Opening a company in a foreign jurisdiction for an IT person, freelancer, mobile application developer
“The taxpayer's right to avoid paying taxes using all methods permitted by law cannot be challenged by anyone. Everyone has the right to conduct their financial affairs in such a way as to reduce the relevant payments to a minimum ... "
J. Sunderland,
Judge of the US Supreme Court
After my article about the search for investments , I received many requests to tell more about opening a company abroad, and to highlight financial issues. In this topic, I tried to set out the main points, not claiming the ultimate truth.
So, when should you think about opening a company abroad?
1. You are a freelancer and your customers are mainly abroad.
2. Money receipts exceed 30.000 usd per year or are close to this figure.
3. You are developing mobile applications for the App Store, Google Play (I don’t know how things are with the windows store) and the bank asks you to bring the original contract signed by Tim Cook and Apple’s wet seal and a notarized translation of the same 200 page contract.
4. You are tired of endlessly communicating with tax, pension, currency control, financial monitoring, etc.
5. You organize a startup and want to do everything right right away. After all, when receiving investments, in most cases, you will have to do incorporation.
')
Of course, first of all, the question of the legality of this step is of interest. In civil society, there is a well-known in general practice, the general legal liberal democratic principle “not prohibited by law is permitted”. Neither Russian nor Ukrainian legislation explicitly restricts the creation of companies abroad by citizens. Legislation restricts, first of all, various forms of investment in the authorized capital of foreign enterprises and the acquisition of their shares. Thus, establishing a company abroad, but without investing anything in it, you do not break the law.
A very good choice is BVI (British Virgin Islands). British law, British jurisdiction, the perfect choice for a startup. It is prestigious, but a little expensive both in registration and in future maintenance, plus the requirements to keep financial records and to keep primary accounting documents. A simpler and cheaper option is Belize. This is the perfect choice for working with the App Store and Google Play, as well as for freelancing. The annual fee is only 100 usd per year, plus some expenses for company support (200-400 usd per year, depending on the options) and that's all. No taxes, reports, checks, pension funds and other nonsense.
I would not apply to Russian (Ukrainian) law firms, it will be more expensive. It is enough to find a law firm in Google in the country of the chosen jurisdiction, to communicate with them, discuss the details, pay with a card and in ten days by DHL you will receive a full package of documents for the company. And do not be afraid "you are not in the church will not deceive you" (c) O. Bender. The price of registration will depend on the options you choose, but at a minimum you can meet the 900-1000 usd.
And so you went all the way and you have documents on the company. You can begin to work, but where to take the money, and most importantly how to withdraw them. And here the most difficult begins, it is necessary to open an account in a decent bank. Frankly, decent banks do not really like offshore companies with small (by their standards) turnovers, but if you are Rockefeller's son-in-law, then that is another matter. Here, too, there are two options. The first is to entrust all to the law firm, but this may pull another 600 usd. And the law firm will take the money, but does not guarantee that you will open a bank account at 100%. Well, the second option, if you want to do well, do it yourself, and at the same time have a rest abroad. The bank is better to choose in a country other than the country of jurisdiction of the company, so safer. Offshore banks in the Caribbean do not immediately advise, there is a very expensive service and non-withdrawable balance on the account can be 1000 usd, plus the time difference and English-speaking staff can create inconvenience. I recommend Latvian or Lithuanian banks. Not expensive, good internet bank, Russian-speaking staff, understanding of our realities.
Since the whole world is struggling with money laundering, drug trafficking, arms trafficking and terrorism, get ready that all your soul will be taken out in the bank. Polite, cultural, but meticulous. In addition to the usual documents on the registration of the company and your passport, you fill out several forms. Banks adhere to the principle of Know Your Customer (know your customer). Prepare yourself what you may be asked for (depending on what impression you make): a second identity document (two IDs rule), a diploma of higher education of directors (hmm, and if there is no diploma that the account will not be opened), documents for owning real estate , registration certificate for a car and driver's license (if any), constituent documents of other companies of yours (if there is one, everything is very simplified), utility bill. They will also be asked the planned volume of revenues and expenses, they will be asked to draw a money flow chart, to tell about the planned counterparties. They may ask for more letters of recommendation from other banks. In short, the bank wants to make sure that you are a good citizen, and plan to engage in legitimate business. And the number of additional documents required is inversely proportional to the impression you made on the bank. Annual service in a Latvian / Lithuanian bank will cost about 200 usd per year. Acceptance of payments for free, sending paid. Plus some small money for issuing cards.
It all depends on your consciousness. You can transfer money to your personal card of the Russian (Ukrainian) bank, and quietly spend. The truth will have to fill out a declaration of income and pay tax on this money. And you can issue a corporate card to the company and spend from it. Formally, this is company money, and you spend it for business purposes; therefore, you should not pay tax on them. Everyone solves this issue based on their inner convictions, but it’s worth considering that the state’s opinion may not coincide with yours, and it’s not worth shining a foreign bank credit card once again.
UPD:
1. As for the purchases of apartments and cars (there were most questions about this). I advise you to take into account that all large purchases are recorded and easily tracked, so that only in “white”. Sorry.
2. Registration of the company as Apple Developer passes without problems for the same 99 usd as the physical person. You only need to get a DUNS number, but it's free. I think with Google Play, admob, etc., too, there are no problems, but maybe someone will write about personal experience in comments.
PS If a respected community deems a topic worthy of a tutorial, I’ll put a tick. I will answer general questions in comments. "Intimate" aka financial, relating to me personally, please in a personal.
