Best low tax EU country for freelancing

[boresnake]

As always in case you are EU citizen - to stay in the Czech Republic for at least 183 days in a given calendar year (you will have to prove that) and do not have center of life (houses, spouse, children) in any other country that could claim you to be tax resident there.

This is hard to achieve for full-time employed family leader but quite manageable for young digital nomad working in IT industry with clients across schengen area for example sitting now in Spain and paying 45% tax.

If you will decide in future to settle in Czechia and need to help with accounting, banking and residence you can PM me, I am local and know how the system works.

It's not the easiest one, you may find one with less bureaucracy but it has its own benefits. And the banks are better capitalized here than in many of the western EU countries.

 

[micand]

I second @happyjohn but would like to add that Cyprus has the lowest tax rate within the EU 12,5% and still offer some sort of privacy until next year. After that, countries like Czech Republic, Romania, Bulgarian, Georgia and so forth may be worth to look into.
Finally we may not forget the UK, but it may take some time before they will compete with the EU I think.

Cyprus might have the lowest standard tax rate with 12,5% but don´t forget about the new GHS contributions which are now an extra 2,4% and while having a closer look Malta has an effective tax rate of 5% due to it´s 6/7 tax refund and Romania has a final corporate tax rate for micro companies with at least one employee and turnover not exceeding 1 million euro.

does romania already have a UBO registry up and running, or some sort of public registry of company directors/shareholders?

Yes

Is that generally or only for freelancer companies?

Generally all micro companies with at least one employee and turnover not exceeding 1 million euro.

Hi, do you have some contact who setup all this online for me?
I contact some companies who do that and they gave me different informations about this. I'm not a citizen of Romania, doing legal work and think to open a company in Romania to reduce taxes and pay out dividends.

Yes

I not sure if the company can be incorporated over the internet, i think you must be there in person in order to sign the documents!

It cannot, you have to either show up in front of a notary or you need to give power of attorney which has to be notarized, translated and notarized again.

Thanks for the replies! I'm specifically looking for a sole proprietorship (aka freelance) legal figure. I want low operating overhead, low cost and easy to setup.
Operating with a company figure is always more expensive, complex to take money out and involves more bureaucracy bulls**t.

Ideally, paying up to 15% flat tax in total, including income tax, social contributions, pension and all the s**t taxes governments invent to steal money from you.

You will always have costs running a business e.g. bookkeeping, annual accounts, tax statements. Romania is quite affordable.

Romania is not a good option if you are used to things being done smoothly. I have experienced notaries making mistakes, translators needing a lot of time for their job, to get a VAT number you actually need a physical office and wait a few weeks etc. It is not an environment for people who are working remotely and not personally in the country to chase the people.

Look into Bulgaria, Cyprus or Georgia. In these jurisdictions you can expect things to be much smoother.

Thats a myth. The question is rather if you work with professionals.

 

[JohnLocke]

Cyprus might have the lowest standard tax rate with 12,5% but don´t forget about the new GHS contributions which are now an extra 2,4% and while having a closer look Malta has an effective tax rate of 5% due to it´s 6/7 tax refund and Romania has a final corporate tax rate for micro companies with at least one employee and turnover not exceeding 1 million euro.

very true, but how about non-domestic companies, you don't pay and tax and honestly my experience is that the tax autho. in Cyprus don't care about such corps owned by foreigners. I admit that if you want a legal setup with resident certificate (if that is required) and VAT registration you have to pay that higher tax.

 

[here2learn]

very true, but how about non-domestic companies, you don't pay and tax and honestly my experience is that the tax autho. in Cyprus don't care about such corps owned by foreigners. I admit that if you want a legal setup with resident certificate (if that is required) and VAT registration you have to pay that higher tax.

Sorry to revive an old thread @Admin - But this is interesting to me! Do you know if going this route (non-domestic Cyprus company) you still need to file legal docs each year - Accounts etc with all receipts & invoices, or do you just declare that income is non-domestic? Interested in hearing more about this - any info/threads on this specifically in the Mentor Group?

 

[cyprus123]

The CFC rules in Cyprus are very new - from April 2019. I think it has to be seen how authorities are dealing with such structures. In my opinion it is advisable to run a local company in Cyprus, pay a small salary, pay some social insurance... and parallel run an international business in Hong Kong, Labuan, UAE or Georgia.


@micand: About Romania: of course it is always an individual impression, but I was never lucky to work with professionals there, only dissappointments. Mistakes from translators, notaries, accountants, lack of communication, ghosting, long delays - not the environment I like to work in. Just my experiences of course.

