Question Business in Dubai - Living in Europe

[businessLB]

Hi, I’m a French freelance copywriter & data analyst and I work with two clients based in the US.

As many knows, France is awful for taxes and I’m looking to get out asap.

Next year, I’m expecting to collect $150k-$200k, and right now, I’m looking at the best ways to develop my business.

Even though I’m only freelancing, I will start to develop an Amazon Store and other investments very soon.

Here’s the plan:

• Setup a business in Dubai within one of the Free Zones (I have a contact for this)
• Move from France to Romania

Based on my little knowledge, I understand that I would not pay taxes within the business in Dubai, and pay 3% as I give myself dividends. Then, the 10% flat rate for personal income in Romania.


So my questions are:

• Does this sound accurate regarding numbers and how much taxes I would pay?
• What are the best ways to get money from the business to a personal account in Romania?
• Is this doable and most importantly, legal in every way?

Thanks a lot!

P.S. I’m in the very early stages of learning everything, so any advice can help.

 

[Konstanz]

Move from France to Romania. Interesting choice.
Have you been in Romania?
What is your budget for residency?

You can just register in UAE (get UAE residence permit) and live some place in Europe (not France) without residency registration. Visit Dubai time by time.
No one will check anything. Only France can challenge your Residence.

 

[businessLB]

I haven't been to Romania yet, I will check it out soon.
For my budget, I think something between $1.5k to $2k maximum is reasonable (of course depending on the country).

So you would suggest that I set up everything in the UAE and move around in Europe?
Wouldn't this have some legal drawbacks between residency, taxes implications, and so on?

 

[Don]

Move from France to Romania. Interesting choice.
Have you been in Romania?
What is your budget for residency?

You can just register in UAE (get UAE residence permit) and live some place in Europe (not France) without residency registration. Visit Dubai time by time.
No one will check anything. Only France can challenge your Residence.

You can indeed, but you can also do it legally by getting a residency permit in EU but remain only UAE tax resident.
Romania is less flexible for the purposes of moving around as its not part of Schengen.

 

[Spinat]

Sepak with @Fred and let him help you with a setup in Dubai. He knows what it takes and you can trust him!

 

[Mr Gus]

Hi, I’m a French freelance copywriter & data analyst and I work with two clients based in the US.

As many knows, France is awful for taxes and I’m looking to get out asap.

Next year, I’m expecting to collect $150k-$200k, and right now, I’m looking at the best ways to develop my business.

Even though I’m only freelancing, I will start to develop an Amazon Store and other investments very soon.

Here’s the plan:

• Setup a business in Dubai within one of the Free Zones (I have a contact for this)
• Move from France to Romania

Based on my little knowledge, I understand that I would not pay taxes within the business in Dubai, and pay 3% as I give myself dividends. Then, the 10% flat rate for personal income in Romania.


So my questions are:

• Does this sound accurate regarding numbers and how much taxes I would pay?
• What are the best ways to get money from the business to a personal account in Romania?
• Is this doable and most importantly, legal in every way?

Thanks a lot!

P.S. I’m in the very early stages of learning everything, so any advice can help.

It sounds rather complicated and unnecessary.

If you run the UAE company from Romania it will be deemed tax resident in Romania, meaning 16% corporate tax + 8% dividend tax + all the cost for incorporating in the UAE and annual costs to maintain the company. The 10% flat income tax is right but you will also have to pay socials which will end up a lot higher then 10%.

What I would rather do and is completely legal and a lot cheaper is setup a micro company, I assume your revenue is almost completely profit, it's 1% corporate tax for the first 500K of revenue and 8% dividend tax. The condition is you need to have one employee, I believe you hiring yourself is also fine. You just pay yourself the minimum salary and pay a little bit of income tax on that.

So you would end up paying around 9% in tax, with a lot lower cost to setup and maintain the company and totally legal. If you where to ever go above the 500K in revenue you can explore more aggressive tax planning options.

 

[businessLB]

You can indeed, but you can also do it legally by getting a residency permit in EU but remain only UAE tax resident.
Romania is less flexible for the purposes of moving around as its not part of Schengen.

I actually didn't think of that. So I could get a residency permit in EU but only be tax resident in the UAE?
As I'm French, I don't think getting a residency permit in a country part of the Schengen zone will be difficult. (if necessary even)

It sounds rather complicated and unnecessary.

If you run the UAE company from Romania it will be deemed tax resident in Romania, meaning 16% corporate tax + 8% dividend tax + all the cost for incorporating in the UAE and annual costs to maintain the company. The 10% flat income tax is right but you will also have to pay socials which will end up a lot higher then 10%.

