Traffic arbitrage is a strategy or business model used in online marketing and advertising. Basically, traffic arbitrage is the process of buying and selling traffic (actions, clicks, miles) on different advertising platforms for the purpose of making profit.
In traffic arbitrage, the basic idea is to buy traffic at a low price on one platform and redirect it to another platform where you can get a higher price for the same traffic, for example through advertising campaigns or affiliate programs.
With the help of market analysis and ad networks, arbitrageurs try to find price imbalances on different platforms and use them to make a profit. They look for opportunities to buy traffic at a low price and sell it at a higher price, getting the difference in value.
Setting up a company for traffic arbitration allows a specialist to work on various advertising platforms, such as Google Ads , Facebook Ads, Bing Ads, AdSense and others.
Registering a company in Europe for traffic arbitration involves some general steps and procedures. Since the registration process may vary depending on the country in which the company is planned to be incorporated, it is necessary to find out the specific requirements and list of documents for incorporation and further activities.
The general steps for setting up a European traffic arbitration company include the following elements:
- Selection of the country for incorporation. At this stage it is imperative that you seek a consultation from a legal consultant who has knowledge in multiple jurisdictions.
- Selection of the relevant organizational and legal form of the future company.
- Preparation of the necessary set of documents for company registration.
- Incorporation and issuing corporate documents.
- Opening a corporate account and starting business activities.
Further we will share with you our recommendations to the client regarding the selection of jurisdiction, organizational and legal form of the future company and opening an account for successful business development.
Prior to proposing any changes to the client's existing mode of operations, we always get to know the client's ultimate goal and the requirements for the business model of the future company.
What instrument did the client wish to obtain when setting up a company for traffic arbitrage
The client wanted to receive income in foreign currency (EUR, USD, other), a unique company registration address for receiving letters from Google and registering on Google My Business.
Requirements for starting a traffic arbitrage company
- Corporate account in a bank or a payment system;
- Receiving and sending payments in EUR from / to contractors;
- Renting a real office in the EU to receive an authorization code from Google for registration on Google My Business ;
- Using online services and special tools to support / optimize business activity;
- Obtaining a VAT number (to avoid charging and paying reverse VAT, avoiding charging VAT for the import of services to Estonia when paying for services provided by non-EU resident entrepreneurs);
- Optimal tax climate ;
- The speed of launching a new business model;
- Optionally - purchasing of a ready-made company registered for more than 1 year ago.
How did we solve the case for setting up a traffic arbitrage company
Taking into account and analyzing all the client's requirements, we recommend registering and conducting business in Estonia. In one of the similar cases, the client was looking for a ready-made company in Estonia or Great Britain that has been in existence for more than 1 year.
Read about setting up a company in the UK
If you want to know how we came up with such ha conclusion, read below.
What arguments did we use when choosing Estonia as a place for incorporating a traffic arbitrage company
The company's corporate account should allow receiving and sending payments in EUR
Opening a corporate account is one of the main components of the company's successful work and an integral part of business operations. Companies working with foreign clients and contractors are constantly faced with the problems of making payments in different currencies (such as EUR, USD), as well as due to local restrictions of national banks, unstable exchange rates, etc. The quick procedure of opening an account with the payment system gives access to using EUR, USD and other currencies to meet the company's needs, and cover most of the financial issues.
We choose a payment system or bank based on:
- Currencies to be used by the client;
- Type of business of the company;
- Countries of location of counterparties;
- Additional functionality that the client needs (paying taxes, currency conversion, issuing a debit card, etc.);
- Other individual needs of the client.
For this case, the optimal payment system turned out to be Paysera, which has an Electronic Money Institution (EMI) license dated 09/27/2012, issued by the Bank of Lithuania. We have chosen WISE as the second account to support the company's activities.
Renting a real office in the EU to receive an authorization code from Google for registration on Google My Business
Our company helps with finding an office for rent (usually these are budget options that are used only for the sake of a unique address and for receiving correspondence), preparing a lease agreement and receiving correspondence to the address of the new office.
Usually, the company's legal (registration) address is mass, because it is used by the company's local agent for all the companies by default.
In our case, the client needed a unique registration address to work with Google , namely to confirm registration on Google My Business . This process is part of the process of verifying your business address on the Google network and allows you to manage your business information on Google Maps and in Google search results.
If a legal entity has registered a company on Google My Business and provided a legal address, Google will send a letter to that address . This email will contain a unique verification code that you must enter in your Google My Business account to verify your business address.
