Italian starting new online business. How to avoid my State taxes?

[Marzio]

Should be tax-free?

Pussy should always be tax free

 

[Don]

Pussy should always be tax free

If in doubt I recommend getting a legal opinion on that

 

[scooterguy]

Each pussy is like its own country with its own tax rules. I know people who have paid over 50% in pussy tax, others much less. There is always some sort of tax though, or at least some hidden VAT, even in the "free" ones.

OP: Like others have said, just leave Italy. Move to Albania or Romania and you'll pay much less in taxes. You can even just set up a micro company in Romania and pay 1% tax + 8% in dividends (i.e., no need for a US LLC in that case).

 

[Don]

Each pussy is like its own country with its own tax rules. I know people who have paid over 50% in pussy tax, others much less. There is always some sort of tax though, or at least some hidden VAT, even in the "free" ones.

OP: Like others have said, just leave Italy. Move to Albania or Romania and you'll pay much less in taxes. You can even just set up a micro company in Romania and pay 1% tax + 8% in dividends (i.e., no need for a US LLC in that case).

As this forums relentless promoter of Estonia to supplement my previous comment, one could also setup a holding in Estonia + subsidiary in Romania to get rid of this 8% WHT (leverage the participation exemption, EU partner-subsidiary directive), resulting in overall 1% tax.
Its worth noting though that Romanian regime has certain limitations, and tax could also be increased to 3% if you don't hire employees in Romania.

One could have the following structure:
Estonia holding - 0% tax until distribution (else 20%) / profits from PE or subsidiary not taxed
Romania subsidiary - 1% turnover tax
Albania branch - 0% + 5% on repatriation of profits

Effectively keeping total tax at 0-5%.

 

[scooterguy]

As this forums relentless promoter of Estonia to supplement my previous comment, one could also setup a holding in Estonia + subsidiary in Romania to get rid of this 8% WHT (leverage the participation exemption, EU partner-subsidiary directive), resulting in overall 1% tax.
Its worth noting though that Romanian regime has certain limitations, and tax could also be increased to 3% if you don't hire employees in Romania.

One could have the following structure:
Estonia holding - 0% tax until distribution (else 20%) / profits from PE or subsidiary not taxed
Romania subsidiary - 1% turnover tax
Albania branch - 0% + 5% on repatriation of profits

Effectively keeping total tax at 0-5%.

That could work, the problem is that it is more expensive to set up, so maybe it's kind of overkill for a business that hasn't even started yet?

Since OP is starting, it might be wiser to start with a simple setup and focus on profits; later on they could improve it.

In other words, I'd rather start paying an overall Romanian tax of ~10% with a simple setup and focus on growing the business, instead of setting up 3 different companies in 3 different countries.

Of course, the structure that you propose would certainly begin to make more sense as OP's profits grow.

 

[ElBotellon]

I would do the other way around.

I would setup a holding company in Romania with director + office so that OP will be taxed at Italian rates (it's 24% if i'm not mistaken) but then he will avoid the massive 26% withholding tax on dividends since Romania is one of the very few countries with 0% withholding tax on dividends with Italy.

Also, the other plus of Romania is that there are no withholding taxes on dividends distributed to non residends so ideally he could move to [put tax free country here] and receive dividends completely tax free from Romanian holding.

I believe here there is a misunderstanding because dividends of non-residents natural persons are subject to 8% WHT based on internal legislation. 10% on other kind of income (e.g. liquidation). Here a summary table from Minister of Finance RO:

https://mfinante.gov.ro/apps/detalii.html?method=searchAnaf&pagina=taxe&den=IMPOZITUL%20PE%20VENITURILE%20OBTINUTE%20DIN%20ROMANIA%20DE%20NEREZIDENTI

I would be glad to be wrong on the point but I believe that this 0% wht in RO (apart from DTA, PEX, etc..) is a myth.

 

[Marzio]

I would be glad to be wrong on the point but I believe that this 0% wht in RO (apart from DTA, PEX, etc..) is a myth.

Well looks like Deloitte got it wrong.

Thanks for pointing that out.

 

[Don]

Well looks like Deloitte got it wrong.

Thanks for pointing that out.

Parent subsidiary directive should still apply.

 

[Marzio]

Parent subsidiary directive should still apply.

Yes, you could setup a holding in EE or CY and achieve the same result as a RO holding.

 

[Don]

Yes, you could setup a holding in EE or CY and achieve the same result as a RO holding.

Based on the PSD, the status of parent company is attributed to a company from an EU Member State that has a minimum holding of 10% in the capital of a company from another Member State.

 

[ElBotellon]

Based on the PSD, the status of parent company is attributed to a company from an EU Member State that has a minimum holding of 10% in the capital of a company from another Member State.

there is also a holding requirement of 1 year.

 

[Don]

there is also a holding requirement of 1 year.

The minimum holding period requirement, if any, must be met (the PSD gives member states the option to require that a parent company hold the shares in its subsidiary for an uninterrupted period of at least two years to qualify for benefits under the PSD).

 

[Forester]

@ElBotellon, @Marzio, @Don: An excellent discussion and material for learning, thanks.

But for the @AntonioT95k 's situation I rather stand with @scooterguy :

That could work, the problem is that it is more expensive to set up, so maybe it's kind of overkill for a business that hasn't even started yet?

Since OP is starting, it might be wiser to start with a simple setup and focus on profits; later on they could improve it.

In other words, I'd rather start paying an overall Romanian tax of ~10% with a simple setup and focus on growing the business, instead of setting up 3 different companies in 3 different countries.

Of course, the structure that you propose would certainly begin to make more sense as OP's profits grow.

This perhaps even should be chiseled into stone