 

[cyprus123]

And yes, you need to declare your income and file tax returns in Cyprus.

 

[Zuzuud]

Helo Guys!

I have searched heavily in this forum and on Google as well, after I read about UK non-resident direcotor/employee who doesnt spend any days in UK except from pay tax in UK.

There are a lot of good documentation on HM Revenue & Customs with some examples, but I have not found anything specific to this.

Could you guys make it clear what's the exact tax free situation, please? Are we talking about salary or is there any special benefit? (I am sure its not dividend)

Running a limited company: your responsibilities

Running a limited company - including directors' responsibilities, company annual returns, reporting company changes and how to take money out of a limited company

www.gov.uk

So what's the way to pay a a non resident director abroad without PAYE nor NI and any other uk (reporting) duties?

ps: I have found something similar in Estonia where I see different between "board memeber salary" and "emplyee salary" (second one is tax free).

How Taxes And VAT Works For Estonian Companies

Taxes and VAT rules work, with concrete examples.

yourcompanyinestonia.com

thank you for any tip

 

[Zuzuud]

Thats all my findings:
"If you live abroad and are employed in the UK, your tax is calculated automatically on the days you work in the UK."

Tax on your UK income if you live abroad

Find out whether you need to pay tax on your UK income while you're living abroad - non-resident landlord scheme, tax returns, claiming relief if you’re taxed twice, personal allowance of tax-free income, form R43

www.gov.uk

Screenshot

Captured with Lightshot

prnt.sc

https://www.pwc.com/gx/en/services/people-organisation/global-employee-mobility/global-mobility-country-guides/assets/pwc-gm-folio-uk-outbound.pdf

but I would be very happy if you can link the exact part of the relevant law.

 

[Zuzuud]

Do you have any idea or can you show me relevant source, please?

thank you

Helo Guys!

I have searched heavily in this forum and on Google as well, after I read about UK non-resident direcotor/employee who doesnt spend any days in UK except from pay tax in UK.

There are a lot of good documentation on HM Revenue & Customs with some examples, but I have not found anything specific to this.

Could you guys make it clear what's the exact tax free situation, please? Are we talking about salary or is there any special benefit? (I am sure its not dividend)

Running a limited company: your responsibilities

Running a limited company - including directors' responsibilities, company annual returns, reporting company changes and how to take money out of a limited company

www.gov.uk

So what's the way to pay a a non resident director abroad without PAYE nor NI and any other uk (reporting) duties?

ps: I have found something similar in Estonia where I see different between "board memeber salary" and "emplyee salary" (second one is tax free).

How Taxes And VAT Works For Estonian Companies

Taxes and VAT rules work, with concrete examples.

yourcompanyinestonia.com

thank you for any tip

 

[Piano]

If your turnover doesn't exceed 80k EUR, then effective tax rate in Czech Republic will be 13.25%. Social security and health insurance included.

For VAT fillings you have to report each month to the tax authority. But it's manageable, I am doing it myself regularly.

If you wish I can help you with the rent/lease agreement, bank account, local sim and other stuff to get the tax residency status. Just PM.

How can I PM you ? Don’t see that option...

 

[avalanche]

Hi. I recommend you Poland - from 1.01.2021 there will be 0% Corporate Tax for sp. z o. o. (limited companies) It is very simple, to open bank account (34 banks) and banks sytem is very modern and pass 2008 crash test without any problems.

The system is similar to Estonia. The different is:
When you withdraw dividends than you will pay:
- 9% - small company status (up to 2 mln EUR) (Estonia have 20%)
- 19% - the rest of companies.
- you should hire min. 1 person for national min. wage: 569 EUR (currency exchange from today)

This solution have advantage compared to for example Estonia:
- the most innovative banks system in Europe (more than 32 banks are in Poland) and no problems to open account. No application fee. You can open account in one day.
- banks are not so scary and don’t block your account without serious reason
- cheaper accounting services than in Estonia
- cheaper lawyer services than in Estonia
- gov. have no problem with registration company in the virtual office (cheaper than in Estonia)
- more simple to move money between local company and abroad company - for example: between Germany and Poland
- much real estate investment opportunity
- much pleasure opportunity and high standard of living (quality of food and houses)
- well educated people

How does it beat 12.5% corp tax + 0% dividend tax in Cyprus?

 

[avalanche]

Maybe move money to polish companu then it will be 0% tax from next year or 9% this year?

