Bulgaria or Cyprus for company and residency?

[georgio]

Hello, I'm an EU citizen and considering of Bulgaria or Cyprus for a company and having residency there. My clients are in the EU, I'm currently billing them with a UK company (consulting services).
Let me list some pros and cons of each country, feel free to add to this list and with personal experiences (I have seen many people in the forum mentioning Cyprus, but not a lot Bulgaria).

Bulgaria:
+ : 10% company flat tax + 10% personal tax for distributing income from the company.
+ : You can have European insurance for really cheap, and then you can add private insurance if you wish.
+ : You can have a very cheap residency, outside of Sofia. You can even buy a flat in the mountains if you like skiing, for less than 300Eur/m2.
+ : Close to Europe with planes, plus you can say you were visiting with a car in case of control for the 6-month residency.
- : Official language is Bulgarian, do you need to translate the documents?
- : Trustful banks? Euro is not the official currency, which may cause issues.
- : Regulation and what if there are some unknown rules/taxes etc.

Cyprus:
+ : 12.5% company tax, no tax on distributed dividends.
+ : Can provide more options for secrecy.
+ : Euro is the official currency.
+ : English is an official language.
- : More expensive for residency, especially if you want to buy property
- : Weird situation with Turkey and neighbors
- : Far from Europe, lack of planes from main EU cities
- : Untrustful banks (see what happened in 2012-13)
- : If you want insurance, you need a salary which can be more expensive than Bulgaria

If anyone has personal experiences, please share them!

 

[Sols]

In terms of costs and taxes, Bulgaria might work out a little bit cheaper. Highly dependent on your lifestyle, and what types of income you're going to be earning.

In terms of quality of life, most people tend to prefer Cyprus. Better weather, friendlier and more open people, and more varied mix of peoples and cultures.

I haven't researched it, but I would imagine that Cyprus is as good if not better connected to mainland Europe, especially during from spring through autumn when tourism is at its peak. In addition to the Larnaca and Paphos airports, you have the (controversial) option of crossing into TRNC and fly from the unrecognised Ercan Airport to Turkey (domestic flight) and from there you have a lot of options.

Ideally, spend some time in both countries and see which one you prefer. If you don't speak Bulgarian, you will struggle to fit in in Bulgaria. In Cyprus, English is very well spoken. Some better than others, of course, but above and beyond what you find in Bulgaria. No need to learn Greek if you live in Cyprus, although it's always appreciated by the locals.

As for insurance, you can get a private insurance. That's what most expats do.

You'd do well not to keep any significant wealth in Cypriot banks. Most expats open business accounts with Bank of Cyprus or Hellenic Bank but make sure to move large sums into more trustworthy banks overseas.

 

[GrumpyMess]

in the forum mentioning Cyprus, but not a lot Bulgaria

Because Bulgaria is a shithole. The only case Bulgaria is good for is when you need a lot of low paid employees. In other cases if you make less than 50-100k you can choose any eastern EU country and your quality of life will be a lot higher than in Bulgaria with the similar tax rate.

Cyprus:

+60 days residency rule
+non dom regime

 

[Joe Blasco]

Being in both countries for many years. You are doing a mistake out of ignorance , because all the others are doing the same mistake. Dividents in cyprus are not taxable for no residents or get a 1 year exemption if you take a cyprus tax residency. That means that dividents are taxable in your own country and that country especially if EU when desires will take this information gladly from Cyprus and sh@t will hit the fan. Secondly , Cyprus is a tourists island so everything, especially real estate is inflated so in order to fix your domicile you pay a premium. Both Sofia and Cyprus (especially Limassol, paphos, larnaka) are villages but in Cyprus you will be completely landlocked. take this in mind if you have any special issues with your existence) . Bulgaria everything is cheaper but you will have a better understanding from people in your special needs, something for which you will have to spend $$$$$ in Cyprus because everybody is spoiled.

