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Business How to open a proper offshore bank account ?
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Malone Offline
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Post: #26
RE: How to open a proper offshore bank account ?
(12-04-2016 04:01 PM)nomadbrah Wrote:  
(12-04-2016 07:22 AM)Malone Wrote:  I am resident in Spain, and I ended up forming my company in Estonia, with banking there.

It's not the easiest to open, although fairly easy. But the reason I didn't do it elsewhere (BVI, etc) - is that the EU has a "blacklist" of tax havens, and the Spanish government has added a few to that list. Estonia being in the EU doesn't currently fall on that list. Estonia also has 0% corporate tax on retained earnings. Since my salary is an expense of the company, it's also not taxed there.

My tax mitigation strategy is an old one: Pay myself the minimum salary I need to maintain myself while billing a much higher rate through my company. The salary I'm paying myself is still high for local standards, but it's in the sweet spot for income tax. The excess builds up in the company as retained earnings. If I need more money I can draw it, but it'll affect the tax bill. If I need to buy hardware or software, I can buy it directly with the company card.

I'm wanting to pay local taxes as I'm actually planning on living here medium-long term, and intend to buy a house and land in 2017. That will probably involve me drawing a nice big dividend out of the Estonian company for the down payment and then paying dividend rates on it in 2018 (20ish %).

Paying local taxes has the advantage that after having been above board for a year or so I should be able to get a local mortgage, which I'll need.

Setting up all this is fairly painless - there's a yearly fee for a virtual office in Estonia, a monthly fee to an Estonian accountant to file the paperwork with the Estonian government.

I also had the advice of a local Spanish accountant to get everything above board here.

I think it would be fairly easy for me to avoid paying taxes entirely with my current employment situation, but not at the same time as I live in one place in Europe and buy property. Trying to do that would get you screwed hard.

You are still eligble for income tax in Spain if you live there, right?

Yes, that's right. That's why I'm drawing a small salary, to limit the tax I am paying. However, it's flexible enough that it was hard to believe.

You have to be living in the country for 6 months in a calendar year to be "resident" - and that clock resets at the end of the year! So I arrived in August or something, and then I wasn't required to pay any local taxes until June the next year. Seems dumb as hell, but that's the way it is.
12-05-2016 02:05 AM
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Bill Brasky Offline
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Post: #27
RE: How to open a proper offshore bank account ?
(12-01-2016 04:25 AM)The Beast1 Wrote:  
(12-01-2016 02:31 AM)Bill Brasky Wrote:  
(07-31-2016 10:56 AM)The Beast1 Wrote:  Easiest way to do this would be to register an American LLC in either Nevada or Delaware, get an IRS business number, and then open a checking account with a bank (Charles Schwab is good).

There will be a yearly associated cost with maintaining the LLC (~150$), but you get the added benefit of hiding your wealth in America from prying European taxmen.

It would be safer to base your wealth in USD as opposed to the Euro.

Depending on how much you make

I'm a digital nomad currently living overseas and want to start a foreign corporation.

I originally was going to start a Nevada corp. The problem with this is is that all you really do is avoid State income taxes since Nevada (and Texas, Florida, Washington, Delaware) do not have State income taxes.

You still have to pay the FICA taxes (SS, Medicare taxes) which are about 15%.

A foreign corporation, one you own, would allow you to legally bypass the requirement of paying the FICA taxes.

The whole start a Nevada company is not that effective for a US citizen digital nomad as the FICA taxes are high and can be easily and legally avoided. Just imagine having an additional $15,000 in your bank account on $100,000 profit.

What did you ultimately set up? I'm curious how you've structured your life for this.

I ended up going with a Belize International Business Company (IBC) which owns a US LLC (Wyoming).

Belize was the cheapest option which is why I went with it. In total, I spent about $1100 and will pay about $650/year for the registered office fee.

I heard it was difficult to open a bank account with a Belize IBC being that its reputation is not very good. This was a non-issue for me as I only needed the IBC to be the sole member of my US LLC and the business checking account will be opened via the US LLC.

That said, I read of a guy at freedomsurfer.com opening a Singapore bank account with his Belize company.
02-23-2017 07:36 AM
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