Online trading. Best way/place to set up company (Offhsore)

M

Mr. Flibble

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I'm thinking of starting a company that gathers and sells information. The company can be considered 'online' ie. all sales are made through the internet and the product is electronic, delivered over the internet.

Let's say companies turnover will be €200k.

If the company is registered in Ireland will VAT have to be paid on the total sales figure? Before any costs, advertising, affiliates' cut, hardware etc are deducted?
If so then this would be €43k.

Would it make sense to register the company offshore? Are there companies set up to help small/mid size operations set up in the likes of the Isle of Man. What sort of costs would be involved?

If anyone can post any good links or info it would be great.
 
You will pay VAT on your sales and get VAT back on your purchases.

If you make 200K a year it sounds like a wonderful business and you are a great entrepreneur, now why should VAT bother you?

Besides you will have to pay income tax, won't you? Unless you move your home to ...the Cayman Islands or some place.

I would get the business started, pay my VAT bill and as soon as I reach the 200K target employ wise tax advisors who will help you avoid the VAT bill or show you how to spend wisely to reduce your VAT bill.

Paying tax is a sign of success so be successful and be grateful you can pay a lot of tax.

Hope this helps.
 
Thank you d2x2.

Well, yes I presume I'd have to pay income tax also, on top of VAT.

About 60% of my sales are to customers outside the EU. Do I need to charge VAT for them also? Sorry for the basic questions, I just am clueless at the moment about all this.

My expenses are also paid predominantly to people outside the EU. In reality they (and the ones inside the EU) are individuals who don't have registered companies. For me to claim VAT back on these will I have to get proof that they paid VAT, or their equivalent?

Regards being grateful about paying a lot of tax. I agree with this sentiment, and don't wish to weasel my way out of paying Irish taxes. But my first interest is the success of the company and a 30% variation in profit could very likely be the difference between success of failure for the company. I want to get weigh up all the options before making a decision of which direction to take.
 
If you are chrging people or companies outside the EU, or VAT registered companies in the EU, you typically will not charge VAT.

If you are being billed by individuals, you will not pay VAT and you will not pay VAT to other EU companies as long as you are VAT registered in Ireland.

Not sure where you are getting a 30% variation in profit?
 
boskonay said:
If you are chrging people or companies outside the EU, or VAT registered companies in the EU, you typically will not charge VAT.
Click to expand...
Does that mean I don't have to pay VAT on income generated by sales to people outside the EU?

boskonay said:
Not sure where you are getting a 30% variation in profit?
Click to expand...

I was thinking along the lines of; I buy product for $1000. Sell it for $2000. If I pay vat at c.20% (c. $400) then I make profit of $600. If I don't pay VAT I make profit of $1000. That's over 30% variation in profit.
 
You don't charge VAT to people outside the EU.

Well, the 'normal' model is you buy for X, then sell for Y + 21.5% VAT to people that VAT applies to.

You simple add the vat to your sale price, and only for Irish companies and EU individuals.

ie: Buy for US$1000, sell for US$2000, for Irish customers, sell at US$2000 + 21.5% VAT.
 
Tax / VAT has nothing to do with profit - you are simply an agent of the revenue. It's not 'your' money.
 
I disagree that has nothing to do with profit.

A customer generally doesn't care if their money is going to the vendor or the government. They consider the total cost to them, as they should.

If a person is willing to pay $1000 for a product and no more I will charge $1000 for it regardless of tax payments necessary.
 
That depends on what you are selling and to whom. Consumers like to see tax inclusive prices, businesses can typically reclaim vat, so like to see tax exclusive numbers.

I would recommend speaking to an accountant.
 
if you want to incorportate offshore visit www.ocra.com

they are the rolls royce of offshore services and have been established 25+ years
 
Hi

Incorporating offshore will have no effect on whether or not you have to pay VAT, corporation tax PAYE etc.

If you are operating in Ireland, selling into ireland etc your offshore company needs to register and pay taxes just like any other business in ireland has to.

The only advantage to an offshore company is disclosure. These companys are not subject to irish company law but Isle of Man law, or Camen islands Law etc. so they are easier to run and to manage.

Depending on where you incorporate you do not have to file accounts in the equivalent to their CRO and it is harder to find out who owns the companies once formed etc.

But there is no difference on the tax side, none at all.

Hope this helps


DB
 
i am no tax expert nor an accountant but i dont agree

friends tell me its possible to form an offshore company in a tax haven and then You can then be legally be an employee of the offshore company and draw down 'income' thats enough to cover your visible living expenses or exactly match any tax bands you wish. Of course being an employee of the offshore company and living in ireland you would be liable for taxes but the company will not.
 

Hi Jigsaw

I am not sure what your friends tell you but I wouldn't count on it being right.

Basically any non resident company trading as a branch or agency in the state is required to register for corporation tax and pay any corporation tax due on its IRISH profits only, to the revenue.

Any company which sells into ireland or carries on a trade in Ireland is required to register for Irish VAT on it's Irish sales if it exceeds the relevant threshold for registering for VAT.

When you think about it, if what you say were true then we could all go and form offshore company's and nobody would ever need to pay any taxes

DB
 
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