 

[Joe Blasco]

Being in both countries for many years. You are doing a mistake out of ignorance , because all the others are doing the same mistake. Dividents in cyprus are not taxable for no residents or get a 1 year exemption if you take a cyprus tax residency. That means that dividents are taxable in your own country and that country especially if EU when desires will take this information gladly from Cyprus and sh@t will hit the fan. Secondly , Cyprus is a tourists island so everything, especially real estate is inflated so in order to fix your domicile you pay a premium. Both Sofia and Cyprus (especially Limassol, paphos, larnaka) are villages but in Cyprus you will be completely landlocked. take this in mind if you have any special issues with your existence) . Bulgaria everything is cheaper but you will have a better understanding from people in your special needs, something for which you will have to spend $$$$$ in Cyprus because everybody is spoiled.

sorry wront typing 17 year exemption

 

[georgio]

You'd do well not to keep any significant wealth in Cypriot banks. Most expats open business accounts with Bank of Cyprus or Hellenic Bank but make sure to move large sums into more trustworthy banks overseas.

How does this work? E.g. personal bank accounts in Switzerland or other high-trust countries, will be ok with income from dividends from a Cypriot company? (and for someone who is not resident in their country)

Being in both countries for many years. You are doing a mistake out of ignorance , because all the others are doing the same mistake. Dividents in cyprus are not taxable for no residents or get a 1 year exemption if you take a cyprus tax residency. That means that dividents are taxable in your own country and that country especially if EU when desires will take this information gladly from Cyprus and sh@t will hit the fan. Secondly , Cyprus is a tourists island so everything, especially real estate is inflated so in order to fix your domicile you pay a premium. Both Sofia and Cyprus (especially Limassol, paphos, larnaka) are villages but in Cyprus you will be completely landlocked. take this in mind if you have any special issues with your existence) . Bulgaria everything is cheaper but you will have a better understanding from people in your special needs, something for which you will have to spend $$$$$ in Cyprus because everybody is spoiled.

Yes, I have to checkout better what happens with the dividend tax-exemption. I've heard that Greece and Cyprus have a double tax-treaty. If you are Greek resident with profits from dividends in Cyprus, the law says that: Greek dividend tax: 10%. Cyprus company tax: 12.5%. So no tax is applicable in Greece, but I don't know how this works in the long-term, if they'll force you to start a Greek branch, etc.

Because Bulgaria is a shithole. The only case Bulgaria is good for is when you need a lot of low paid employees. In other cases if you make less than 50-100k you can choose any eastern EU country and your quality of life will be a lot higher than in Bulgaria with the similar tax rate.

Indeed, having employees there in the future could be a plan, but for now it works well just by using freelancers.

 

[Joe Blasco]

do not know what you re trying to write but be careful cyprus tax 12,5 % plus defence tax I think if resident, then you are supposed to pay 10 % on your dividents if you are Greek. You do NOT get a tax exemption !!! if your name appears on company registry and you have no other tax residency, for greek tax authorities you are running the company from greece and risking 25 % tax !

 

[Sols]

How does this work? E.g. personal bank accounts in Switzerland or other high-trust countries, will be ok with income from dividends from a Cypriot company? (and for someone who is not resident in their country)

It's a separate discussion, but yes, that's usually how it's done. Say you move to Cyprus from for example Austria, you'd keep your personal account in Austria and move your personal funds there instead of keeping them in Cyprus.

If you're from Greece, you'll have to assess whether Greek banks are any better than Cypriot. Or you can start looking around for stable banks you might be able to open an account with.

 

[GrumpyMess]

Say you move to Cyprus from for example Austria

In case of Austria you can manage your Cyprus company without CFC to be triggered. There is an article with a proper structure.

That means that dividents are taxable in your own country

It highly depends on your passport country tax rules.

