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Ask Me Anything (49)

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Hi All,

I am an ACCA/ACA qualified with masters in financial management from UK. I have worked in performance industry for 5 years and have setup/managed structures in UK, Dubai, Hong Kong, India and Philippines.

I have in depth expertise around accounting, financial management, financial reporting, multi jurisdictional audits, VAT, GST, corporation tax, payroll taxes, company incorporation, tax efficient structure, banking and other corporate matters across multiple jurisdictions.

If your heart skips a beat when you hear about accounting, tax or audit, you can always calm yourself by asking a question here.

Whether you are looking for information on complex matters including taxes/audits or something as simple as raising or recording a sales invoice, happy to share my experiences with you.

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That is an EXTREMELY generous offer Umar! Thank you very much for extending such help to the community!

I hope you won't mind, but I'm moving this thread to a more popular section of the forum to get more eyeballs. This will no doubt turn into such a valuable post!

Thanks again!



Amy

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Thanks Amy.

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What's your Skype?

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Ask here, let the community benefit from the answers too

Hi Umar btw

A question from me if you don't mind ... are any of the regions, that you have experience with, safe for transactions that are related to Adult in some way? We do promote adult dating offers for example, part of the revenue we collect is from standard affiliate networks, some are 100% adult focused but with neutral company names ... would that pose a problem with a company setup in Dubai for example?

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For EU-based, is the most tax efficient setup for an affiliate to structure/incorporate in a 0-15% corporate tax jurisdiction and have the incorporated company hire the affiliate whereby they only draw salary to be taxed in the country of domicile?

Is it a better practice to put more distance between you and the company through maybe setting up yet another holding company or incorporate another one for instance that provides services to the first etc.

What are you looking for in a bank for business? capital and liquidity ratios? region?

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Hi, I think it is better if you post your questions here so other can benefit from the info as well..

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Hi Matuloo, with regards to a Dubai setup for adult activity, i don't see any issues from a company setup point of view as long as you keep a moderate name and select a more broader/generic business activity for e.g Advertising agency, marketing etc. Just so you know the Adult websites are banned in Dubai so you may find some challenges in generating traffic via various more regulated advertisers if your account is registered with them under a Dubai CO.

UK could be a good option as the company setup is cheap and adult activity/traffic is not banned there however it comes with a lot of tax implications including VAT and Corporation tax which you may want to avoid entering into.

Hong Kong seems a good option with no complications around adult activity and at the same time you can enjoy the benefits of tax free profits as well as long you don't have a Hong Kong sourced income and no employees/directors are HK resident.

If you are looking for a more tax efficient structure I would put Hong Kong as a first option and Dubai as a 2nd.

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Wow, ACCA and ACA qualified?

This is like having 2 Ph.D.s ... not many people who have both global chartered accountancy qualificantions. Nice!

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I think EU based setup comes with a lot of tax implications especially VAT ( There are more complex VAT rules for digital marketers) which you can avoid by looking into a more tax efficient structure especially in Dubai or Hong Kong etc.

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One more question if you don't mind... Is it possible to setup a company in HKK or Dubai, without having to travel there on my own, or is it a must?

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For Dubai you would have to travel for both company setup and the bank account opening purposes unless you appoint a local Dubai resident to act as manager of your company and a signatory with the bank. However the company agents in Dubai can deal with most of the processes and you would have to come only towards the end.

For Hong Kong you can setup a company without travelling but for bank account purposes it depends case by case especially what nationality the directors and ultimate shareholders hold and where they are based etc. Based on the due diligence some banks may require you to travel to Hong Kong and in other cases you may not be required and your company agents in Hong Kong can deal with all the matters on your behalf.

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Hey Digitas,

Thanks for this opportunity! I'm currently looking for the best jurisdiction to incorporate my new company.

I already have company incorporated in my home country in Europe (but not part of EU), but would like to keep my income information away from friends, family and local authorities' eyes I thought Cyprus might be the best option, or maybe even HK or BVI... What do you think?

Thanks!

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What are your opinions on setting up a company in Estonia or Bulgaria?

I am an EU citizen from the Netherlands who lives in Spain but are not registered here and I am planning to unregister from the Netherlands.

Looking for something with low taxes and easy management and several people advised Estonia or Bulgaria.

Offshore might be an issue for me as I need to show income soon for a mortgage application.

Thanks

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Hi Hocuspocus, it depends what objective you are trying to achieve. If you are looking more of a tax efficient structure and keep things away from the local authorities then Hong Kong or BVI would definitely work better. You can also look out for a Free zone entity setup in Dubai however setup costs are a bit high in Dubai compared to those of Hong Kong.