What I would rather do and is completely legal and a lot cheaper is setup a micro company, I assume your revenue is almost completely profit, it's 1% corporate tax for the first 500K of revenue and 8% dividend tax. The condition is you need to have one employee, I believe you hiring yourself is also fine. You just pay yourself the minimum salary and pay a little bit of income tax on that.

So you would end up paying around 9% in tax, with a lot lower cost to setup and maintain the company and totally legal. If you where to ever go above the 500K in revenue you can explore more aggressive tax planning options.

Thanks for the info!

Yes, my revenue is almost full profit, but it will change as I expand my activities (Amazon store, then real estate investing).
I'm not particularly attached to being in Romania, I just need to find a solution that is the best for me and maximize the business's growth.

But this could work. I didn't think the corporate would be taxed with the Romanian tax code, as it would legally be based in the UAE. (I would only give myself some dividends over time)

 

[Mr Gus]

I actually didn't think of that. So I could get a residency permit in EU but only be tax resident in the UAE?
As I'm French, I don't think getting a residency permit in a country part of the Schengen zone will be difficult. (if necessary even)

Don't go this way.. If you where ever to move back to France for whatever reason and the tax authorities will ask for proof of residency like rental contracts, electricity bills, health insurance and you can provide none there is a chance France will still deem you tax resident in France for the years you "left" France.

To be safe move the a country that has a tax treaty with France rent a place for the whole year or buy a place and don't have a permanent place too stay in France and make sure spend 183 days in your new country every year.

 

[businessLB]

Don't go this way.. If you where ever to move back to France for whatever reason and the tax authorities will ask for proof of residency like rental contracts, electricity bills, health insurance and you can provide none there is a chance France will still deem you tax resident in France for the years you "left" France.

To be safe move the a country that has a tax treaty with France rent a place for the whole year or buy a place and don't have a permanent place too stay in France and make sure spend 183 days in your new country every year.

Yes, this is the plan.

Here are my two options, based on what I understand and what my contact helping me set up in Dubai shared:
1. Incorporate in Dubai & live in Europe (not France)
2. Incorporate in Dubai & live in Dubai

For number 2, it's fairly easy. My business is there, I live there, zero taxes across the board.

However, for number 1 I'm not quite clear on how everything works.
As you said with the example of Romania: if I live there, it will consider and tax the UAE business as incorporated in the country itself (therefore, corporate taxes and personal ones as I give myself a salary). Is this accurate?

Or, let's say I choose to live in Germany, Italy, or Austria for that matter: will my business be taxed as if it's incorporated in the country (even though it's in the UAE) or will I only be taxed on what I get out of the business (as salary, dividends, and whatnot)?

Because based on this, it might be widely advantageous for me to just stay in Dubai for some time, as my business grows.

P.S. When I say "live", I mean really living in the country, not faking a residency.

 

[Mr Gus]

I actually didn't think of that. So I could get a residency permit in EU but only be tax resident in the UAE?
As I'm French, I don't think getting a residency permit in a country part of the Schengen zone will be difficult. (if necessary even)


Thanks for the info!

Yes, my revenue is almost full profit, but it will change as I expand my activities (Amazon store, then real estate investing).
I'm not particularly attached to being in Romania, I just need to find a solution that is the best for me and maximize the business's growth.

But this could work. I didn't think the corporate would be taxed with the Romanian tax code, as it would legally be based in the UAE. (I would only give myself some dividends over time)

If you manage and control the company from Romania it will be deemed tax resident in Romania, doesn't matter where it is incorporated.

Yes, this is the plan.

Here are my two options, based on what I understand and what my contact helping me set up in Dubai shared:
1. Incorporate in Dubai & live in Europe (not France)
2. Incorporate in Dubai & live in Dubai

For number 2, it's fairly easy. My business is there, I live there, zero taxes across the board.

However, for number 1 I'm not quite clear on how everything works.
As you said with the example of Romania: if I live there, it will consider and tax the UAE business as incorporated in the country itself (therefore, corporate taxes and personal ones as I give myself a salary). Is this accurate?

Or, let's say I choose to live in Germany, Italy, or Austria for that matter: will my business be taxed as if it's incorporated in the country (even though it's in the UAE) or will I only be taxed on what I get out of the business (as salary, dividends, and whatnot)?

Because based on this, it might be widely advantageous for me to just stay in Dubai for some time, as my business grows.

P.S. When I say "live", I mean really living in the country, not faking a residency.

Yes especially for those countries, all those countries have management and control rules.

Number 2 is very straight forward indeed, but Dubai is very expensive. Incorporating and maintaining a company there will cut in your profits, as well as the visa, expensive housing and food. The only thing that is cheap in Dubai is fuel and energy, that is about it.

