The Perfect 0% Tax Structure for Online Businesses

Summary

The Wealthy Expat discusses strategies for legally lowering taxes on online business income, focusing on the use of payment processors like Stripe and PayPal. The video outlines a two-entity structure involving a UAE company and a US LLC to facilitate payments and minimize tax liabilities. It details the process of setting up an LLC, obtaining a bank account with Mercury, and transferring funds to a UAE company, all while addressing client concerns about making payments to foreign entities. The presenter also emphasizes the importance of using professional services to establish this tax-efficient structure.

Takeaways

• 💼 The video discusses strategies for legally lowering taxes, particularly for those with online businesses.
• 🌐 It addresses the challenge of clients' reluctance to pay to accounts in certain jurisdictions, like the UAE, due to perceived risks or stigma.
• 🏢 The speaker proposes a two-entity structure involving a UAE company and an intermediary company elsewhere to manage payments and taxes.
• 📑 The UAE company can be a free zone company, which allows for zero percent tax on profits.
• 🇺🇸 For U.S. citizens not residing in the U.S., an LLC in the U.S. can act as an intermediary, facilitating payments to the UAE company.
• 💻 Online businesses can use payment processors like Stripe and PayPal to receive payments, which are then transferred to the U.S. LLC and subsequently to the UAE company.
• 🏦 The video mentions Mercury as a bank option for opening accounts for U.S. LLCs, even for non-residents.
• 📈 The speaker shares personal experience, showing documents and transactions that demonstrate the effectiveness of this structure.
• 🔒 It emphasizes the importance of using professional services to set up this structure correctly to avoid legal and tax complications.
• ⚠️ A cautionary note is given regarding the choice of service providers, as not all are equipped to handle the complexities of setting up such an international business structure.

Q & A

What is the primary focus of the Wealthy Expat channel?

The primary focus of the Wealthy Expat channel is to discuss legal ways to lower taxes, thereby allowing individuals to keep more of their wealth and money.

How does the speaker suggest reducing capital gains taxes for online business owners?

The speaker suggests establishing a company in a tax-friendly location like Dubai, UAE, to reduce capital gains taxes to zero percent.

What is the concern some clients have when paying to a UAE bank account?

Some clients are concerned that paying to a UAE bank account might indicate the business owner is engaging in shady activities, due to stigma and prejudice associated with certain jurisdictions.

What is the recommended structure for a business owner to legally pay zero percent tax?

The recommended structure involves having two entities: a UAE company and a company in another country to handle payment processors. The second company sends money to the UAE company, which pays zero percent tax.

Why does the speaker recommend setting up a US LLC for non-US citizens?

The speaker recommends a US LLC for non-US citizens because it can act as an intermediary between clients and the UAE company, and it can also be owned 100% by the UAE company, facilitating tax-free transfers.

What is the role of an online bank account in this structure?

An online bank account, such as one from Mercury, is used to receive payments from clients through Stripe or PayPal, and then to send those funds to the UAE company.

Why is it important for the speaker to emphasize the use of professionals when setting up this structure?

The speaker emphasizes the use of professionals because setting up this structure requires specific knowledge and expertise, which services like LegalZoom may not provide, potentially leading to incorrect setup and legal issues.

What is the significance of the Free Zone Company (FZCO) in the UAE?

The Free Zone Company (FZCO) in the UAE is significant because it can own a US LLC and receive payments tax-free, making it a crucial part of the tax-reduction strategy.

How does the speaker propose dealing with clients who are uncomfortable paying to a Dubai account?

The speaker proposes using a US LLC as an intermediary to receive payments from clients, which then transfers the funds to the Dubai company, making the transaction appear more legitimate to the clients.

What is the potential tax implication for US citizens using this structure?

For US citizens, using this structure might still result in a maximum tax of 10.5% due to the 'guilty tax', unless they follow specific rules and strategies outlined in other videos by the speaker.

