An acquaintance approached me for an opinion on his particular situation -
Consulting globally, mostly in Europe, got this very good client paying decent $ (since then they basically resell the service to Fortune100 companies so it's a intermidiary of an indermediary's intermediary game..)
The problem is that recently the client's compliance started pestering for a lot of data - wanted to see not only the VAT tax number docs but also the personal social security card and status of the owner and also actively inquired about the "tax residency proofs"
An another subcontractor managed to dodge that by submitting a simple statement from an auditor just stating the tax residency without any numbers or even whether the tax was due/paid; in his case they actually want to see the copies of actual tax returns. I don't know how legitimate is that request since why would a client fish for his supplier's tax returns which may contain also numbers relative to other services provided to other clients...seems a bit inappropriate request that could be fought against. However probably they will start nosing more and more since the company (VAT nr) is in EU country A but the bank account is in EU country B
Is this doc chasing the norm among other people's clients or business partners?
Any recommendations how to make things more solid and looking 100% legit?
Additionally can the company maybe relocate to Dubai and continue to operate consultancy (legal and general) services undisturbed in EU or this won't work due to end clients (Fortune100) refusing such a setup?
Especially now with all this smart-working I simply don't see a practical reason why not to incorporate in Dubai, travel there 2 times per year and the rest of time roam around the EU consult clients and receive payments via Dubai company as UBO (even if having some front door company in EU just as a nice Amsterdamish looking facade :)) Why no? Maybe problems when everything is centered around one specific EU end client?
Last edited: Mar 8, 2021
UAE is a full proof method but the client may reject this if they live and work from a different country.
I would suggest a UK LLP as an option if UAE doesn't work. You can open a bank account and get a tax number relatively quickly.
I
CaptK said:I would suggest a UK LLP as an option if UAE doesn't work. You can open a bank account and get a tax number relatively quickly.
Can you elaborate on the UK LLP setup, if you don't mind go into details for this specific case, considering the limited information you have received from OP?
I'm asking because it can be of great help to others joining later on here.
Admin said:Can you elaborate on the UK LLP setup, if you don't mind go into details for this specific case, considering the limited information you have received from OP?
I'm asking because it can be of great help to others joining later on here.
So as soon as you register a UK entity the tax office will immediately issue you a tax number, UTR (Unique Tax Reference). A UK LLP is tax neutral, so profits are distributed to the partners and tax is liable in their jurisdiction. So no issue with tax but ofcourse you must file accounts.
If you live in a tax friendly country then you can take advantage of this.
Alternatively if you coupled this with a UAE company with the residency it provides, this shows that the company is not taxable in the UK.
That's the template to persue in this current climate but keep the two companies seperate for the purposes of clarity. They may have the same name and same directors but if you do this banking would be much easier. Allowing you to invoice in the jurisdiction that works for the client and or your tax position.
It would be possible to do this with a US LLC but I don't know how that would work practically as I have never done this with a US LLC.
It's hard to give a more complete answer as there could be many factors that effect why the client has asked so many questions. Normally this is due to some government money involved or the client has had an audit and have been asked to KYC their suppliers. They can only ask for your tax information but not your actual tax returns.
Last edited: Apr 9, 2021
Thank you for clarification, this looks like a very clever and legit way, but I'm not a tax professional so don't take my word for it ;)
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