Most of these cost you won't have in Romania, Bulgaria or w/e because companies are a lot cheaper to incorporate and setup and you don't need a visa. Housing and food is much cheaper, high quality labor is also a lot cheaper.

Also banking is much more expensive and harder to get in the UAE.

 

[Parsifal]

@Mr Gus More or less, what's the breakeven? I mean to what income is it better to stay in low tax country (9%) and after what level of earnings is it better to move to the UAE?
From what I've heard you can close your expenses in 20k usd/yr with freezone license including. Can we say the breakeven is 200k pa?

 

[Mr Gus]

@Mr Gus More or less, what's the breakeven? I mean to what income is it better to stay in low tax country (9%) and after what level of earnings is it better to move to the UAE?
From what I've heard you can close your expenses in 20k usd/yr with freezone license including. Can we say the breakeven is 200k pa?

I think setup cost could be 20K for everything and annually maybe 5K after that. I have not run calculations but you could already break even at 100K because you will also have incorporating cost and company maintenance in eastern europe.

The problem with Dubai is more the high cost of living which will empty your pockets. Also high quality talent is a lot more expensive as well as banking.

 

[businessLB]

I think setup cost could be 20K for everything and annually maybe 5K after that. I have not run calculations but you could already break even at 100K because you will also have incorporating cost and company maintenance in eastern europe.

The problem with Dubai is more the high cost of living which will empty your pockets. Also high quality talent is a lot more expensive as well as banking.

Based on what colleagues have done and what I was asked to incorporate in Dubai, it's in the area of $5k + around 2k for Visa, then the renewal of the visa.
Of course, banking cost is not included in this.

Now, in my situation, I don't need employees to be located in Dubai. In fact, I don't need employees at first as I'm providing the service myself. But it's something I'll need to develop for sure. However, as soon as I start investing in Real Estate, I will need to create a holding (Investments) containing an active company (Services).

That's when it starts to cost a bit, around $15k per year between the two. (a bit less than that)


Regarding the cost of living, yes it's expensive. In my situation, I'm expecting to collect around $150k - 200k next year with my main service only. So my investment in the Amazon Store could put me in the range of $200k - $225k. At the minimum, I'm at $150k.

I'll need to run the math, it might be not profitable to incorporate in Dubai year one, but year two would 100% be.

 

[Parsifal]

By "close your expenses" I meant 10k/yr for apartment, 5k/yr for food and 5k/yr for freezone license. And it's given you live frugally. I didn't include incorp fees, Idk how much they are.

 

[Mr Gus]

By "close your expenses" I meant 5k/yr for apartment, 5k/yr for food, 5k/yr for freezone license and idk 5k/yr for transport and such. And it's given you live frugally. I didn't include incorp fees, Idk how much they are.

5K a month for an apartment you mean?

 

[businessLB]

By "close your expenses" I meant 5k/yr for apartment, 5k/yr for food, 5k/yr for freezone license and idk 5k/yr for transport and such. And it's given you live frugally. I didn't include incorp fees, Idk how much they are.

5k per year in Dubai is going to be extremely difficult to find, even impossible.
Unless you meant 5k per month, than yes it's more than doable.

 

[Parsifal]

Okay I just checked and there are only rooms for hindus for 5k/yr. Nice studios are 10k/yr in suburbs, just edited the previous one.

 

[benbao]

Dubai is a big city and not necessarily expensive, you can live very well and cheap here. If you of course rent a place in downtown with Burj view and only eat out at lavish hotel Restaurants it's pricy, but at least you get a great life for the money.

 

[Mr Gus]

Dubai is a big city and not necessarily expensive, you can live very well and cheap here. If you of course rent a place in downtown with Burj view and only eat out at lavish hotel Restaurants it's pricy, but at least you get a great life for the money.

You can live cheap in Dubai but you don’t get a great life for the money.

In Bucharest you can rent a luxurious penthouse for 3K a month and in Dubai you get a studio or small 1 bedroom with a gas oven and with a view looking at the skyscraper next to you.

 

[benbao]

You can live cheap in Dubai but you don’t get a great life for the money.

In Bucharest you can rent a luxurious penthouse for 3K a month and in Dubai you get a studio or small 1 bedroom with a gas oven and with a view looking at the skyscraper next to you.

That is what I said, in Dubai you spend money you get a great life. In Bucharest you can spend a bit money and life well also, but you quickly hit the ceiling of lifestyle after which more money doesn't improve your life anymore.

In Dubai you can easily rent nice studios with gym, pool, parking etc in locations like silicon oasis or production city for 1k USD/month. Say you love marina area but don't wanna spend the money, just rent a car for 400 and a studio in production city for 1k, then head over to marina within 15min when you feel like it.