European remote worker look for low cost living and low tax

[jatrex]

Hello everyone,

I've been thinking and reading about going offshore, lower my tax rate and flag theory in general, but I haven't taken the leap yet. I've been living as a digital nomad for about a year and have reached the conclusion that I want to have a base somewhere and spent a good portion of my time in one place, so I'm currently looking for a good tax-friendly place to have a base.

My situation:
- Danish citizen
- Work 100% remote for a danish startup, formally as a contractor but it is my only client and I 100% work for that company.
- Currently incorporated in Denmark with a danish LLC who bills the startup
- I earn around 2000-3000$ a month
- I also have shares in the startup and my shares are currently worth approx. 500.000$, which is owned by my holding company, but there are no public records of this deal, so I'm thinking about just discarding the old one and signing a new deal once I'm in a more tax-friendly country.
- In the future, I might want to do some it contracting work and maybe making SaaS products
- I want to invest whatever I can save up in stocks
- I just finished college and I don't have a lot of capital yet


What I had in mind:
I've been looking a lot at Georgia. the cost of living is cheap which is good because of my low current salary. It also looks pretty easy to get things set up there. Georgia ranks high on the ease of doing business index, and the salaries are low, which is good if I want an accountant or something. Most people with western passports also get one-year visa-free access where they are also allowed to work. Since I work within IT I can also classify for a Virtual Zone LLC (some information on that here: https://virtualzonegeorgia.com/). With the virtual zone, I will only be taxed at a flat 5% when I take the money out as dividends. However, I've spoken to a Georgian lawyer who says I'm not allowed own shares with the virtual zone company, which means that I probably have to own the shares from the startup personally and would have to pay a capital gains tax of 20% if I sold them, but she said there were some loopholes. Anyway, I'm totally okay with paying 20% tax if I got to sell the shares at some point.

I've been thinking about renting an apartment in Tbilisi and living there for half of the year in order to gain tax residency, and then travel for the other half of the year. Possibly buy a van and travel around Europe.


I haven't tried to do any sort of international tax optimization yet so I'm pretty new to the game and there seem to be a lot of experts in this forum. Therefore I would appreciate it if anyone could give me some feedback on whether or not this would work and if there is something that I'm missing.

Thanks in advance!

 

[jackfrost]

biggest question i would see is that your only captial seems to be the shares which could be worth 500k or be worth nothing tomorrow. your salary does not support most tax efficient solutions in the EU or even just living in any of those countries. same goes for the travel. 2-3k is simply not nearly enough. do you see that going up anytime soon?

 

[jatrex]

biggest question i would see is that your only captial seems to be the shares which could be worth 500k or be worth nothing tomorrow. your salary does not support most tax efficient solutions in the EU or even just living in any of those countries. same goes for the travel. 2-3k is simply not nearly enough. do you see that going up anytime soon?

Thanks for the answer.

Yes, I do see the salary going up soon, but it is hard to tell when and by how much.

I also live very cheaply in general, when I travel in developing countries I usually only spend around 1500$ a month, so I know that it would be enough.

 

[jackfrost]

Yes but the countries that have the good tax efficient setups are not third world ones and quite expensive

Also the setups, accounting, filing etc would already eat up most of your salary.

So any of those would really depend on you being very sure about those 500k and a plan to cash those 500k out soonish.

 

[reesek]

Georgia can become Lebanon any day. I would not suggest to bet your life on that one.

What you can do is look at countries that do not tax income originating outside of their territories, like Malta. Or countries that have zero income tax like UAE

 

[NicolasMaduro]

2000-3000 USD is not enough to make it worth it.

 

[Limelight]

Georgia can become Lebanon any day. I would not suggest to bet your life on that one.

Why is that? Besides the Russian threat, is there anything to be worried about?

 

[reesek]

every emerging market is under threat of dislocation as global supply chains are disrupted and golden billion of consumers is literally on gov support and cutting non-essential spending

 

[Limelight]

every emerging market is under threat of dislocation as global supply chains are disrupted and golden billion of consumers is literally on gov support and cutting non-essential spending

Even considering the worst-case scenario (e.g. Ukraine 2014) it shouldn't be too bad if you don't keep too much money in Georgian banks, right? I mean, if things really start looking like SHTF is about to happen, he can just cash out, pack up and leave, no? Need to keep the finger on the pulse, that's all.