 

[Joe Blasco]

It highly depends on your passport country tax rules.

yes ofcourse, but our fellow member stated he has an EU passport, I do not think there is in some EU country exemption for world wide income, but if there is I will be glad to know. Also the fact , that cyprus in most of the cases will not report this income to the foreign tax authorities, does not make this plan, nor legal nor 100 % foolproof

 

[Sols]

In case of Austria you can manage your Cyprus company without CFC to be triggered. There is an article with a proper structure.

The topic is about incorporating and moving to Cyprus (or Bulgaria). I don't see what CFC implications for running a Cypriot company from Austria has to do with the topic. It was just an example of a country they might be moving from, where some banks are probably more stable than most Cypriot banks.

 

[fshore]

yes ofcourse, but our fellow member stated he has an EU passport, I do not think there is in some EU country exemption for world wide income, but if there is I will be glad to know. Also the fact , that cyprus in most of the cases will not report this income to the foreign tax authorities, does not make this plan, nor legal nor 100 % foolproof

You're confusing citizenship with tax residency. EU countries tax worldwide income when you are tax resident there. If you are not tax resident then you don't pay tax to your citizenship country. Not all countries requires you to have another tax residency.

 

[Joe Blasco]

You're confusing citizenship with tax residency. EU countries tax worldwide income when you are tax resident there. If you are not tax resident then you don't pay tax to your citizenship country. Not all countries requires you to have another tax residency.

I aint confusing nothing . Our friend stated he has an EU passport. 99,9 % his tax residency is in the country of his citizenship, if he had some kind of residency and tax residency elsewere, he woudn t ask these questions...

 

[Sols]

I aint confusing nothing . Our friend stated he has an EU passport. 99,9 % his tax residency is in the country of his citizenship, if he had some kind of residency and tax residency elsewere, he woudn t ask these questions...

The thread opens with: "Hello, I'm an EU citizen and considering of Bulgaria or Cyprus for a company and having residency there"

The assumption in this thread is that Georgio both lives in and forms a company in Bulgaria or Cyprus.

 

[Martin Everson]

Because Bulgaria is a shithole.

You could have just ended at this point and most people would understand . I 1oo% agree.

I shared my feelings about Bulgaria back in another thread below Sept 2018 when I wrote the below and my feelings have not changed:

Let me just say on my first and only visit to Bulgaria I was left with one question in mind. Who on earth was responsible for signing off on letting this place join the EU.

Have a nice day.

 

[GiGoGo]

How about Portugal? I've heard you have a lot of tax benefits if you relocate there.

Also Italy, yes Italia. Seems you relocate there and can make a deal with the tax office about how a fixed rate for all your taxes.

 

[GrumpyMess]

Also Italy, yes Italia. Seems you relocate there and can make a deal with the tax office about how a fixed rate for all your taxes.

There is a flat rate of 100k whatever your income is. If you make a 7 figures yearly it's a good location

 

[GiGoGo]

There is a flat rate of 100k whatever your income is. If you make a 7 figures yearly it's a good location

If you do that much its even better than HK or SG

 

[Luganese]

Also you can negotiate with different Swiss Cantons like many F1 pilots

 

[OTR365]

If anyone has personal experiences, please share them!

I'd just like to add two observations about Cyprus:
- The climate is hot - very hot. This year it was above +32C still in mid-October. For people of e.g. Mediterranean origin, that might be completely OK, but many North Europeans/Scandinavians like this kind of weather only in small doses. Cyprus is like this almost six months/year.
- Cyprus city planning adheres to Anglo-Saxon model, where cities are built for cars, not pedestrians. Outside of very tiny old city quarters in Limassol, Paphos and Larnaca, you can't really walk anywhere. Streets are very wide; traffic is crazy and there's lots of it; parked cars block pavements; public transport options are weak. Most of European cities from West to East are quite walkable - Cyprus just isn't so, except for Nicosia. Many foreigners aren't bothered by this at all, some others are.

In my opinion the cities, lifestyle, climate, food etc. in Cyprus are inferior to what can be arranged in e.g. Spain/Portugal/Canaries. I've lived in Cyprus for 1½ years now, and looking for an exit already.