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Freelancer working from Greece via his own UK LTD. Tax Planning options

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archer

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Hello, I am a Software Developer and I work for a UK based company fully remote from Greece. I am a Greek citizen and tax resident and I have created a non-resident UK LTD and invoice my client via this company. I expect a yearly income of 50K EUR. I am trying to make some planning of my tax obligations and I came to the following structure:

UK LTD corp tax: 9500 EUR (50K * 0.19%)

Everything left will be paid to me as dividends. I then have to pay 5% dividend tax in Greece. So:

Greek tax on dividends: 2025 (40500 * 0.05)

This leaves me with a take home of 38475 EUR = 0.77% approx

I have a couple of questions:

1. Are the above the expected taxation for my case? Or I have to pay dividend tax in UK (which is higher than Greek ones) or corp taxes in Greece (which are higher than UK ones)?

2. In Greece there is a scale tax structure and for the first 20K the taxes are relatively low (especially for the first 10000 the corp tax is 4.5% if the business is new). I have already a personal company in Greece and I am planning to invoice my UK LTD with my Greek company, in order to benefit for this low tax scale and also I want to show some income to my Greek company for other reasons (credit profile, Social Security contributions, etc). My main question is Can I just invoice my UK-LTD with my GreeK-company with some simple reason eg management consulting or software assistance-outsourcing etc? I am the director in the UK LTD and the Greek company is actually under my real name, so if anyone takes a look at the invoice will realize easily that I invoice myself in some way. IS THIS LEGAL? This is a major question and I couldn't find a lot of stuff online about it. If it's legal is there some specific-suggested way that this must be done? This is a major concern of mine at this stage, as if it's legal and acceptable by the tax authorities, I am planning to issue a couple of invoices with my Estonian GO company as well, as part of the tax planning.

3. If you were in my shoes, would you follow some other path in order to have a better scheme? To be honest I am happy with the 75-77% take home percentage so solutions like Romania, Cyprus, Dubai, Bulgaria, etc don't attract me so much, especially after the changes in the Romanian taxes that were recently announced. So if I could increase the take home ratio with some invoice balancing between by existing 3 companies (UK, Greece, Estonian GO) that would be fine for me.

I have hired accountants both in UK and Greece, I know I can ask them these questions but I am sure that the knowledge and experience of some of the members here are greater than any individual/random accountant

Thanks
 
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#2
There are quite a few points requiring a better assessment of your situation, including Greek CFC rules and management and control issues with you being the director in the entities. Your income though is at the lower end so exemptions may apply. Also having three companies and mantaining them creates additional costs which should be assessed against your tax savings, unless the companies serve any additional purpose. Do listen to your local accountants first as they understand their respective Tax Office behaviour and potential risks better. Also you pay them so they have to think before they speak , in contrast with people on the forums which may go overboard at times
 
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#3
CyprusLawyer101 said:
There are quite a few points requiring a better assessment of your situation, including Greek CFC rules and management and control issues with you being the director in the entities. Your income though is at the lower end so exemptions may apply. Also having three companies and mantaining them creates additional costs which should be assessed against your tax savings, unless the companies serve any additional purpose. Do listen to your local accountants first as they understand their respective Tax Office behaviour and potential risks better. Also you pay them so they have to think before they speak , in contrast with people on the forums which may go overboard at times
Click to expand...
Thanks. My Estonian company costs nothing, just a formation cost some time ago. Its actually dormant. My Greek company I need it in order for me to pay national insurance contributions as self-employed, its a cost that I am willing to pay. My main concern is if I need to pay taxes in Greece for all my UK income, as the high rate in Greece is lunatic (44% compared with the 19% of UK's)
Also if am legally allowed to simply issue invoices between my 3 companies, in order to balance the income amounts for obvious reasons
 
#4
Hi @archer . This scenario is close to what I am trying to do.

I currently have a UK Ltd company and this week I finally got 2 bank accounts with Zen.com and Currenxie (no other bank would allow me to open an account without UK residency).

I am also thinking of opening a sole trader business in Greece for social security and show some domestic income and business activity.

I will be following this thread and I hope more people can shine a light into this topic.
 
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#5
AstroMan said:
Hi @archer . This scenario is close to what I am trying to do.

I currently have a UK Ltd company and this week I finally got 2 bank accounts with Zen.com and Currenxie (no other bank would allow me to open an account without UK residency).

I am also thinking of opening a sole trader business in Greece for social security and show some domestic income and business activity.

I will be following this thread and I hope more people can shine a light into this topic.
Click to expand...
What's the benefit of having UK ltd when a Greek similar company only has 3% more corp tax ? This seems like a bad decision except if you do something shady.
 