 

[reesek]

i guess you dont understand what happens in a financial trouble
all foreign currency deposits are nationalized

 

[anotherone]

Hello everyone,

I've been thinking and reading about going offshore, lower my tax rate and flag theory in general, but I haven't taken the leap yet. I've been living as a digital nomad for about a year and have reached the conclusion that I want to have a base somewhere and spent a good portion of my time in one place, so I'm currently looking for a good tax-friendly place to have a base.

My situation:
- Danish citizen
- Work 100% remote for a danish startup, formally as a contractor but it is my only client and I 100% work for that company.
- Currently incorporated in Denmark with a danish LLC who bills the startup
- I earn around 2000-3000$ a month
- I also have shares in the startup and my shares are currently worth approx. 500.000$, which is owned by my holding company, but there are no public records of this deal, so I'm thinking about just discarding the old one and signing a new deal once I'm in a more tax-friendly country.
- In the future, I might want to do some it contracting work and maybe making SaaS products
- I want to invest whatever I can save up in stocks
- I just finished college and I don't have a lot of capital yet


What I had in mind:
I've been looking a lot at Georgia. the cost of living is cheap which is good because of my low current salary. It also looks pretty easy to get things set up there. Georgia ranks high on the ease of doing business index, and the salaries are low, which is good if I want an accountant or something. Most people with western passports also get one-year visa-free access where they are also allowed to work. Since I work within IT I can also classify for a Virtual Zone LLC (some information on that here: https://virtualzonegeorgia.com/). With the virtual zone, I will only be taxed at a flat 5% when I take the money out as dividends. However, I've spoken to a Georgian lawyer who says I'm not allowed own shares with the virtual zone company, which means that I probably have to own the shares from the startup personally and would have to pay a capital gains tax of 20% if I sold them, but she said there were some loopholes. Anyway, I'm totally okay with paying 20% tax if I got to sell the shares at some point.

I've been thinking about renting an apartment in Tbilisi and living there for half of the year in order to gain tax residency, and then travel for the other half of the year. Possibly buy a van and travel around Europe.


I haven't tried to do any sort of international tax optimization yet so I'm pretty new to the game and there seem to be a lot of experts in this forum. Therefore I would appreciate it if anyone could give me some feedback on whether or not this would work and if there is something that I'm missing.

Thanks in advance!

I think that for 2000 - 3000 USD, the best would be to live in BUlgaria where the income tax is 10%
When you withdraw money from your Danish company as a salary, you would only pay 10% tax as salary is a liability of the company before profit (and corporate tax). In other words, your salary would lower the money you pay as corporate tax in Denmark. Dividend tax is 5%
So, the goal would be to extract as much money as you can before danish fiscal year end.

Georgia???
outside of the SEPA zone? for me it is like the hedge of universe

 

[khinkali]

Given that @jatrex has already spent a year as a nomad and is currently looking at cost of living, ease of setting up business and long term planning, Georgia seems like a good choice.

$2k-3k goes further in Georgia than in most of the EU. Banking, broadband, high speed mobile etc. are well developed.

You can start a business easily. As a software developer looking to export, the virtual zone is great value. It's a good place to hire people if you want to expand.

But we're talking about somewhere to live for at least half the year, not just a location for an offshore company. So it is important to think about where you want to live. Climate, food, culture, etc. Personally, I like Georgia.

I don't know about Danish withholding taxes or DCFTA, but I think it's worth re-checking the Georgian capital gains tax on selling shares in an offshore company. I could be wrong but I don't think there is any.

 

[jatrex]

I think that for 2000 - 3000 USD, the best would be to live in BUlgaria where the income tax is 10%
When you withdraw money from your Danish company as a salary, you would only pay 10% tax as salary is a liability of the company before profit (and corporate tax). In other words, your salary would lower the money you pay as corporate tax in Denmark. Dividend tax is 5%
So, the goal would be to extract as much money as you can before danish fiscal year end.

Georgia???
outside of the SEPA zone? for me it is like the hedge of universe

That sounds like a good idea. I haven't thought about that as an option . I have looked up Bulgaria and it looks like a place I would like and it's has a pretty low cost of living as well. However, I'm not sure if I keep my current danish company and withdraw salary from there and still have bank accounts in Denmark, etc. if Denmark would allow me not to be a tax resident there. I've heard that it's best to make a clean cut away from your home country. But if that could work that would be very easy and a pretty good option.

Given that @jatrex has already spent a year as a nomad and is currently looking at cost of living, ease of setting up business and long term planning, Georgia seems like a good choice.

$2k-3k goes further in Georgia than in most of the EU. Banking, broadband, high speed mobile etc. are well developed.

You can start a business easily. As a software developer looking to export, the virtual zone is great value. It's a good place to hire people if you want to expand.

