Freelance taxes planning

[WhiteAngel]

Hello,

I'm going to work as a remote freelancer (developer) via marketplaces (UpWork, Fiver, ...). For the moment, I live in France and I'm looking for a legal way to lower my taxes. I don't care about the privacy and the main issue is lowering taxes.
I was thinking to create an offshore company to be able to work via this company and still continue living in France. If I understood correctly, I will still have to pay the same taxes in France as soon as I receive dividends, right? In this case, it makes no sense.
1. Is it possible to pay amount of dividends that is lower than taxes threshold (e.g. 25K EUR in France / year).?In that case I won't be required to pay any taxes in France and all remaining money will stay at the company's bank account. When I need more money I might already be in a different country where you got e.g. regional taxation regime and I could withdraw company's money to my private account without any taxes. Could this work or I'm missing something?
2. Are there any other possibilities for a remote freelance work to lower taxes in France or the only possible way is to move to tax heaven?
3. Is it possible to make a residence permit of the country with which France got DTAA (e.g. Costa Rica) and pay no taxes / minimal taxes in Costa Rica and stay free of the taxes in France?

Thank you in advance!

 

[Old Spice]

I know French IT freelancers that have a residence in Andorra to lower their taxes. i.e. They still live in France.
Not tax-free but far better than what France is offering.

 

[W4rhol]

If you live in France, you pay (and your company as well) your taxes in France. No matters if you have any residence in Andorra.

You spend more than 183 days per Year in France and your company is run in France, so both of you have to pay taxes there.

The rest is only blablabla.

 

[Dev Nul]

Is it true that if you are a resident of zero tax country and have your bank account there using the resident country credentials, then you can live anywhere else and be liable to pay no taxes because your resident country bank can't report you to your home country? The bank doesn't know about your home country.

Is the bank required to determine where the account holder person or the UBO of a company's bank account is currently residing? Or where the company is actually run from?

How does the residence status affect the treatment by bank? You could have temporary residence (as a student) or a permanent residence

Does a bank constantly require you to prove your actual present residence location? If they dont, then shouldn't you be good after you manage to get a bank account?

Another question I have is, if you acquire a residence in a tax haven, would you be in a better position by changing your name there? So you could have 2 names at the same time. How much of a problem would that be in practical life?

 

[Dev Nul]

Here's some useful information on how tax residency is supposed to be figured by the bank / tax authority
Tax residency - Organisation for Economic Co-operation and Development

Looks like if you maintain a nominee director and a nominee shareholder along with virtual office (phone number, address) in a tax haven you claim to be a tax resident of, you could pass off as the tax resident easily

 

[WhiteAngel]

The rest is only blablabla.

Does this mean that if I live in France there's no any possibility to lower taxes?
What's about the situation when you got an offshore company that pays you dividends in small amounts that are not taxed (e.g. ~24k EUR / year)?

 

[WhiteAngel]

I know French IT freelancers that have a residence in Andorra to lower their taxes. i.e. They still live in France.
Not tax-free but far better than what France is offering.

If they got tax residency of France and they don't pay taxes in France (even if they got residence permit of Andorra) they are doing illegal things.

 

[W4rhol]

Does this mean that if I live in France there's no any possibility to lower taxes?
What's about the situation when you got an offshore company that pays you dividends in small amounts that are not taxed (e.g. ~24k EUR / year)?

You live in France, you pay all the taxes that the French Taxman ask you to pay. Simple as that. You can try to do some tricks, but trust me, you will not stand long...

 

[WhiteAngel]

You live in France, you pay all the taxes that the French Taxman ask you to pay.

This sounds very strange. Do you want to say that there's no place for taxes optimization in case of France? Could you explain why the scheme I've described is illegal, please?

 

[W4rhol]

This sounds very strange. Do you want to say that there's no place for taxes optimization in case of France? Could you explain why the scheme I've described is illegal, please?

It's illegal because you think that :

Place of incorporation of the offshore company = place where my company have to pay taxes
if place where my company have to pay taxes = 0% taxes = No problem for you.

Except that it's not work like this. The taxman don't care where your company is incorporated, he only care FROM WHERE your company is run. And in your case : in France.

You run your company FROM France, so your company have to pay taxes in France and ALL OF THEM.

 

[W4rhol]

You want to optimize your taxes in France ? Simple, quit the country that's all. You cannot have the butter, the milk, the cream of the milk and the sexy a*s of the cashier. You have to choose

 

[WhiteAngel]

You are right, @W4rhol. My bad. Thank you for clarification.

 

[WhiteAngel]

Simple, quit the country that's all

This was one of the possibilities for me but I'm still looking for another possibilities before choosing this one.

 

[Martin Everson]

Does this mean that if I live in France there's no any possibility to lower taxes?

There is none!!!!

There is a very good reason 10,000 millionaires left France in 2015 and 12,000 left in 2016 and probably more in 2017...lol.

Wealth tax forces 12,000 millionaires A YEAR out of France | Daily Mail Online

What you describe won't work because of effective place of operation and management of the offshore company i.e France. You will also be investigated or audited each year for using an offshore company until the harassment tires you out of the structure. But don't listen to me listen to the thousands of French millionaires and countless other ordinary French people who refused to drop their pants and bend over for the taxman and have left.

 

[W4rhol]

Happy to help

 

[WhiteAngel]

Happy to help

Maybe you could show me the correct direction where to look in case of remote freelance programming? Like moving to countries with regional taxation regime or making a company for my parents (who leave in a country with much lighter taxation system) or something else?
Thank you in advance.

 

[WhiteAngel]

One more question, please:

Place of incorporation of the offshore company = place where my company have to pay taxes

Is it the same in case if my company is in a country that got DTAA with France? Does DTAA mean:
- if I pay some small amount of taxes in this offshore country, no taxes should be paid in France?
or
- I need to pay taxes in France (as far as a control is being done from France) and no need to pay these taxes 2nd time in offshore country?

 

[Martin Everson]

You need to read the terms of the individual DTA that concerns you. However although a DTA may in principle work all attempts to shift profits from higher tax to lower tax jurisdictions will be thwarted. BEPS for example in EU is there to counteract this. Offshore companies (IBC's) that are not resident in their home countries also do not generally get access to DTA's. To cut a long story short read my last post and if you still want to go ahead you can do so.

"Base erosion and profit shifting (BEPS) refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations. Under the inclusive framework, over 100 countries and jurisdictions are collaborating to implement the BEPS measures and tackle BEPS."

 

[WhiteAngel]

You need to read the terms of the individual DTA that concerns you. However although a DTA may in principle work all attempts to shift profits from higher tax to lower tax jurisdictions will be thwarted. BEPS for example in EU is there to counteract this. Offshore companies (IBC's) that are not resident in their home countries also do not generally get access to DTA's. To cut a long story short read my last post and if you still want to go ahead you can do so.

"Base erosion and profit shifting (BEPS) refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations. Under the inclusive framework, over 100 countries and jurisdictions are collaborating to implement the BEPS measures and tackle BEPS."

Thank you for all the information @Martin Everson. Somehow, I missed your previous post. Now I read it and I see your point.
Thank you once more!

 

[countryfree]

Thought everybody knew that. When you live in high tax country, and that is most of the EU, you first need to leave the country for good if you don't want to pay. Then, we'll talk.