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#6
If you bill yourself with your own companies you trigger :

Each jurisdiction will ask questions, especially nowadays where you have to declare the UBO of business of any related companies. You can invoice yourself with any other company you own, you will just raise flags and will have to explain to each tax authority the relationship, billing, Proof you have substance and actually did the work there in UK or whatever country you bill from. You will also need to have a transfer pricing document.

So unless you move to UK or actually have an office with people working there any country may ask questions and they only care about their own taxes and that you can proof the substance and actual work was done in the other country, if not, you get taxed + interest + fines (secret commissions how they call it are taxed in some countries at a rate of 120% if you didn't declare them before)
 
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#7
My work is purely digital (websites and digital marketing). Nothing shady. I am expecting clients from Greece, the EU as well as Canada and the US.

I am planning of reporting the income I bring and spent in Greece to the Greek tax authorities and I will be paying the 19% corporate tax in the UK.

Greece and UK have a DTAA so normally and, correct me if I am wrong, I will be just paying the difference between the two tax rates for my income from the UK company.

Of course, Greece can and, most likely, will try to tax me with the corporate tax in Greece but what are the Double Taxation Avoidance Agreements for? It doesn't make sense to pay taxes both in UK and Greece, right?
 
#8
AstroMan said:
My work is purely digital (websites and digital marketing). Nothing shady. I am expecting clients from Greece, the EU as well as Canada and the US.

I am planning of reporting the income I bring and spent in Greece to the Greek tax authorities and I will be paying the 19% corporate tax in the UK.

Greece and UK have a DTAA so normally and, correct me if I am wrong, I will be just paying the difference between the two tax rates for my income from the UK company.

Of course, Greece can and, most likely, will try to tax me with the corporate tax in Greece but what are the Double Taxation Avoidance Agreements for? It doesn't make sense to pay taxes both in UK and Greece, right?
Click to expand...
Tax treaties are there to avoid double taxation etc between companies operating and managed from those different jurisdictions.

You are talking about an empty Ltd company that is managed from Greece, so that UK limited company is considered being located in Greece and fully liable to Greek taxation.
 
#10
AstroMan said:
So, the only way to have a legitimate UK business is to rent an office in UK and employ at least 1 person there?
Click to expand...
That would be the best possible way to get a legitimated company there. However, we have seen some provider that provides substance to UK LTD's that may work too.
 
#15
archer said:
Hello, I am a Software Developer and I work for a UK based company fully remote from Greece. I am a Greek citizen and tax resident and I have created a non-resident UK LTD and invoice my client via this company. I expect a yearly income of 50K EUR. I am trying to make some planning of my tax obligations and I came to the following structure:

UK LTD corp tax: 9500 EUR (50K * 0.19%)

Everything left will be paid to me as dividends. I then have to pay 5% dividend tax in Greece. So:

Greek tax on dividends: 2025 (40500 * 0.05)

This leaves me with a take home of 38475 EUR = 0.77% approx

I have a couple of questions:

1. Are the above the expected taxation for my case? Or I have to pay dividend tax in UK (which is higher than Greek ones) or corp taxes in Greece (which are higher than UK ones)?

2. In Greece there is a scale tax structure and for the first 20K the taxes are relatively low (especially for the first 10000 the corp tax is 4.5% if the business is new). I have already a personal company in Greece and I am planning to invoice my UK LTD with my Greek company, in order to benefit for this low tax scale and also I want to show some income to my Greek company for other reasons (credit profile, Social Security contributions, etc). My main question is Can I just invoice my UK-LTD with my GreeK-company with some simple reason eg management consulting or software assistance-outsourcing etc? I am the director in the UK LTD and the Greek company is actually under my real name, so if anyone takes a look at the invoice will realize easily that I invoice myself in some way. IS THIS LEGAL? This is a major question and I couldn't find a lot of stuff online about it. If it's legal is there some specific-suggested way that this must be done? This is a major concern of mine at this stage, as if it's legal and acceptable by the tax authorities, I am planning to issue a couple of invoices with my Estonian GO company as well, as part of the tax planning.

3. If you were in my shoes, would you follow some other path in order to have a better scheme? To be honest I am happy with the 75-77% take home percentage so solutions like Romania, Cyprus, Dubai, Bulgaria, etc don't attract me so much, especially after the changes in the Romanian taxes that were recently announced. So if I could increase the take home ratio with some invoice balancing between by existing 3 companies (UK, Greece, Estonian GO) that would be fine for me.