But we're talking about somewhere to live for at least half the year, not just a location for an offshore company. So it is important to think about where you want to live. Climate, food, culture, etc. Personally, I like Georgia.

I don't know about Danish withholding taxes or DCFTA, but I think it's worth re-checking the Georgian capital gains tax on selling shares in an offshore company. I could be wrong but I don't think there is any.

Thanks for the advice. I'm planning to travel to Tbilisi as soon as I can because of the corona situation and then I will see if it seems like a place where I can see myself living.

Okay, I'll re-check with the Georgian capital gains tax. They also have territorial taxation, so there might be some workarounds.


Does anyone know if it makes a difference that I won't have a residency for Georgia and that I would just live on a tourist visa? Would a country like Denmark still believe that I lived in Georgia and therefore should pay my taxes there?

 

[JustAnotherNomad]

However, I'm not sure if I keep my current danish company and withdraw salary from there and still have bank accounts in Denmark, etc. if Denmark would allow me not to be a tax resident there.

Look at the tax treaty. It should be pretty clear.

 

[anotherone]

Look at the tax treaty. It should be pretty clear.

Bulgaria has a treaty in place with denmark to avoid double taxation:
https://www.skm.dk/love/internationalt/dobbeltbeskatningsoverenskomster/bulgarien/

 

[JustAnotherNomad]

Yes, exactly. And it should make it very clear where you have to pay your taxes as a Danish citizen living in Bulgaria and receiving a salary from your Danish company.
I haven’t read the treaty, but if you live and work in Bulgaria, it would be extremely unusual if Denmark were allowed to tax that salary.
The other thing is that if it’s your own company, you would probably have permanent establishment in Bulgaria. So you would have to pay Bulgarian corporate income tax. But I guess that shouldn’t be an issue.

 

[cyprus123]

I would highly recommend to visit Georgia and see if you like the country. You might want to visit Bulgaria (or North Macedonia) as well to have something to compare with.
In terms of cost of living and of a business setup, the bureaucracy and tax burden Georgia is a gem. Even with your 2 to 3k USD a month you will have a very good lifestyle in Tbilisi.

And if you are worried about any political problems, just don't keep all eggs in one basket, open some personal accounts with Revolut, Monese etc. and keep your money there. You could theoretically even work without any local bank account (just to point out that living somewhere and taking advantage of a nice environment and low cost of living doesn't mean you have to bank there).

 

[Marie Manila]

Thanks for the advice. I'm planning to travel to Tbilisi as soon as I can because of the corona situation and then I will see if it seems like a place where I can see myself living.

If you go to Georgia, you should also visit Batumi!
I did not feel comfortable in Tiblisi. But Batumi is a place, where I myself could imagine settling down.

 

[JimBeam]

Georgia - cheap and will probably wold do it - if you can live there and if your setup is not difficult so in case of emergency you could move things to other country (setup a new company somewhere else move the business there). What you need to check is how to get a residency there so you could stay there legally (not as a tourist).

Bulgaria - also pretty cheap, has 10% CIT but with your 2-3k/month you can payout most of it as salary and expenses so you'll probably paying next to nothing. It's part of the EU so it can make things easier (relocation, SEPA payments etc) but can make things also difficult (CRS, CFC, BEPS rules). So you should really do a clean cut - close everything in Denmark and really move to Bulgaria (rent or even buy a cheap place there so you have an address and electricity and cable bills to show even if you plan to travel the Europe in a van and not even live at that place)...

Someone proposed Malta. Everything will be much expensive on Malta compared to Bulgaria, so even if some taxes are bit lower over the time Malta would probably "eat up" the difference over time. Also they have some issues with banks right now and if you plan to live in a van and travel - you'll burn what Malta has to offer in couple of weeks (the place is tiny as Sing Sing) and you might feel trapped or like in jail (which is exactly how I felt after a couple of weeks). The only option is to go to Italy/Sicily (really has a lot to offer) or travel by plane somewhere else.

UAE - can be very expensive to setup and maintain and is not worth doing for 2-3k/month. You can't travel GCC counties in a van since your brain will melt and there is nothing except the desert so it's pretty boring. It is possible, but the question is - do you want to do it. Do you want to live there (or even go there), run business from there etc. Also note that the setup can take months (bank account opening is usually 2 months but can take 6 months, while I guess in Bulgaria or Georgia you'll get one same day or within couple of days).

You could also look into Estonia - that's what's built for people like you: location independent freelancers.

Best thing it to go and see things with your own eyes, talk with some people and get some information from the field.