Provided that you do not have a Hong Kong sourced income then i would put Hong Kong as a first option compared to BVI. HK setup is a more formalized and regulated legal entity setup compared to that of BVI and it will make things a lot easier for you in the future if you are looking for some business funding, credit lines or even a M&A deal etc. It further helps you in producing a more legitimate source of income for future personal purposes instead of incorporating in a less or completely non regulated offshore zones like BVI, Seychelles etc.

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Hi Eurosen, A Bulgaria setup seems a good option especially having low corporation tax rates compared to other EU countries.

However you can still consider an offshore setup in some of the more regulated zones like Hong Kong or Dubai, withdraw regular salaries or dividends out of the company's profits and at the same time declaring them in your personal tax return in the country of your residence and paying appropriate taxes. The good thing with an offshore setup is that you may have to pay personal taxes on withdrawal based on your personal tax circumstances however company profits would not be taxable at all. Whereas setting up entities in a tax regulated countries like Bulgaria etc you would pay personal taxes as explained above and at the same time would also pay corporation tax on company's profits.

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Great, thanks for the quick reply!

Do you offer one on one paid advice?

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I only reply to forum posts as I want many people to benefit from the information. I don't provide advice and everything on the forum is for information only.

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maybe this is out of your niche but how do I get higher daily spend limit on my debit cards with banks? Most give it to me but they are not permanent.

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Ah ok, completely get where your coming from.

So what would you do, being a Dutch citizen who wants to unregister from NL and live in Spain without registering as a citizen?

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Hi Digitas! A couple of questions from me if you please:

1)I was born in Hong Kong but my citizenship is Canadian. If I'm wanting to set up a company in Hong Kong would it help make the process easier if I reinstated my HK citizenship? I can do this quite easily.

2)If I'm wanting to import goods into an EU country and sell them locally, would it make financial sense - if it would even be possible in the first place - for me to register a company in that country? What if I was working with someone who is a resident of that country and I'm wanting to be an official business partner? What do you think would be the best and most viable option?


Thanks in advance for your help!



Amy

Sent from my SM-G930W8 using STM Forums mobile app

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Hi, is your debit card issued on personal or business account ?

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There are many rules to be taken into consideration when someone qualifies to be a tax resident of a particular country, however the most important rule is that you should not spend more than 183 days in a year in Spain to avoid being considered as Spanish tax resident. A Free zone entity incorporated in Dubai may work very well for your in this case. You can get an employment visa from the Dubai CO which will give you Dubai residency status. This will allow you to show Dubai as your tax residency for personal tax purposes ( there are no personal or corporation taxes in Dubai) no matter where you live but you would need to make sure to not spend more than 183 days in a year in Spain.

However there are other factors to be considered as well for e.g if you have house in Spain or your spouse is Spanish tax resident etc. A proper tax advice is always recommended in this case in order to structure things properly in the first place.

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Hi Amy, Hong Kong citizenship will always ease out things for you while opening a bank account whereas it may put a significant challenge for you to claim a corporation tax exemption on your company's profit. The main reason you want to have a company in Hong Kong is to avoid paying any corporation tax on business profits. However if a company's director or a key employee is HK citizen, the tax authorities takes a very hard approach on giving a tax exemption/relief on company's profit.

Regarding point 2, when you say "sell them locally" do you mean selling to one particular EU country or across various EU countries ?

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So to clarify: If a tax break is what I'm seeking, then I should set up the business entity and bank account in HK as a Canadian citizen?

And regarding question 2: I am selling in just the one EU country to start. However, I do have plans to expand to other EU countries, so any advice on that would be very useful as well!

Don't know how to thank you Digitas - I was about to seek out a professional to consult with about taxes and setting up an entity - and here you are! Even just having a general direction to head towards will help immensely. Thank you!



Amy

Sent from my SM-G930W8 using STM Forums mobile app

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Yes it would be more appropraite to setup HK entity as a Canadian citizen.

Regarding question 2 it would be more beneficial from VAT point of view to incorporate a company in a EU state to do this part of activity. There will be different VAT rules applicable on each type of transaction as to whether its is a business to business sale or business to customer sale.
Working with an EU resident director will always help easing out opening of bank account for the company so you may want to consider your business partner role here.

Sent from my SM-G955F using STM Forums mobile app

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Understood! Your suggestions are very much appreciated!

And please let us know if there's anything we could do for you.


Amy

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One of the best solutions for EU citizens right now is the Cyprus "Non-Domiciled" program I think. Either get an Ltd and pay 12.5% corporate tax and no tax on dividends or an offshore company and pay no tax on dividends in cyprus.

2 months stay a year for the Ltd solution, 6 months for the one without the Ltd (HNWI). The difference to Malta's program is that the offshore dividends are allowed to enter the country.

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Thanks for this and your previous advise.

If I would like to setup in HK and don´t want to travel to HK, what are my options?