Because of the 4-ki in the Russian language, at the time, did not receive a gold medal, so about grammatical errors, write in a personal.
J. Sunderland,
Judge of the US Supreme Court
After my article about the search for investments , I received many requests to tell more about opening a company abroad, and to highlight financial issues. In this topic, I tried to set out the main points, not claiming the ultimate truth.
When
So, when should you think about opening a company abroad?
1. You are a freelancer and your customers are mainly abroad.
2. Money receipts exceed 30.000 usd per year or are close to this figure.
3. You are developing mobile applications for the App Store, Google Play (I don’t know how things are with the windows store) and the bank asks you to bring the original contract signed by Tim Cook and Apple’s wet seal and a notarized translation of the same 200 page contract.
4. You are tired of endlessly communicating with tax, pension, currency control, financial monitoring, etc.
5. You organize a startup and want to do everything right right away. After all, when receiving investments, in most cases, you will have to do incorporation.
')
Legality
Of course, first of all, the question of the legality of this step is of interest. In civil society, there is a well-known in general practice, the general legal liberal democratic principle “not prohibited by law is permitted”. Neither Russian nor Ukrainian legislation explicitly restricts the creation of companies abroad by citizens. Legislation restricts, first of all, various forms of investment in the authorized capital of foreign enterprises and the acquisition of their shares. Thus, establishing a company abroad, but without investing anything in it, you do not break the law.
Where
A very good choice is BVI (British Virgin Islands). British law, British jurisdiction, the perfect choice for a startup. It is prestigious, but a little expensive both in registration and in future maintenance, plus the requirements to keep financial records and to keep primary accounting documents. A simpler and cheaper option is Belize. This is the perfect choice for working with the App Store and Google Play, as well as for freelancing. The annual fee is only 100 usd per year, plus some expenses for company support (200-400 usd per year, depending on the options) and that's all. No taxes, reports, checks, pension funds and other nonsense.
how
I would not apply to Russian (Ukrainian) law firms, it will be more expensive. It is enough to find a law firm in Google in the country of the chosen jurisdiction, to communicate with them, discuss the details, pay with a card and in ten days by DHL you will receive a full package of documents for the company. And do not be afraid "you are not in the church will not deceive you" (c) O. Bender. The price of registration will depend on the options you choose, but at a minimum you can meet the 900-1000 usd.
And now the most difficult
And so you went all the way and you have documents on the company. You can begin to work, but where to take the money, and most importantly how to withdraw them. And here the most difficult begins, it is necessary to open an account in a decent bank. Frankly, decent banks do not really like offshore companies with small (by their standards) turnovers, but if you are Rockefeller's son-in-law, then that is another matter. Here, too, there are two options. The first is to entrust all to the law firm, but this may pull another 600 usd. And the law firm will take the money, but does not guarantee that you will open a bank account at 100%. Well, the second option, if you want to do well, do it yourself, and at the same time have a rest abroad. The bank is better to choose in a country other than the country of jurisdiction of the company, so safer. Offshore banks in the Caribbean do not immediately advise, there is a very expensive service and non-withdrawable balance on the account can be 1000 usd, plus the time difference and English-speaking staff can create inconvenience. I recommend Latvian or Lithuanian banks. Not expensive, good internet bank, Russian-speaking staff, understanding of our realities.
What documents will require the bank
Since the whole world is struggling with money laundering, drug trafficking, arms trafficking and terrorism, get ready that all your soul will be taken out in the bank. Polite, cultural, but meticulous. In addition to the usual documents on the registration of the company and your passport, you fill out several forms. Banks adhere to the principle of Know Your Customer (know your customer). Prepare yourself what you may be asked for (depending on what impression you make): a second identity document (two IDs rule), a diploma of higher education of directors (hmm, and if there is no diploma that the account will not be opened), documents for owning real estate , registration certificate for a car and driver's license (if any), constituent documents of other companies of yours (if there is one, everything is very simplified), utility bill. They will also be asked the planned volume of revenues and expenses, they will be asked to draw a money flow chart, to tell about the planned counterparties. They may ask for more letters of recommendation from other banks. In short, the bank wants to make sure that you are a good citizen, and plan to engage in legitimate business. And the number of additional documents required is inversely proportional to the impression you made on the bank. Annual service in a Latvian / Lithuanian bank will cost about 200 usd per year. Acceptance of payments for free, sending paid. Plus some small money for issuing cards.
Withdrawals and taxes
It all depends on your consciousness. You can transfer money to your personal card of the Russian (Ukrainian) bank, and quietly spend. The truth will have to fill out a declaration of income and pay tax on this money. And you can issue a corporate card to the company and spend from it. Formally, this is company money, and you spend it for business purposes; therefore, you should not pay tax on them. Everyone solves this issue based on their inner convictions, but it’s worth considering that the state’s opinion may not coincide with yours, and it’s not worth shining a foreign bank credit card once again.
UPD:
1. As for the purchases of apartments and cars (there were most questions about this). I advise you to take into account that all large purchases are recorded and easily tracked, so that only in “white”. Sorry.
2. Registration of the company as Apple Developer passes without problems for the same 99 usd as the physical person. You only need to get a DUNS number, but it's free. I think with Google Play, admob, etc., too, there are no problems, but maybe someone will write about personal experience in comments.
PS If a respected community deems a topic worthy of a tutorial, I’ll put a tick. I will answer general questions in comments. "Intimate" aka financial, relating to me personally, please in a personal.
Because of the 4-ki in the Russian language, at the time, did not receive a gold medal, so about grammatical errors, write in a personal.
Source: https://habr.com/ru/post/169349/
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