After entering the verification code, the company will be verified on Google My Business and the customer will be able to manage their business information.
Use of payment services and tools to support / optimize the business activity
Traffic arbitrage companies often use a variety of services and tools to support and optimize their operations. Below are several services which can be used:
- Traffic Analytics: Traffic arbitrage companies use various analytics tools to monitor and analyze traffic sources, user behavior, conversions and other metrics. For example, Google Analytics, Mixpanel and others;
- Ad Network Platforms: Traffic arbitrage companies work with various ad networks such as Google Ads, Facebook Ads, Bing Ads, Taboola, Outbrain and many others. These platforms provide access to advertising inventory and tools for placing and optimizing advertising campaigns;
- Affiliate marketing platforms: Some traffic arbitrage companies work in affiliate marketing where they work with affiliate networks and partner websites. Platforms like Amazon Associates, Commission Junction, ClickBank, ShareASale and others help you set up and track affiliate links and rewards;
- Traffic Management Tools: Traffic arbitrage companies use various tools to optimize traffic and manage advertising campaigns. For example, Voluum, BeMob, RedTrack and other services help to monitor and analyze the effectiveness of advertising campaigns, establish links and optimize bandwidth;
- Web hosting and domain registrars: Traffic arbitrage companies usually need web hosting and domains to host their websites and landing pages. Popular hosting providers and domain registrars include GoDaddy, Bluehost, HostGator, and others.
Using these services with the help of a foreign company helps traffic arbitrage companies to manage advertising campaigns, analyze results, optimize traffic and achieve greater efficiency and profitability of their advertising projects.
Obtaining a VAT number
If the company has contractors located outside the European Union (private entrepreneurs in Ukraine, legal entities in the UAE, Hong Kong, Singapore, etc.) and is going to pay for their services, it is necessary to obtain a VAT number in order not to paying 20% VAT on the import of services to Estonia.
Also, if the company is registered for VAT and works with other European companies, then the VAT Reverse Charge system will be applied when issuing or paying the invoice . To use such a mechanism, it is necessary to notify counterparties (or European services) that the company is a VAT payer and provide this VAT number.
A VAT number in Estonia is obtained very easily - in one day (we help our clients to obtain it).
Optimal tax climate
Estonia's special tax system is one of the main advantages in favor of this jurisdiction. Corporate income tax - 0% (20% tax is paid only when dividends are distributed). Therefore, the profits received from the activity can be constantly reinvested in the business without paying taxes.
The speed of launching a new business model
An important component when choosing a jurisdiction for business relocation is the remote registration procedure . Registering a company in Estonia eliminates the need to be distracted from work and travel to another country. You can register a company in Estonia with the help of an E-residency card (which is, in essence, a digital signature), which we also help to obtain, or prepare a power of attorney and send it by courier to Tallinn.
Obtaining an E-residency card takes 1 month.
Registering a company in Estonia using E-residency takes several working days.
You can also register a company by proxy (we help with the preparation of all the necessary documents), which takes up to 2 weeks.
You can also purchase a ready-made Estonian company , the re-registration of which takes about several days. In some cases, our arbitration clients are looking for ready-made companies that have been registered for more than 1 year.
Why you should you contact Taxters to set up a traffic arbitrage company
The prodecures and requirements for setting up a company overseas differ depending on the country and region. For this reason it is imperative that you seek proper assistance from a proffesional who understands all the pitfalls and particular steps connected to the incorporation procedure. We will help you make the right choice of the jurisdiction and the bank or payment system based on your specific business model.
Prior to extending any offer to the client, we provide a thorough consultation regarding choice of the jurisdiction, legal form, ownership structure and other financial and corporate aspects.
Having a ton of experience, we successfully assist our clients in entering a foreign market and scaling business.
Simply click the "Quick Consultation" button and we will answer all your questions.
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Ukrainian version and Russian version are also available.
FAQ
Why Register a Traffic Arbitrage Company?
Registration of a European company for traffic arbitration helps to optimize the tax burden, access web services necessary for work, allows you to send / receive payments in foreign currency.
How long does it take to find an office with a unique registration address for a company?
Searching for a relevant office takes about 2-3 working days.
Is it possible to register a company for traffic arbitration and open an account for it remotely?
Yes, the registration of an Estonian company for traffic arbitration and the opening of a corporate account in the payment system can be done 100% remotely.