Is a HK company combined with Transferwise business or Revolut possible?

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Personal account.

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For Hong Kong you can setup a company without travelling but for bank account purposes it depends case by case especially what nationality the directors and ultimate shareholders hold and where they are based etc. Based on the due diligence some banks may require you to travel to Hong Kong and in other cases you may not be required and your company agents in Hong Kong can deal with all the matters on your behalf.

Transferwise is now in Hong Kong. For Revolut the last I know was that they are yet to launch in HK.

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Debit card setup on personal accounts always has a low limit compared to business account. You may try getting one on the business account and always request for a permanent increase in the limit if it is lower.

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Ok, so basically using Transferwise business could eliminate the fact that you have to open up a bank account in Hong Kong?

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Yes if you just want to operate via a virtual bank account (Transferwise) only. However it is highly recommended to open an account with a bank having physical presence in Hong Kong as well. In future if you wanted to produce business bank statements for some reason for e.g to open an account with payment processor platform etc the third party may not accept transfer wise statements.

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Thanks Digitas, helps a lot!

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Digitas, at what yearly profit would you say is time to consider tax optimization and planning?

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It depends what tax rates you are currently at. In any case if you have $100K or more in profits then its definitely worth considering tax planning. Some of the offshore zones like Hong Kong are no brainier really as the setup costs are quite low and in some cases annual compliance costs would be less than or equal to what you may be paying in your current tax jurisdiction.

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Can you say what the annual costs are roughly, for a really basic setup in HKK and Dubai? Really the most basic company structure with no extra employees, just 1 bank account ...

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1. How difficult is it nowadays to open a bank account in Hong Kong?
2. Imagine being a resident in a country that doesn't tax foreign income sources and it's not part of OECD exchange information. In your opinion, what's the best/cheapest/less burdens (accounting, yearly financial statements, etc.) combination to incorporate a company + where to open its bank account?

Thanks, you're awesome.

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For HK it would cost between $4K to $5K annual. This includes $1K one time setup fees. You also have to get an annual audit which is included in the total of $4K. Depending on how complex the business is, this may increase.

In UAE there are quite a few freezones, Dubai would be expensive but the minimum freezone in UAE would cost between $8K to $10K annual. This includes a one time setup fee of $2K.

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1- Regarding bank account, this really depends on nationality and the personal profile of the shareholders and directors.However in the first instance you should try in the banks other than HSBC.

2-It's really hard to give a specific answer here but since your country is not part of OECD exchange information you may try some of the less or non regulated offshore zones like BVI or Seychelles.They all have very relax accounting, compliance requirements. However non regulated offshore zones always comes with a risk if you are trying to proof a more legitimate source of income for your personal purposes. For e.g. if you want to buy a mortgage in future etc.

Looking at the regulated offshore zones, HK would be the cheapest whereas UAE would be less burden in terms of accounting, taxes, compliance etc.

Hope this helps!

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Bank accounts in Hong Kong are getting very hard to get as a non resident ... even more so for an industry like AM which is not very well understood to the rest of the world

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Have you ever looked into http://business.neat.hk? In theory (just by looking at the website) seems like a great alternative.

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As in affiliate marketing, the gap between what a web site says it offers and what actually you end up getting is pretty vast ...

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Hi @digitas
First I’d like o thank you for taking time and sharing an advice with the community as nowadays it’s not only costly to find a tax adviser but also really hard to find a good one.

My question is related to the savings and assets though : affiliate industry is highly risky and you hear about law suits all the time involving high amounts of money. I have heard that an individual can secure savings or other assets such as property but having an overseas / offshore trust manage it. If let’s say I want to buy a house that is 1m worth and don’t want to put it on my name for security or anyone else’s name what would be the best way to handle this ? If I use some Belize trust on my name as an owner of that properly as far as I know it would be secure enough if I don’t want to lose it if anyone files a law suit against me..

Or if I want pull 1m in dividends and wouldn’t want the money to go on my name in the county where I’m registered as a tax resident?

Thanks!

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Hi, What is the exact objective you are trying to achieve here, is it to avoid paying taxes or simply avoid putting any assets/cash under your name ?

I may not be able to provide much suggestions around this as I have only dealt with few trust setups.

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Well basically saving on taxes dealing with high digit amounts payed out in dividends (which could later be spent on acquiring property for example) also not having any intangible assets directly associated with my name. In case someone files a lawsuit against me personally and I will be charged with penalties.

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Yes trust setup could work in this case. You need to make sure you are not setup as a trustee. Most of the offshore trust incorporation agents provides trustee services as well.

However i would like to mention that trust are complex and it's very important that they are setup appropriately in the first instance in order to achieve the tax objective you are looking for. It's quite essential that a proper tax advice is taken beforehand.

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Thank you Digitas for sharing an advice!

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