Cheap Romanian incorporation services?

[gnud]

Can I chip in.

Scenario
- Romanian Micro Company 1% tax turnover
- Cyprus Holding Company owns Romanian Micro Company and benefits from EU parent directive, 0% tax.

This construction saves the 5% Divi tax in Romania and allows for private trading cap gains to be tax-free in Cyprus.

There are considerable costs to it as well before it becomes beneficial.

• Substance costs in Romania - You need enough substance for it not deemed a PE in Cyprus
• 2.65% Gesy cost in Cyprus on Dividends and on Capital Gains in Cyprus and all worldwide income.
• Costs of setting up holding company.

Last but not least there are the compliance headaches and getting it all setup and approved.

Are the savings worth the hassle?

Not sure why would you want a Cypriot holding company. As a domiciled entity it'll be liable for taxation there, as far as I understand. So it'd erase all the benefit of not having to pay the 5% on dividends from the Romanian company.

Imo it's better to just employ someone for a minimum wage in Romania to create an economic substance there, and hold it directly, receive dividends to an offshore account while living in Cyprus. You'll pay 0% or 5% on those dividends, 1% on the company revenue, and that's it. Just show up in Cyprus, show them your company bank statements or your personal bank statements and obtain residency.

CFC rules and PE / POEM rules are two different things. A company can have a local PE and be liable for taxation even without being considered a CFC by some exclusion.

If the Estonian company has no economic substance in Estonia, and it's managed from Malta, it'll be liable for taxation in Malta to the extend to which its profit is attributable to the PE in Malta, which is 100% in that case, because the income is seen as arising from Malta, a place where the business is in fact being conducted.

https://cfr.gov.mt/en/inlandrevenue/legal-technical/Documents/Guidelines%20on%20The%20Remittance%20Basis%20of%20Taxation%20for%20Individuals%20under%20the%20Income%20Tax%20Act.pdf

The non-dom regime and CFC exclusion is only good if no work is being done in Malta, and the company is only owned by a non-domiciled resident of Malta.

 

[Marzio]

As a domiciled entity it'll be liable for taxation there, as far as I understand

As far as i know dividends received from subsidiaries of a Cyprus holding company are tax exempt.

Cyprus Holding Company owns Romanian Micro Company

Are you sure that the micro company status will be granted to a RO company owned by a legal person?

 

[gnud]

As far as i know dividends received from subsidiaries of a Cyprus holding company are tax exempt.

Yes, but the money will be in the Cyprus company, not in your personal possession. If you try to take them out either as a dividend or salary you'll have to pay tax, because it's a domiciled entity. Unlike when you just receive dividends from the Romanian company personally. Because that one is non-domiciled.

The whole point of the non-dom regime is not having anything domiciled, and keep things offshore.

 

[Marzio]

If you try to take them out either as a dividend or salary you'll have to pay tax

As OrangeKangaroo said you only pay 2.65% Gesy cost in Cyprus on Dividends distributed as a non-dom.

Well after all you could be right and save 2.5% could not be worth the hassle to setup a holding company.

 

[gnud]

As OrangeKangaroo said you only pay 2.65% Gesy cost in Cyprus on Dividends distributed as a non-dom.

Well after all you could be right and save 2.5% could not be worth the hassle to setup a holding company.

True, you'll save yourself 2.35% in case Romania decides to apply the 5% tax for you as a Cypriot resident. On top of that you'll have costs of running the company, and added bureaucracy. I read some time ago incorporation services in Cyprus are not exactly cheap as lawyers are always inventing new fees.

If Romania decides not to apply the 5% tax then there's no benefit at all in the Cypriot holding company.