Outlines

00:00

🌐 Managing International Business Taxes and Client Payments

The speaker, known as the Wealthy Expat, discusses strategies for legally lowering taxes on business income, particularly for those running online businesses. They mention the use of payment processors like Stripe and PayPal and the consideration of establishing a company in Dubai, UAE, to benefit from zero percent tax rates. The challenge of maintaining client trust when payments are made to foreign bank accounts is addressed, with a focus on overcoming the stigma associated with such transactions. The speaker shares their personal experience of managing payments and taxes through a dual-entity structure involving a UAE company and a US LLC, which allows for tax-free transfers while keeping clients comfortable with familiar payment methods.

05:01

🏦 Structuring Business for Tax Efficiency and Client Satisfaction

In the second paragraph, the Wealthy Expat elaborates on the business structure involving a UAE company and a US LLC to optimize tax benefits. They explain the process of setting up a US LLC owned by a UAE free zone company and using it as an intermediary for receiving payments from clients worldwide. The speaker highlights the importance of choosing the right banking partners, such as Mercury for the US LLC and Emirates MBD for the UAE company, to facilitate seamless transactions. They also emphasize the legal and professional aspects of setting up such a structure, warning against using inexperienced service providers like LegalZoom. The speaker offers personal consultations for those interested in implementing this tax-efficient business model and mentions a partnership with a well-known marketer to help clients reduce their tax liabilities.

Keywords

💡Tax Optimization

Tax optimization refers to the legal strategies used by individuals or businesses to minimize their tax liabilities. In the video, the speaker discusses setting up a company in Dubai to achieve zero percent tax on business income, which is a form of tax optimization. This strategy is central to the video's theme of maximizing financial freedom through legal means.

💡Capital Gains

Capital gains are profits realized from the sale of an asset, such as investments or real estate. The video mentions lowering taxes on capital gains as one of the topics discussed on the channel, highlighting the importance of managing different types of income for tax efficiency.

💡Online Businesses

Online businesses are ventures that operate primarily on the internet, such as e-commerce sites, digital marketing agencies, or content creation platforms. The script talks about online businesses as a source of income that can be subject to tax optimization strategies, particularly for those using payment processors like Stripe or PayPal.

💡Payment Processors

Payment processors are services that facilitate the transfer of funds between buyers and sellers. In the context of the video, the speaker discusses how to maintain client satisfaction when using payment processors like Stripe or PayPal while also establishing a company in a tax-advantageous location like Dubai.

💡Free Zone Company

A free zone company is a type of business entity registered in a designated area that offers specific economic benefits, such as tax incentives. The video mentions starting a free zone company in Dubai as part of the tax optimization strategy, which allows for zero percent tax on certain business activities.

💡Intermediary Company

An intermediary company acts as a middleman between different parties, often used for financial transactions or business operations. The speaker recommends using a U.S. LLC as an intermediary company to facilitate payments from clients to the Dubai-based company, which helps in managing tax liabilities and client relations.

💡LLC (Limited Liability Company)

An LLC is a business structure that protects its owners from personal liability for the company's debts or liabilities. The video script describes the process of setting up a U.S. LLC owned by a Dubai-based free zone company, which is part of the tax optimization strategy discussed.

💡Mercury Bank

Mercury Bank is mentioned in the video as a financial institution that offers business banking services, including online banking. The speaker uses Mercury Bank to manage the U.S. LLC's finances, receiving payments and transferring funds to the Dubai company, which is part of the tax optimization process.

💡Emirates NBD

Emirates NBD is a banking group in the United Arab Emirates. In the script, the speaker recommends using Emirates NBD for the Dubai company's banking needs, as it is a local bank that can facilitate the receipt of funds from the U.S. LLC, furthering the tax optimization strategy.

💡Tax Residency

Tax residency refers to the legal status of an individual or entity in relation to their tax obligations in a particular jurisdiction. The video discusses the importance of understanding tax residency, especially for U.S. citizens, to avoid unintended tax liabilities while optimizing taxes through international business structures.

💡GILTI Tax

GILTI (Global Intangible Low-Taxed Income) tax is a U.S. tax on certain foreign income of controlled foreign corporations. The script briefly touches on the GILTI tax, noting that U.S. citizens may still be subject to this tax even when operating a business in Dubai, which is an important consideration in the overall tax optimization strategy.

Highlights

Discusses strategies for legally lowering taxes to increase financial freedom and retain more wealth.

