February 14, 2013 at 11:10Opening a company in a foreign jurisdiction for an IT specialist, freelancer, mobile application developer
“The right of a taxpayer to avoid paying taxes using all methods permitted by law cannot be challenged. Everyone has the right to conduct their financial affairs in such a way as to minimize the corresponding payments ... ”
J. Sunderland,
Judge of the Supreme Court of the USA
After my article on the search for investments , I received many requests to tell us more about opening a company abroad and to cover financial issues. In this topic, I tried to state the main points, not claiming the ultimate truth.
So, when should you think about starting a company abroad?
1. You are a freelancer and your customers are mostly abroad.
2. The income of money exceeds 30,000 usd per year or 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 the Apple wet seal and a notarized translation of the same contract to 200 pages.
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 you receive an investment, in most cases, you have to do incorporation.
Of course, the question of the legality of this step is of primary interest. In civil society, the general legal liberal-democratic principle “not forbidden by law is permitted”, which is known in world practice, operates. Neither Russian nor Ukrainian legislation clearly restricts the creation of companies abroad by citizens. The legislation restricts, first of all, various forms of investment in the authorized capital of foreign enterprises and the acquisition of their shares. Thus, setting up an enterprise abroad, but not 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 further maintenance, plus the requirements to keep financial records and 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 freelance. The annual fee is only 100 usd per year, plus some support costs for the company (200-400 usd per year, depending on options) and all. Not any taxes, reports, inspections, 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 company in Google in the country of your chosen jurisdiction, write to them, discuss the details, pay by card and in ten days DHL will receive a full package of documents for the company. And do not be afraid “you are not in the church you will not be deceived” (c) O. Bender. The registration price will depend on the options you have chosen, but at a minimum you can keep within 900-1000 usd.
And so you went all the way and in your hands you have documents for the company. You can start working, but where to take money, and most importantly how to withdraw it. And here the most difficult part 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’re Rockefeller’s son-in-law, then another thing. There are also two options. The first is to entrust everything to a law firm, but it can pull another 600 usd. Moreover, the law company will take the money, but it does not give guarantees that you will open a bank account 100%. Well, the second option, if you want to do well, do it yourself, at the same time, and relax abroad. It is better to choose a bank in a country other than the country of jurisdiction of the company, it is more reliable. Offshore banks of the Caribbean do not immediately recommend there it is very expensive service and a non-deductible account balance can be 1000 usd, plus the time difference and English-speaking staff can create inconvenience. I recommend the Latvian or Lithuanian banks. Not expensive, good internet banking, Russian-speaking staff, understanding of our realities.
Since the whole world is struggling with money laundering, drug trafficking, arms trafficking and terrorism, get ready to take out your whole soul in the bank. Polite, cultured, but meticulous. In addition to the usual documents on registration of the company and your passport, you will fill out several questionnaires. Banks adhere to the principle of Know Your Customer. Get ready what may be required of you (depending on what impression you make): a second identification document (rule of two IDs), a diploma of higher education of directors (hmm, and if there is no diploma, they will not open an account), documents on real estate ownership , car registration certificate and driver’s license (if any), constituent documents of your other firms (if any, everything is very simplified), utility bill. They will also ask for the planned amount of revenues and expenses, will be asked to draw a diagram of the movement of money, talk about planned counterparties. They may also ask for letters of recommendation from other banks. In short, the bank wants to make sure that you are a respectable 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 little money for issuing cards. 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 little money for issuing cards. 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 little money for issuing cards.
It all depends on your consciousness. You can transfer money to your personal card of a Russian (Ukrainian) bank, and spend it quietly. True, you will have to fill out an income statement and pay tax on this money. And you can get a corporate card for the company and spend with it. Formally, this is company money, and you spend it for business purposes, so you should not pay tax on them. Everyone solves this issue on the basis of internal convictions, but it should be borne in mind that the opinion of the state may not coincide with yours, and it’s not worth highlighting a foreign bank credit card again.
UPD:
1. As for the purchase of apartments and cars (there were most questions about this). I advise you to take into account that all major purchases are recorded and easily tracked, so only in white. Sorry.
2. Registration of the company as Apple Developer runs without problems for the same 99 usd as an individual. You only need to get a DUNS number, but it's free. I think with Google Play, admob, etc. there are also no problems, but maybe someone in the comments will write about their personal experience.
PS If a respected community considers the topic worthy of a tutorial, I’ll check the corresponding box. I will answer general questions in comments. "Intimate" aka financial, relating to me personally, please in PM.
