Free Web NovelChapter 461: Chapter 257: You Can Dodge Taxes Like This?
"That’s too stupid! Because that means, all this fourteen million will become your taxable income in the United States."
"Even in Wyoming, where there’s no personal income tax, Uncle Sam’s federal tax is enough to give you sleepless nights."
"So what should be done?" Lin Yu’an asked, like a keen student.
"The answer is, split. We need to split your income from single US domestic earnings into a diversified income portfolio of different natures and regions."
Matty explained, "The CAA legal team will immediately register a brand new global IP management company for you in Ireland, 100% owned by you."
"You can start thinking about the company’s name now."
"Then your image rights, the brand name ’Lin Yu’an in the Wilderness’, and all your future content’s overseas copyrights will be injected into this Irish company as intangible assets."
"Why Ireland?" Lin Yu’an sharply seized the key point.
"Because its corporate income tax is only 12.5%, one of the lowest in Europe, and it has comprehensive tax agreements with the United States. It’s the perfect transit for global tax planning."
Lin Yu’an thought for a moment and said, "Let’s name the company Snowfield Heart."
"Nice name," Matty praised, "Now the magic begins."
"Before we proceed to the next step, you need to establish a firewall in the US mainland. You can’t undertake any business in your personal capacity anymore."
"My team will immediately register a new company for you in Wyoming. How about calling it Wilderness Heart to complement Ireland’s Snowfield Heart?"
"This company will handle all your future US domestic business, including the ranch you’re about to purchase."
"Sure, Matty, that name is quite nice too."
"Now comes the critical point," Matty’s voice became very focused.
"Considering you currently don’t have a farm to incur large business expenses to offset taxable income in the United States."
"So in the first year’s contract, we must maximally attribute the income, legally, to the Irish company where the tax rate is lower."
"Archaeopteryx’s fourteen million will be restructured into two independent contracts by our team."
"One is a creative and production service contract valued at one and a half million US dollars, paid by Archaeopteryx’s North American company to your Wilderness Heart company in Wyoming."
"This amount is the basic remuneration for a series of services such as content creation and filming you perform for them in the United States."
"The other is a global brand IP authorization contract valued at a whopping twelve and a half million US dollars, paid by Archaeopteryx’s European headquarters to your Snowfield Heart company in Ireland."
"This amount is the fee for authorizing them to use your overnight-valuable image rights and brand image worldwide."
Lin Yu’an instantly understood the subtlety here: "So you’re saying my actual taxable income in the US is only one and a half million?"
"Exactly right!"
"Now let’s calculate. Before that, let’s handle the most important legal business expenditure first — agency commission."
"According to your agreement with CAA, for the six million over eight million dollars from the Archaeopteryx contract, you need to pay a 25% commission, totaling one and a half million US dollars."
Lin Yu’an immediately came up with an idea: "So, the one and a half million US dollars received by the Wyoming company will be entirely used to pay that one and a half million commission?"
On the other end of the phone, Matty’s satisfied chuckle came through, "Lin, you’re starting to think like a real CEO. That’s exactly what I’m here to do for you."
"Operationally, we’ll have your Wyoming company bear the entire one and a half million commission."
Matty’s voice carried a touch of the joy of revealing a magic trick, "This way, your Wyoming company’s books will be very clean."
"Total income, one and a half million dollars, total expenditure, one and a half million dollars. Net profit, zero."
"A company with zero profit doesn’t need to pay a cent of federal tax. Thus, your one and a half million tax issue in the US is legally cleared by us."
"Do you think Uncle Sam will still want tax from a company with zero receivables? And with these one and a half million in the CAA company’s account, they can fully compress taxes down to one hundred and fifty thousand."
Lin Yu’an completely understood. This is like a precise mathematical game, through rational fund allocation, transferring the tax burden entirely to the segment with the lowest tax rate.
This is equivalent to using this enormous legal expenditure of commission to almost entirely offset the income from the creative and production service contract on US soil!
Lin Yu’an continued to ask curiously, "What about Ireland’s Snowfield Heart?"
Matty’s voice carried a hint of joy, "That’s even simpler. Its pre-tax profit is twelve and a half million US dollars."
"In Ireland, you only need to pay 12.5% corporate income tax, which is one million five hundred sixty-two thousand five hundred US dollars."
"The remaining ten million nine hundred thirty-seven thousand five hundred US dollars will safely lie in your Irish company’s bank account as the company’s after-tax profit."
"Is this... is this the end?" Lin Yu’an looked at the quickly calculated numbers, his voice carrying a bit of disbelief.
"So you’re saying my total income of fourteen million, after paying one and a half million in commissions, requires only this one hundred fifty-six plus thousand in taxes in total?"
