Trading via own remote company in a no-tax-country

[Xela]

if you earn income through a foreign country you still have to pay taxes.

Indeed ... but (contrary to popular belief, especially in forums, where opinions are very widely offered) not necessarily US taxes: America has tax treaties with very many countries, and in those cases income taxed in the counterpart country is not additionally liable for US taxation.

All the US citizens working throughout Europe (and in many other parts of the world) who are taxed locally on their incomes by foreign governments are certainly not also paying taxes separately to the US government. This is just a widespread myth.

However, US citizens resident in the US and earning not-locally-taxed money via overseas corporations certainly have to declare and pay taxes on that income at home (a very different point which I suspect may be what you intended to mention?).

 

[marsman]

It is NOT legal for an american citizen to not pay taxes on all his income. if you earn income through a foreign country you still have to pay taxes.

so be legal. PAY YOUR TAXES OR GO TO JAIL.

BS, I'm not a US citizen nor residing in the US, cf. the initial posting...

 

[dealmaker]

Indeed ... but (contrary to popular belief, especially in forums, where opinions are very widely offered) not necessarily US taxes: America has tax treaties with very many countries, and in those cases income taxed in the counterpart country is not additionally liable for US taxation.

All the US citizens working throughout Europe (and in many other parts of the world) who are taxed locally on their incomes by foreign governments are certainly not also paying taxes separately to the US government. This is just a widespread myth.

However, US citizens resident in the US and earning not-locally-taxed money via overseas corporations certainly have to declare and pay taxes on that income at home (a very different point which I suspect may be what you intended to mention?).

How do you know this? Let's say you are a US citizen living in Ireland where highest tax is 40%, where as in US its 45% wouldn't you in this scenario assuming you do not have deductions be liable for the remaining 5%?

 

[Xela]

How do you know this?

Just by being slightly better informed on the subject than Chewy is, but that isn't difficult: he's apparently one of the people who believes the widespread myth that all US citizens, wherever they live, have to pay income tax to the US government. The reality is, of course, not nearly as simple as that, and comparatively few living overseas actually do (partly because of all the bilateral taxation treaties to which I referred above).

Let's say you are a US citizen living in Ireland where highest tax is 40%, where as in US its 45% wouldn't you in this scenario assuming you do not have deductions be liable for the remaining 5%?

Sorry - I don't know enough detail to have an answer to this. I strongly suspect the answer's "no", because of a tax treaty, but I can easily be wrong on that point. Please appreciate that I'm by no means trying to come across as any kind of expert on this subject: I just wanted to correct the hugely mistaken impression created by Chewy's post above.

 

[d08]

Latvia (and Estonia?) does not tax income from dividends and stocks if incorporated. Mentioning this in case you don't know, and both are EU countries.

But in Estonia you're taxed 20% when paying shareholders dividends and I believe you mentioned it's 10% in Latvia, which is quite amazing even if you factor in the taxes for min. wage you'd be paying. In Estonia you don't actually need to pay yourself a wage as there was a court settlement where the bureau of taxation lost.

 

[Pasternak]

Yes, correct about Estonia. If you can pay no taxes at company level then you can compound a lot by just letting money stay in company. Do you have any idea how much it costs to run an Estonian company? It's an alternative for me.

About Latvia there is no withholding taxes to non resident companies (as far as I know, except tax havens). Still, I think 10% is a pretty good deal? About minimum salary you can circumvent that to a large degree. I pay myself a minimum salary just twice a year. Minimum salary is 370 EUR a month now.

I'm not an expert, but be careful about what you are doing. Easy to get it wrong.

 

[d08]

I still own an Estonian LLC and I kept a close eye on the laws and consulted an accountant, I was a resident and I'm a citizen so it was easier for me to follow.
You need to keep 2500 EUR as capital (doesn't even have to be a currency, can be a car or anything of material value) which can be used for whatever operations you need (including trading) but you can't go below that for an LLC, the amount is 10 times that for a corporation (aktsiaselts, AS).
Registration as of now seems to be 185 EUR and there shouldn't be any other costs besides this. Reporting is typically done once a year online, the numbers are checked online so it's not too easy to leave any typos but you're responsible for correctness (obviously). There's also an English interface (haven't tried it myself).
Compared to Estonia, 10% is obviously much more competitive, even if it comes to 11-12% with the two salaries annually.

 

[Pasternak]

Thanks for info, I didn't know you were Estonian. I believe filing is much easier than i Latvia, where it's very buraucratic. And who knows for how long the Latvian system will stay. I need an accountant to do all my filing here.

As of now you can even have an offshore UAE company and pay no taxes to Latvia (because of a tax treaty clause in the internal law). And no filing

You confirm there is no minimum wages you have to pay in Estonia? What kind of numbers need to be typed in? I assume as a foreigner I would need an accountant?

 

[d08]

It's probably easier to get an accountant for that but if you've filed in other countries yourself then you should be able to do it. I filed myself (although with some help) and it wasn't as straightforward as I thought.
There was no need to pay a min. wage 2 years ago and while I can't say for sure, I believe the system is the same. Obviously for safety it's best to pay the min. wage as you'd also get health insurance and some other perks.

 

[jk90029]

It is NOT legal for an american citizen to not pay taxes on all his income. if you earn income through a foreign country you still have to pay taxes.

so be legal. PAY YOUR TAXES OR GO TO JAIL.

One worst case is leaving US citizen, for the reason of high tax.