Because of the 4 matches in the Russian language, at one time, I did not receive a gold medal, so write about the grammar errors in PM.
J. Sunderland,
Judge of the Supreme Court of the USA
After my article on the search for investments , I received many requests to tell us more about opening a company abroad and to cover financial issues. In this topic, I tried to state the main points, not claiming the ultimate truth.
When
So, when should you think about starting a company abroad?
1. You are a freelancer and your customers are mostly abroad.
2. The income of money exceeds 30,000 usd per year or 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 the Apple wet seal and a notarized translation of the same contract to 200 pages.
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 you receive an investment, in most cases, you have to do incorporation.
Legality
Of course, the question of the legality of this step is of primary interest. In civil society, the general legal liberal-democratic principle “not forbidden by law is permitted”, which is known in world practice, operates. Neither Russian nor Ukrainian legislation clearly restricts the creation of companies abroad by citizens. The legislation restricts, first of all, various forms of investment in the authorized capital of foreign enterprises and the acquisition of their shares. Thus, setting up an enterprise abroad, but not 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 further maintenance, plus the requirements to keep financial records and 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 freelance. The annual fee is only 100 usd per year, plus some support costs for the company (200-400 usd per year, depending on options) and all. Not any taxes, reports, inspections, 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 company in Google in the country of your chosen jurisdiction, write to them, discuss the details, pay by card and in ten days DHL will receive a full package of documents for the company. And do not be afraid “you are not in the church you will not be deceived” (c) O. Bender. The registration price will depend on the options you have chosen, but at a minimum you can keep within 900-1000 usd.
And now the hardest part
And so you went all the way and in your hands you have documents for the company. You can start working, but where to take money, and most importantly how to withdraw it. And here the most difficult part 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’re Rockefeller’s son-in-law, then another thing. There are also two options. The first is to entrust everything to a law firm, but it can pull another 600 usd. Moreover, the law company will take the money, but it does not give guarantees that you will open a bank account 100%. Well, the second option, if you want to do well, do it yourself, at the same time, and relax abroad. It is better to choose a bank in a country other than the country of jurisdiction of the company, it is more reliable. Offshore banks of the Caribbean do not immediately recommend there it is very expensive service and a non-deductible account balance can be 1000 usd, plus the time difference and English-speaking staff can create inconvenience. I recommend the Latvian or Lithuanian banks. Not expensive, good internet banking, Russian-speaking staff, understanding of our realities.
What documents will the bank require
Since the whole world is struggling with money laundering, drug trafficking, arms trafficking and terrorism, get ready to take out your whole soul in the bank. Polite, cultured, but meticulous. In addition to the usual documents on registration of the company and your passport, you will fill out several questionnaires. Banks adhere to the principle of Know Your Customer. Get ready what may be required of you (depending on what impression you make): a second identification document (rule of two IDs), a diploma of higher education of directors (hmm, and if there is no diploma, they will not open an account), documents on real estate ownership , car registration certificate and driver’s license (if any), constituent documents of your other firms (if any, everything is very simplified), utility bill. They will also ask for the planned amount of revenues and expenses, will be asked to draw a diagram of the movement of money, talk about planned counterparties. They may also ask for letters of recommendation from other banks. In short, the bank wants to make sure that you are a respectable 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 little money for issuing cards. 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 little money for issuing cards. 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 little money for issuing cards.
Withdrawals and taxes
It all depends on your consciousness. You can transfer money to your personal card of a Russian (Ukrainian) bank, and spend it quietly. True, you will have to fill out an income statement and pay tax on this money. And you can get a corporate card for the company and spend with it. Formally, this is company money, and you spend it for business purposes, so you should not pay tax on them. Everyone solves this issue on the basis of internal convictions, but it should be borne in mind that the opinion of the state may not coincide with yours, and it’s not worth highlighting a foreign bank credit card again.
UPD:
1. As for the purchase of apartments and cars (there were most questions about this). I advise you to take into account that all major purchases are recorded and easily tracked, so only in white. Sorry.
2. Registration of the company as Apple Developer runs without problems for the same 99 usd as an individual. You only need to get a DUNS number, but it's free. I think with Google Play, admob, etc. there are also no problems, but maybe someone in the comments will write about their personal experience.
PS If a respected community considers the topic worthy of a tutorial, I’ll check the corresponding box. I will answer general questions in comments. "Intimate" aka financial, relating to me personally, please in PM.
Because of the 4 matches in the Russian language, at one time, I did not receive a gold medal, so write about the grammar errors in PM.