"Yes, that’s right, that’s the end." Matty said, perfectly enjoying the moment his client was amazed by his professional skills.
"Your final effective comprehensive tax rate was successfully lowered to around eleven percent."
"And the post-tax net profit you received, which you can freely allocate, amounts to over 10.93 million US Dollars! Lin, tell me, are you satisfied with this result?"
"... Very satisfied." Lin Yu’an said sincerely, this isn’t just satisfaction, it’s magic.
"Haha, it’s rules and mathematics! But calling it magic isn’t an exaggeration."
Matty added, "But don’t be too happy yet, those tens of millions are Snowfield Heart Company’s money, not yours personally."
"If you want to use this money, according to standard procedure, you need to first dividend the money from the Irish Company to yourself personally, then transfer it back to the United States."
"In this process, you need to pay a qualified dividend tax as high as 20%, which is another huge amount exceeding 2 million US Dollars. Of course, we won’t do it this way."
"What should we do then?" This was precisely what Lin Yu’an was most concerned about. "How can this money legally return to the United States for my use?"
"I’ll teach you how the wealthy gracefully move their assets." Matty’s voice carried a hint of cunning, "We won’t use dividends, we’ll use loans."
"Loans?" A flash of insight crossed Lin Yu’an’s mind.
"Exactly right. It’s the loans as you understand them." Matty confirmed his thoughts.
"The specific operation is like this: your Wyoming Company, Wilderness Heart Company, will officially issue a compliant commercial loan application drafted by lawyers to your Irish Snowfield Heart Company."
"The reason for the loan is very sufficient and legitimate. Wilderness Heart Company requires a huge sum for future business expansion and content creation, to purchase a filming base within the United States."
"Then, your Irish Company, upon board approval, will provide your American Company with a long-term low-interest inter-company loan worth ten million US Dollars."
"This money will be legally transferred from the bank account in Ireland to your Wilderness Heart Company’s account in the United States."
Lin Yu’an completely understood, he murmured, "Because... loans are not income, they don’t need to be taxed."
"Exactly!" Matty’s voice was filled with admiration for this client who grasped immediately. In the past, he might spend hours explaining to those corpulent clients without them necessarily understanding.
He greatly favored clients like Lin Yu’an, oh no, more accurately, Chinese clients, their mathematics were on the foundational level."
Matty continued, "The tax authority cannot levy a tax on a legitimate debt. And this money will forever exist between your two companies in the form of debt."
"Your American Company can even symbolically repay this loan with future profits generated in the United States, thereby legally allowing the funds to flow back to Ireland."
"Thus forming a perfect, personal offshore and onshore capital loop."
"As for what you can do with this money?" He tossed out even more tempting options.
"You can use your American Company’s name to purchase your dream ranch. You can also use your Irish Company’s name for global investments."
"Or buy a castle in London, a watch in Switzerland, a vineyard in France... All these can be counted as legitimate investments or operational expenses of the company."
"And you, as the owner of the company, are merely utilizing these assets."
Lin Yu’an was thoroughly shocked by these words. He felt he had pushed open the door to a new world! Behind that door lay a labyrinth built with law and capital that ordinary people could never imagine."
Matty made the final summary, "So, Lin, welcome to the world of the wealthy!"
"In this world, the most important thing isn’t how much money you make, but how cleverly you structure it."
"I understand." Lin Yu’an took a deep breath, immediately switching to a pragmatic mode, "Matty, before ending the call, there’s one last thing."
"Speak."
"Please have your assistant compile all the services you provided for me today, including the review of the CAA contract, the Archaeopteryx negotiation, and this invaluable tax planning session we just had, into a detailed invoice and send it to me."
Lin Yu’an’s tone was full of respect for professional value: "Tell me how much I need to pay in total and how I should make the payment."
On the phone line, Matty seemed surprised that he would proactively bring up settling the fee at this moment.
He chuckled with genuine pleasure, "Haha, Lin, you truly are the most extraordinary client I’ve ever met."
"Most people at this point either lose themselves in joy and forget about it, or think about how to roll lawyer fees into company costs and pay them out of the next income."
"I respect professionalism and I respect contracts." Lin Yu’an calmly replied.
"Very well. I like this attitude. However, regarding this fee, why don’t we play it differently?"
"Oh? What approach?"
"The review of the CAA contract was a favor I did for Scoot, also a welcoming gift for you, completely free."
"As for the Archaeopteryx negotiation." Matty’s tone took on a clever edge.
"The invoice will be issued. Based on the time our team invested and the final outcomes, the total cost is approximately Twenty-five thousand dollars."
"However." He changed his tone.