Explores the use of investments and crypto to minimize capital gains tax.

Addresses the challenge of managing online business income and taxes for digital entrepreneurs.

Suggests establishing a company in Dubai or UAE to reduce taxes to zero percent.

Provides advice on maintaining client trust and satisfaction when using international payment processors.

Introduces a two-entity structure involving a UAE company and an intermediary company for payments.

Recommends the United States as an ideal location for an intermediary company for non-US citizens.

Details the process of a Free Zone company in UAE owning a US LLC.

Discusses the use of online banking platforms like Mercury for handling international transactions.

Explains how to legally transfer profits from a US LLC to a UAE company while paying minimal or no tax.

Advises on the importance of structuring the business correctly to avoid tax liabilities.

Highlights the benefits of using a US LLC for non-US residents to avoid taxes.

Provides a practical example of transferring money from a US LLC to a UAE company using Emirates NBD.

Discusses the collaboration with a famous YouTuber and marketer to help clients lower their taxes.

Warns about the risks of using unprofessional services for setting up such tax structures.

Offers a one-on-one consultation service for individuals interested in setting up this tax structure.

Encourages viewers to subscribe and stay updated for more content on tax optimization and financial strategies.

Transcripts

hi it's the wealthy expat here obviously

in this channel we talk about lowering

taxes legally so you can get more

freedom keep more of your own wealth and

money and a lot of times we talk about

investments crypto how to lower taxes on

the capital gains side but we also have

a lot of people that run online

businesses maybe you're a marketing

person you're running a marketing agency

you're doing consulting you're running a

youtube channel doing any type of

business where you're generating

business income and you can use that

income online so basically clients pay

you that money through stripe or paypal

or easy pay direct or any other payment

processor like that you're looking at a

place like dubai uae to lower your taxes

establish a company and obviously that

is the best way to lower your taxes down

to zero percent but how do you also keep

the payment processors how do you also

keep clients happy when they're paying

you to your account because maybe some

clients of yours are in the us in canada

in the uk anywhere all over the world

they maybe don't want to pay to a ua

account i have a client in germany his

german clients don't want to pay to a

uae bank account because they feel like

hey this guy is

maybe doing something shady in dubai and

uae we don't want to pay that and it's

just the stigma it's just the prejudice

that a lot of these countries have how

can you deal with this how can you make

your clients happy paying you to a

company that is in another country and

makes them more comfortable and you can

also use stripe and paypal i'm going to

show you how i've done it how i did it

last year with multiple hundreds of

thousands of dollars and how you can do

it all legally and pay zero percent tax

let's first start off with the structure

this particular structure would have two

different entities it would have the uae

company and then a company somewhere

else to have the payment processors and

the payment methods your uae company the

free zone company you could start it as

a marketing management company which is

the one that i have and then the other

company would send money to your

marketing company in the uae and it

would pay zero percent tax so how would

it look like i'm going to show you right

now my llc documents in the united

states the united states is actually the

best place i recommend for u.s citizens

and non-us citizens doesn't matter where

you are from the world to have an

intermediary company to have an

intermediary step between your clients

payment processors and then your uae

company even if you're a us citizen as

long as you don't live in the united

states if you live in the united states

that's a whole different story but if

you don't live in the us and you have a

company in dubai in the uae you could

still pay

maximum or minimum 10.5 percent tax

because you have the guilty tax for

everybody else in the world you would

pay zero percent in dubai and then use

the u.s llc as a way to send money

through your clients all the way over to

your dubai company i'm going to show you

the document right here for my llc in

the united states my marketing company

central marketing services we made a lot

of money through this company

essentially this is the operating

agreement and you can see at the bottom

i'm just going to scroll through it's

just a regular operating agreement where

we go to the members page after the

signatory page you will see that the

owner of this company is a free zone

company central marketing services fcco

when you incorporate a marketing company

or any type of company in the ua you

will have an fcco especially a free zone

corporation that free zone corporation

can then own the u.s llc by a hundred

percent like it says here 100 percentage

interest in the uslc then what you would

do is you would get an online bank

account for this company like with

mercury i've talked about them many

