Newbies wanting info on how to make an income

[SV THIRD DAY]

Speaking of Mexico...there is a refrigeration local guy in almost every port that won't like you playing unlicensed illegal worker taking food out of his family's mouth. Translation...he will turn your ass into immigration as soon as he gets wind of you...

I know there is this myth out there that you can fund your cruise by providing services to fellow cruisers, but I think that is 1970 or 1980 thinking. Unless you are in a very out of the beaten path place, these days, for every service you can think of to provide to cruisers there will almost always be a local in that town or harbor doing it. Or even more likely to turn you into immigration is an ex-pat who went through the paperwork to set up a legal business and not lives there full time. So do you want to constantly be whispering of your services around the dock hiding from the local guy you will be pissing off?

To me it's just not realistic these days to play that game....not when there are so many other things you can do to fund your cruise without working illegally in a foreign Country and pissing off the locals.

[sveinutne]

I wonder if I have found a loophole in chartering your boat in exotic places without work permit and license. If you form a company and let people by shares in the company. Let say x% will give them the right to use the boat for one week, but you will be on the boat as part of the group. All expenses during the week, will be split between the people onboard. Then there is no work or salary or need for work permit? The person owning the x% of the boat will invite some of his guests or friend, and if they have some money changing hands between them, that is their business. How you later will buy back the x% of your business is an other story.

Maybe I am wrong here?

[valhalla360]

Originally Posted by sveinutne

I wonder if I have found a loophole in chartering your boat in exotic places without work permit and license. If you form a company and let people by shares in the company. Let say x% will give them the right to use the boat for one week, but you will be on the boat as part of the group. All expenses during the week, will be split between the people onboard. Then there is no work or salary or need for work permit? The person owning the x% of the boat will invite some of his guests or friend, and if they have some money changing hands between them, that is their business. How you later will buy back the x% of your business is and other story.

Maybe I am wrong here?

Sounds good until you get to the details.

Now you are a company importing the boat into a wide variety of countries in a short period of time.

For starters is your company even legal to operate in the country? Next what are the import rules for companies? I just spent a full day explaining to a govt offical how a traffic count board works and what it is used for. We are importing it for a project we hired to do by the govt.

What are you going to tell them your buisness is when you bring the boat in? Most countries won't allow companies to simply import goods with no explaination of what you are doing with them.

Sounds like a good way to get your boat imported for trying to skirt import rules.

[sveinutne]

Sorry for only telling part of the story. This is just an idea and it might not be doable, but I have been looking into the regulation for doing charter business in Greece. It is not easy, but doable. Then my plan is to form a company located in Greece with Norwegian owners. This company will buy a Lagoon 440 and charter it is Greece, and I will be the skipper. I got a Norwegian license for boats upto 24 meters and 12 paying passengers. These papers might have to be updated to Greece charter standards. Then in the slow winter period, I plan to sail down to Hurghada in Egypt and maybe further south where the diving is fantastic. I plan to buy 51 % of the stocks and let divers in Norway buy 49 %. This will give them the right to use the boat for 2 weeks during a 5 years period. Then after 5 years, the boat will be sold and the money split between the sharholders, or I might buy out the other 49% and use the boat as I wish. The Expected return on the money might be 75% of inverted money plus two weeks of use in Egypt for every 1% of the stocks. This will make the divers do the networking and “selling” of the trips, so I can concentrate on the selling of the real charter trips in Greece.

[mstrebe]

In the share purchase/buyback scheme, how are you extracting profit?

In a "real" business, the value of shares are based on the value of a business. With no other factors in play, the value of the business has not changed when money changes back, so the shares are worth the same and essentially nothing has happened. In the real world you have depreciation of the boat, possible currency fluctuations, wear and tear on the boat including possible damage, etc. all making the business less valuable than at the beginning.

In theory you could cook up a scheme where people simply pay you an inflated price up front for shares and then you buy them back at a discount at the end, but that won't pass muster in any kind of audit. Furthermore, you will have to legally issue the shares, which does involve some administrative burden.

Finally, the company has to be legal to do business in the country, and you would wind up paying capital gains on all of your profits in additional to any other taxes you were assessed.

It is true that in certain circumstances and in most countries foreigners without visas can skirt labor laws by forming a legal corporation in a country (no citizenship is required) and then receiving only dividends from the business without taking any salary--but they also can't do any work for the business (at least in the U.S.) or the IRS will consider that money to be "fruit of their labor", reclassify it as taxable income, charge them with tax fraud, and deport them for working without a work VISA.

You can "own" a business in a foreign country, but you can't work for that business. You have to be a true silent partner to actually avoid running afoul of labor laws.

It's a very sticky situation if you get caught.

[Cadence]

Originally Posted by mstrebe

In the share purchase/buyback scheme, how are you extracting profit?

In a "real" business, the value of shares are based on the value of a business. With no other factors in play, the value of the business has not changed when money changes back, so the shares are worth the same and essentially nothing has happened. In the real world you have depreciation of the boat, possible currency fluctuations, wear and tear on the boat including possible damage, etc. all making the business less valuable than at the beginning.

In theory you could cook up a scheme where people simply pay you an inflated price up front for shares and then you buy them back at a discount at the end, but that won't pass muster in any kind of audit. Furthermore, you will have to legally issue the shares, which does involve some administrative burden.

Finally, the company has to be legal to do business in the country, and you would wind up paying capital gains on all of your profits in additional to any other taxes you were assessed.

It is true that in certain circumstances and in most countries foreigners without visas can skirt labor laws by forming a legal corporation in a country (no citizenship is required) and then receiving only dividends from the business without taking any salary--but they also can't do any work for the business (at least in the U.S.) or the IRS will consider that money to be "fruit of their labor", reclassify it as taxable income, charge them with tax fraud, and deport them for working without a work VISA.

You can "own" a business in a foreign country, but you can't work for that business. You have to be a true silent partner to actually avoid running afoul of labor laws.

It's a very sticky situation if you get caught.

Let him have his pipe dream. If he can find those investor and has his 51%, he is a better business man than me.

[sveinutne]

In Greece it will be a normal charter company like most other. Instead of letting the boat be not in use during the cold winter mounts, I can charter it myself and sail down to Egypt during the winter. This is all within the law. What I am uncertain of is if there is some law forbidding what I plan to do while in Egypt.
When it comes to the investment from the divers, they are getting a very good deal, and I am concerned the value of the company will increase because of the activities in Greece during the summer, so I plan to put in a buy back option that will give me the right to buy it back the stocks at 100% of initial price. This will give me the option to keep the boat upgraded to top notch condition to keep the profit and tax in Greece down to a low value.
I am not making any profit during the winter; they are only paying the cost of staying in Egypt.

[sveinutne]

This is still a very rough plan, which will need a lot of thinking before it can be offered to interested parties.
I think it is too good for the divers, so a more realistic offer might be like this:
For the first 10 buying 1% will give 14 days, the next 10 will get 10 days, and the last 29 will only get 7 days.
If they get 100% back after the 5 years period, this will only be like interest on the loan. A week in Greece chartering a Lagoon 440 cost from $3000 until $8000 per week. So let say with a skipper it is worth about $5000 for a week. Then investing $5000 gives you sailing for $5000 plus your money back after 5 years.
The first 10 or 20 divers deserve to get a better deal, because I cannot do it without some investors, but with 20% sold like this, the project is doable, so paying more is a waste of money.

[sveinutne]

Sorry if I killed this tread, it was just ment as a possibility from my side.
It will be even better if you put down zerro money, and let the "divers" put in all the needed money. It is also possible, but then we are close to what normal charter companies do.