What about 23% Polish VAT? According to EU rules you must charge VAT to B2C for almost all services unless they are exempt (not many are exempt). In Cyprus VAT is 19%, basically lower by 4%. Essentially your lower Polish corporate tax rate is then "compensated" with higher VAT (which is worse than optimizeable corporate tax).

Then.. why would you look for EU solution if you are not planning to make more than 2m EUR in turnover? Eventually you end up paying 19% on dividend distribution in Poland which is a lot higher than Cyprus (if you take into account flat 12.5% corporate tax in Cyprus). There are a lot cheaper tax set ups for small companies outside EU

If you are not planning to make 2m EUR turnover why not just look for something non-EU that does not have draconian VAT?

 

[dziter]

Eventually you end up paying 19% on dividend distribution in Poland which is a lot higher than Cyprus

Totally agree with that.

When you withdraw dividends than you will pay:
- 9% - small company status (up to 2 mln EUR)

Source? Never heard about that, usually it's 19% as @avalanche said.

 

[avalanche]

Cyprus is 2 times more expensive in corporate services then Poland so they "compensated" lower VAT rate by expenses for accounting services and empty virtual offices etc.

Beside VAT exempt (35,000 EUR per annum) is lower in Cyrus than in Poland: 44 028,00 EUR
For VAT there is exemption 200k PLN. You could also open 10-20 compares. Beside - did you ever seen Google to send invoice with VAT? No because they operate on one country and have Clients from another country. So you could have company in Poland and 0% VAT invoice for Clients from abroad. Simple. Typical company pay 0% VAT like google is have good structure.

Anyone following MichaILs tax advice may be doing grave mistake if you dont get legit consulting from a proper tax advisor. You may not pay VAT for export of services to non-EU persons for a while until your gov catches up with you and demands to pay shitton of taxes for many years of operations.

His job is to probably sell you a company with fairy tales and after he's done he will disappear. You end up with a company and a full a*s of debts

 

[avalanche]

When you withdraw dividends you should pay: (Corporate Tax and Personal Tax) Yes? So corporate tax will depend of size of your company (9% or 10%) and personal tax you will pay where you are tax resident. This is simple. So you could live in Dubai and have company in Poland. If you live in Poland and have company in Poland you will pay 9% or 19% (corporate tax) + 19% but who is withdrawing dividends living in Poland? Nobody.

You started sounding like a con artist or a very silly person

 

[exprtadvisrdev]

@Admin this person offends me.

@Admin I was expecting higher standard on this forum.

Wtf?

 

[Btraveler]

Armenia offers 0% tax for IT freelancers until you make $50,000 per year. After that tax crawls up to 3% until you make $200k per year. Banking easy to set up with proper contacts (EUR USD AMD accounts) Accounting may cost around $80/mo. Easy to get residency, good and affordable healthcare (although need to know Russian language. Setup is around 1k EUR

Very interesting option + it's a country outside the CRS radar.

About EUR - USD accounts. How do you manage them for not to be charged for intermediary banks and similar. Practical examples of my question:

1) If a customer that lives in Europe wnat to make a transfer to your EUR account in Armenia, how does it work? Comissions, etc...or you receive charge free in your account?

2) If you manage to obtain a merchant account in an Armenian bank that charges customers in USD or EUR, the money enters without comissions to your USD or EUR account at that armenian bank accounts? Or, at least, at a flat rate like Stripe of 1% or 1,5%?

Many thanks in advance for your info on that

 

[avalanche]

Very interesting option + it's a country outside the CRS radar.

About EUR - USD accounts. How do you manage them for not to be charged for intermediary banks and similar. Practical examples of my question:

1) If a customer that lives in Europe wnat to make a transfer to your EUR account in Armenia, how does it work? Comissions, etc...or you receive charge free in your account?

2) If you manage to obtain a merchant account in an Armenian bank that charges customers in USD or EUR, the money enters without comissions to your USD or EUR account at that armenian bank accounts? Or, at least, at a flat rate like Stripe of 1% or 1,5%?

Many thanks in advance for your info on that

1. Customer chooses OUR in bank transfer options. I think its classic thing everybody should do when they are paying.
2. Card processing fee is 2.7-3%, money enters your bank account without any extra fees. If your volume is large, you can go for less fees. Where did you see 1-1.5% on Stripe?

 

[Btraveler]

I think Stripe is

1.4%+€0.25
for European cards

2.9%+€0.25
for non-European cards

But yes, an average of 3% for having that money out of CRS in Armenia (or other countries like that) is quite good

 

[drumtraks]

Maderia has a 5% corporate tax and 0% on dividends if I recall correctly. VAT is 22% tho.