Bulgaria / Cyprus for this?

[antigo]

I run an agency, and currently having only 1 client, making less than 50k a year.

I live in France, and I can't leave for 2 more years (personal).

So I am thinking of a company, outside of France to reduce tax.

I have friends in Bulgaria and Cyprus, who can help me with PE for cheap.

My goal is low corporate tax and capital gains, since I want to put my funds into crypto & indexes long-term.

Do I go BG / CY / ...

 

[Don]

Bulgaria is nice. Cyprus is also nice but over there you have to pay for audits and everything is 2x-3x more expensive + higher tax. No point with your budget

• Estonia company with branch in Bulgaria
• Friend as branch director
• CIT only 10%
• Repatriate profit to headquarters 0% WHT
• Later move to Estonia temporarily - no physical stay needed for tax residence
• Cash out everything with no additional tax

 

[antigo]

Estonia company with branch in Bulgaria

Great setup indeed.

How much would that cost me yearly?

I feel like adding Estonia to this would be same as maintaining a Cyprus company (~120 BG+120 EE=240 per month on accounting)

 

[Sols]

You live in France? You pay French tax.

You own/control a company while living in France? The company pays French tax (regardless of where it's incorporated).

Don't want to pay French tax? Don't live in France.

Super simple. Anything else is playing with fire. It's your life, your money, your liberty, your future.

If you're open to relocation, Cyprus is nice. Malta is also nice. Lots of tax incentives. I think the average French person would suffer in Estonia (cold, dark) and Bulgaria.

 

[Don]

Great setup indeed.

How much would that cost me yearly?

I feel like adding Estonia to this would be same as maintaining a Cyprus company (~120 BG+120 EE=240 per month on accounting)

Probably around 500 EUR/year will do.
And when it comes to incorporation, you might get it done for another 500.
Then add BG accounting for 120 per month.

Either way, with your budget, it is better to stay out of Cyprus.

Otherwise, I would prefer Cyprus, but you need to spend more in Cyprus for a decent quality of life. Everything costs 2-3x more.

In Bulgaria, the wages are 2x cheaper, and the talent pool is 5x bigger, so it's easier to hire staff and establish economic substance.

You live in France? You pay French tax.

You own/control a company while living in France? The company pays French tax (regardless of where it's incorporated).

Don't want to pay French tax? Don't live in France.

Super simple. Anything else is playing with fire. It's your life, your money, your liberty, your future.

If you're open to relocation, Cyprus is nice. Malta is also nice. Lots of tax incentives. I think the average French person would suffer in Estonia (cold, dark) and Bulgaria.

Your summary of the French tax system is relatively straightforward, but your post is not exactly inviting to discuss the nuances of taking calculated risks.

While I understand the position of the OCT administration that the forum should not promote illegal practices, I believe it's perfectly fine to discuss risks. So, to rephrase your statement, you claim that the OP, with his structure, will be 100% exposed to French tax risk, which is not worth taking.

Now, to expand on this, take a group of friends in different countries who set up a business in one country. One person works for a few years for free for this entity. Does it mean that if they have one French citizen in this company, immediately, France will start a cross-border tax investigation, spending probably way more than they could get back from the business in taxes? Sometimes, probably yes. All the time - I don't think so. What is the risk with different structures?

 

[antigo]

You own/control a company while living in France? The company pays French tax (regardless of where it's incorporated).

That is true, I mentioned that my choice behind Bulgaria / Cyprus is because I can establish PE there.

That's why I wouldn't be liable to French tax.

 

[polonieth]

With only 1 client and making less than 50k a year I think the idea of tax reduction is pointless. You could probably optimise your French setup to make some savings rather than aspirations of setting something up in BG.

1 client? Unless it's your Dad or something, that could surely go south rather quickly?

And that's not a dig; I know plenty of digital agencies boasting multi-million turnover, but 1 or 2 client losses and it is redundancy time. And this happens all the time when clients with big spends get on the merry go around.

 

[Sols]

@polonieth is right. Focus on growing your business: add more clients and revenue streams. Only relocate today if that's something you want to do anyway.

50,000 EUR goes further in Bulgaria and Cyprus than in France, although that varies a lot based on location in the country you're comparing. Central Limassol vs rural France would probably lead to higher costs of living in Cyprus.

 

[JimBeam]

Bulgaria is nice. Cyprus is also nice but over there you have to pay for audits and everything is 2x-3x more expensive + higher tax. No point with your budget

• Estonia company with branch in Bulgaria
• Friend as branch director
• CIT only 10%
• Repatriate profit to headquarters 0% WHT
• Later move to Estonia temporarily - no physical stay needed for tax residence
• Cash out everything with no additional tax

Estonian registry is public and if he's the owner of Estonian company and France finds out - they will cause issues.
If your profit is moved from Bulgaria to Estonia and you want to "cash it out" you'll pay 20% distribution tax in Estonia?

If your friend can setup a company for you and run it for you, that's the best bet as you'll pay 10% CIT and 5% dividend tax.

With only 1 client and making less than 50k a year I think the idea of tax reduction is pointless. You could probably optimise your French setup to make some savings rather than aspirations of setting something up in BG.

Exactly!

 

[Don]

Estonian registry is public and if he's the owner of Estonian company and France finds out - they will cause issues.

A public registry is true, but it is the same in Bulgaria.

If your profit is moved from Bulgaria to Estonia and you want to "cash it out" you'll pay 20% distribution tax in Estonia?

No such profits are exempt from tax if you redistribute them. Compared to the BG company setup, theoretically, you can avoid paying the 5% WHT this way.

 

[antigo]

With only 1 client and making less than 50k a year I think the idea of tax reduction is pointless.

I love the notion, however, I don't see the problem with my setup.

PE = Resident Director (paid, it's a close friend). CFC = My client is also in Bulgaria / Cyprus, so unlikely. PIT = I'll pay it in France until I move to a territorial country, but even after I move Bulgarian company will still be better than French.

Am I missing something?

1 client? Unless it's your Dad or something

I get your point. Even at 5-10 clients, I will regret that I put them under a French company. Changing the company details is not professional imo.

 

[Don]

Are you considering VAT? Especially if your client is in the same jurisdiction it could apply.

 

[freegeek]

if you will manage this all from France then French tax authorities will find you. If you want to stop paying French taxes then you have to physically move. All these other schemes have the real potential to end before a judge because of tax evasion sooner or later.

 

[Ade]

I understand @Dons argument on taking calculated risks however I think its always important to also clearly state that such structures are not legal as @Sols did. Because many people think they can register a company somewhere and benefit from the local taxes which - easy to understand as everybody would do that - is not legal.
If you live in France and the company actually will remain yours and all business will be done by you in France then what you are doing won't comply to law.

Whether they will find out is a completely different question. Thats as if I would say "Only charge 30% on the invoice, travel to the country where your client is located and get the remaing 70% in cash without showing French authorities." How shall they find out? Its even better than setting up companies in BG and Estonia as you avoid having companies/bank accounts which make it easier to find you. Also the whole process is much easier and cheaper. But still it remains illegal.