings.
The case
Trying to achieve a as low as possible tax rate by reducing the withholding tax and other taxes. There are quite a few legal options and as far as I know and one non-legal option but the latter one is commonly used.
Legal Solutions
Malta company + non-dom resident (10% US withholding tax)
- 5% corporate tax on trading income, so all revenue there is no US withholding tax on will apply to this (6/7 refund on 35%)
- 11.8% corporate tax on royalty income, you get a tax credit resulting (2/3 refund on 35%)
No withholding if you pay it out as dividends to a foreign holding company, and leave it there a 1-2 years and then remit it to Malta tax free. So you will effectively pay somewhere between 5-11.8%
Cyprus company + non-dom resident (0% US withholding tax)
- 12.5% corporate tax
I believe 2.25% dividend tax when paying out the dividends so effective tax of 15%
Bulgaria company + resident (10% US withholding tax)
- 10% corporate tax (The withholding tax can be offset by the corporate tax by making use of the tax credit)
You will be subject to 5% tax on dividends so an effective tax rate of 15%.
Georgia company + resident (0% us withholding tax)
- 15% corporate tax
- 0% corporate tax for Virtual IT zone companies (I heard it is really hard to get a license for it today and I am not sure if a YouTube business is eligible for this status)
- 1% for small businesses if your revenue is below 500.000 Georgian Lari
In case you make use of a regular company or virtual one you will have to pay 5% on dividend distributions so in Georgia you will have an effective tax rate of 1%, 5% or 20%.
Non - Legal Solutions
UAE Resident + UK LLP
- 0% tax on personal income in the UAE
- 0% withholding tax on US revenue in the UK
The reason this is not legal is because of the LOB clause in the tax treaty between the US which states that at least 50% needs to be held by a UK resident. I see many people use this setup and so far so good because as far as I know the W8-Ben forms are not directly reported to the IRS but I am not sure about this. However if the IRS start digging into this scheme you are very easily caught, you can even google the residency of the directors/shareholders of an LLP.
Worth looking into Solutions
UAE Resident + Georgian Company
- 15% corporate tax
- 0% corporate tax for Virtual IT zone companies (I heard it is really hard to get a license for it today and I am not sure if a YouTube business is eligible for this status)
Since there is no LOB clause in the US and USSR tax treaty this could be an option worth looking into however would require some more expertise, especially if you are eligible for a Virtual IT zone company. Which would mean 0% tax because of the tax treaty between Georgia and the UAE otherwise 15%.
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If you any addition to this list or spot a mistake please let it know.
The problem
Withholding of 30% on all US revenue generated from YouTube / Google ad earnings.
The case
Trying to achieve a as low as possible tax rate by reducing the withholding tax and other taxes. There are quite a few legal options and as far as I know and one non-legal option but the latter one is commonly used.
Legal Solutions
Malta company + non-dom resident (10% US withholding tax)
- 5% corporate tax on trading income, so all revenue there is no US withholding tax on will apply to this (6/7 refund on 35%)
- 11.8% corporate tax on royalty income, you get a tax credit resulting (2/3 refund on 35%)
No withholding if you pay it out as dividends to a foreign holding company, and leave it there a 1-2 years and then remit it to Malta tax free. So you will effectively pay somewhere between 5-11.8%
Cyprus company + non-dom resident (0% US withholding tax)
- 12.5% corporate tax
I believe 2.25% dividend tax when paying out the dividends so effective tax of 15%
Bulgaria company + resident (10% US withholding tax)
- 10% corporate tax (The withholding tax can be offset by the corporate tax by making use of the tax credit)
You will be subject to 5% tax on dividends so an effective tax rate of 15%.
Georgia company + resident (0% us withholding tax)
- 15% corporate tax
- 0% corporate tax for Virtual IT zone companies (I heard it is really hard to get a license for it today and I am not sure if a YouTube business is eligible for this status)
- 1% for small businesses if your revenue is below 500.000 Georgian Lari
In case you make use of a regular company or virtual one you will have to pay 5% on dividend distributions so in Georgia you will have an effective tax rate of 1%, 5% or 20%.
Non - Legal Solutions
UAE Resident + UK LLP
- 0% tax on personal income in the UAE
- 0% withholding tax on US revenue in the UK
The reason this is not legal is because of the LOB clause in the tax treaty between the US which states that at least 50% needs to be held by a UK resident. I see many people use this setup and so far so good because as far as I know the W8-Ben forms are not directly reported to the IRS but I am not sure about this. However if the IRS start digging into this scheme you are very easily caught, you can even google the residency of the directors/shareholders of an LLP.
Worth looking into Solutions
UAE Resident + Georgian Company
- 15% corporate tax
- 0% corporate tax for Virtual IT zone companies (I heard it is really hard to get a license for it today and I am not sure if a YouTube business is eligible for this status)
Since there is no LOB clause in the US and USSR tax treaty this could be an option worth looking into however would require some more expertise, especially if you are eligible for a Virtual IT zone company. Which would mean 0% tax because of the tax treaty between Georgia and the UAE otherwise 15%.
====
If you any addition to this list or spot a mistake please let it know.