times and they're a bank account that

you can open even if you're not in the

united states and even if you don't plan

on visiting the united states when i was

doing this setup for myself i did a free

zone company in the uae i then had my

uslc but i couldn't get a bank account

for the uslc because chase capital one

bank of america all these companies they

want you to be in the us applying for

the bank account i did not want to

travel there because of the things

happening around the world and also

because i just didn't want to go to the

united states maybe get stuck there for

more than 30 days and have to pay more

taxes to the us since i'm a us citizen

so you can do you can get a bank account

from mercury unless you're from a war

within country or country like iran

which is very stigmatized and has a lot

of sanctions you can get a bank account

with them and then what you do is you

receive money through stripe through

paypal into this bank account and

mercury for your u.s llc and then from

this mercury bank account you send money

from your u.s llc to your uae company

just like you can see here so for

example you'll see a lot of transfers in

2021 15 000 15 000 10 000 8 000 20 000 8

000 5 000 and this is money that is

profit in my marketing company my uslc

sending money to my uae company and it's

receiving that profit tax-free or in the

case of a us citizen that has no other

partners then it would pay 10.5 because

of the guilty tax but if you're from

anywhere else in the world and you have

the uae company as long as you're not

living in your origin country if you're

living in france with a uae company but

you're doing all this and you're still

living in france then obviously you

would still pay taxes in france but you

need to follow my other rules and the

other videos that i talk about here for

this to work you could send that money

receive it in your bank account in your

uae company and that's pretty much it it

would pay zero percent tax and the uslc

it's also important to know that uslcs

owned by non-us citizens or non-us

residents pays zero percent tax as well

so even if you keep the money in the

uslc this wouldn't work if you're a u.s

citizen but if you're a citizen of

anywhere else in the world like canada

uk you could keep that money in the uslc

and it still wouldn't pay tax i would

still recommend you if you're using uae

as your tax residence place if that's

where you're paying zero tax to do all

these transfers because then the money

is arriving in ua it's not arriving in

the u.s the u.s might think that you're

a tax resident there that you want to

actually live there so maybe just better

send all the money over to the ua so it

pays zero percent tax and this is a

structure that i use and this is the

bank that i use emirates mbd i've talked

about them many times so i connect

stripe paypal easy pay direct many

different payment methods i send money

to the uslc for my clients so the

clients actually pay over to the mercury

bank account they pay anywhere with

stripe or paypal that money is received

in the mercury bank account then for

mercury it's sent over to emirates mbd

you could use any bank in the ua maybe

abu dhabi commercial bank maybe islamic

banks whatever you want to use mashreq

but this is the one that i recommend and

then you receive the money there and

then you use it for your business and

for your personal expenses so this is

the structure that i use to pay zero

percent tax many people use it and

people that are very well known in the

industry like iman gaji for example he's

a very famous youtuber and marketer we

actually are doing a partnership

together to help his clients lower their

taxes this is the structure that he uses

and his best clients use to lower their

taxes down to zero in dubai do it

properly absolutely legally and not have

troubles with clients being unhappy that

they need to send money to dubai another

very important note before we close off

this video be careful who does this

structure for you there's a lot of

people out there that do uae free zone

companies that do us llcs that have no

idea how to set this whole thing up and

it'll give you bad advice so for example

companies like legalzoom which you can

register a uslc for 200 bucks they will

not know how to add a free zone company

in the uae as the owner of your uslc

they just don't know and they can't

compute how to do that because uslcs

typically have just a person owning it

as a us citizen or u.s resident you want

to get professionals to do this for you

to do this whole setup i have lawyers

and i have contacts i can do it and i

can do the whole uae setup in dubai if

you're interested in that click that

first link in the description book a

one-on-one call with me let's see if

this structure works for your business

and how you can lower your online

business taxes your entrepreneurship

taxes anything you're doing online

receiving payments from clients from

companies whatever it is we can lower it

down to zero percent book a call right

now and if you're interested in moving

to dubai and paying zero percent tax on

all of your income i have video that's

gonna pop up right here how to move to

dubai if you have money or if you make a

lot of income what are the best

strategies to do it subscribe hit that

notification bell that like button down

below i'll see you on the next one i am

the wealthy expat