I have hired accountants both in UK and Greece, I know I can ask them these questions but I am sure that the knowledge and experience of some of the members here are greater than any individual/random accountant

Thanks
Click to expand...
Hi @archer
1. I am curious, why would you use an Ltd in the UK and pay corporate tax there vs for instance an LLC in the US, where you would pay no corporate tax at all (disregarded entity) as long as the LLC does not carry out business in the US (no PE or employees there)?
In any case, I believe both setups are at risk of being challenged by the Greek tax authorities, as the company is effectively managed from Greece. Another option in the UK would be a LLP, which is also fiscally transparent in the UK; you can have another party as partner with only a symbolic share if necessary: somebody else or even another company that you own.

2. I did not know new businesses in Greece pay a lower corporate tax. You talk about 4.5% for the first 10K. Are you sure about this? I could not find any info to corroborate it . Can you point me to the relevant legislation or any other place where I can find more information about it?

Thanks
 
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#16
CyprusLawyer101 said:
There are quite a few points requiring a better assessment of your situation, including Greek CFC rules and management and control issues with you being the director in the entities. Your income though is at the lower end so exemptions may apply. Also having three companies and mantaining them creates additional costs which should be assessed against your tax savings, unless the companies serve any additional purpose. Do listen to your local accountants first as they understand their respective Tax Office behaviour and potential risks better. Also you pay them so they have to think before they speak , in contrast with people on the forums which may go overboard at times
Click to expand...
CFC rules in Greece only apply to passive income as far as I know. Management is certainly an issue and the UK Ltd would likely be deemed a tax resident in Greece given it is effectively managed from there.
 
#17
European said:
Hi @archer
1. I am curious, why would you use an Ltd in the UK and pay corporate tax there vs for instance an LLC in the US, where you would pay no corporate tax at all (disregarded entity) as long as the LLC does not carry out business in the US (no PE or employees there)?
In any case, I believe both setups are at risk of being challenged by the Greek tax authorities, as the company is effectively managed from Greece. Another option in the UK would be a LLP, which is also fiscally transparent in the UK; you can have another party as partner with only a symbolic share if necessary: somebody else or even another company that you own.

2. I did not know new businesses in Greece pay a lower corporate tax. You talk about 4.5% for the first 10K. Are you sure about this? I could not find any info to corroborate it . Can you point me to the relevant legislation or any other place where I can find more information about it?

Thanks
Click to expand...
Hello, I think that the 4.5% is only if your entire income is less than 10000 EUR, if it's higher, then the first 10000 will be taxed with 9% Here is a relevant article, please use google translate to read it:
https://www.naftemporiki.gr/finance...nees-atomikes-epicheiriseis-me-chamilo-tziro/
 
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#18
European said:
Hi @archer
1. I am curious, why would you use an Ltd in the UK and pay corporate tax there vs for instance an LLC in the US, where you would pay no corporate tax at all (disregarded entity) as long as the LLC does not carry out business in the US (no PE or employees there)?
In any case, I believe both setups are at risk of being challenged by the Greek tax authorities, as the company is effectively managed from Greece. Another option in the UK would be a LLP, which is also fiscally transparent in the UK; you can have another party as partner with only a symbolic share if necessary: somebody else or even another company that you own.
Click to expand...
Regarding your first point, tbh I haven't looked for an LLC in USA at all, as I was familiar with UK and my agency that I work for is in the UK. My schema is a bit complicated. End client is a large USA company, client is based in UK and the hiring agency is also in UK. Do you know if this way my work will still be considered as 100% Greek based?
Also I want to have a UK LTD for other future contracts in UK.
However I will look at the LLC option. Do you know which states are good for this? I saw that Delaware and Nevada are good ones. Could you confirm?
Thanks
 
#20
Marzio said:
In Greece transparent entities does not exist so his LLP will pay Greece CIT.
Click to expand...
So would the UK Ltd, wouldn't it?

archer said:
Regarding your first point, tbh I haven't looked for an LLC in USA at all, as I was familiar with UK and my agency that I work for is in the UK. My schema is a bit complicated. End client is a large USA company, client is based in UK and the hiring agency is also in UK. Do you know if this way my work will still be considered as 100% Greek based?
Also I want to have a UK LTD for other future contracts in UK.
However I will look at the LLC option. Do you know which states are good for this? I saw that Delaware and Nevada are good ones. Could you confirm?
Thanks
Click to expand...

Delaware, Nevada, Wyoming, Florida... LLCs are disregarded entities for the IRS, which means the company is not taxed, its owners are. If you operate outside the US, it matters little where you form the LLC, except perhaps for, I assume for you less relevant aspects, as formation/maintenance costs or "anonymity" (the IRS and your corporate bank will need to know who is behind the company in any case)
 
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