Income Tax and Social Contributions free life in Portugal

[piratechain]

I would like to live tax-free in Portugal, both in terms of income tax and social security contributions.

I will set up a corporation for this purpose to distribute dividends.
1. Can I only use companies from the jurisdictions with which Portugal has a double tax treaty?

2. Which would be the best jurisdictions with the lowest incorporation & running costs?

3. These would be the jurisdictions with DTAs with Portugal

Algeria 
Andorra
Angola 
Austria
Bahrain, Kingdom of
Barbados
Belgium
Brazil
Bulgaria
Cabo Verde
Canada
Chile
China, People’s Republic
Colombia
Croatia
Cuba
Cyprus
Czech Republic
Denmark
East Timor
Estonia
Ethiopia
France
Georgia
Germany
Greece
Guinea Bissau
Hong Kong
Hungary
Iceland
India
Indonesia
Ireland, Republic of
Israel
Italy
Ivory Coast
Japan
Kenya
Korea, Republic of
Kuwait
Latvia
Lithuania
Luxembourg
Macau
Malta
Mexico
Moldova
Montenegro
Morocco
Mozambique
Netherlands
Norway
Oman, Sultanate
Pakistan
Panama
Peru
Poland
Qatar
Romania
Russia
San Marino
São Tomé e Príncipe, Republic of
Saudi Arabia
Senegal
Singapore
Slovakia
Slovenia
South Africa
Spain
Sweden
Switzerland
Tunisia
Turkey
Ukraine
United Arab Emirates
United Kingdom
United States
Uruguay
Venezuela
Vietnam

 

[hlepic211]

Curious as well. I was told that Liechtenstein and Gibraltar left the NHR blacklist. Not very sure about this as I can't find the latest list of blacklisted jurisdictions. Does anyone know?

 

[piratechain]

Curious as well. I was told that Liechtenstein and Gibraltar left the NHR blacklist. Not very sure about this as I can't find the latest list of blacklisted jurisdictions. Does anyone know?

I found both jurisdictions on every list, even when you search in Portugese. The 2021 List is the most recent version

 

[CyprusLaw]

I found both jurisdictions on every list, even when you search in Portugese. The 2021 List is the most recent version

Cyprus is an excellent choice when combined with the NHR. In Cyprus dividends are tax/sdc free for non-dom individuals, and under the NHR dividends will not be taxed. Therefore, your tax obligation would be limited to 12.5% corporate tax in Cyprus.

 

[piratechain]

Cyprus is an excellent choice when combined with the NHR. In Cyprus dividends are tax/sdc free for non-dom individuals, and under the NHR dividends will not be taxed. Therefore, your tax obligation would be limited to 12.5% corporate tax in Cyprus.

For my case Cyprus is not an optimal choice, because of 60 days per year in Cyprus and the company is not taxfree and the running cost + incoprporation cost are more then i would like to spend.

I know that Singapore is a choice that can make sense with a 0% tax for my case + 750-1.5k incorporation cost and 1-2k per annum running costs
Would like to know if someone can recommend a better choice then singapore

 

[CyprusLaw]

For my case Cyprus is not an optimal choice, because of 60 days per year in Cyprus and the company is not taxfree and the running cost + incoprporation cost are more then i would like to spend.

I know that Singapore is a choice that can make sense with a 0% tax for my case + 750-1.5k incorporation cost and 1-2k per annum running costs
Would like to know if someone can recommend a better choice then singapore

The 60-day rule applies for your personal tax residency, in this case this is irrelevant, as you will be in Portugal, only the company's tax residency is of concern.

 

[MiltonStone]

The 60-day rule applies for your personal tax residency, in this case this is irrelevant, as you will be in Portugal, only the company's tax residency is of concern.

Are non resident / non domiciled Cyprus companies taxed in 2022 and if so, how much corporate tax do they pay?

 

[CyprusLaw]

Are non resident / non domiciled Cyprus companies taxed in 2022 and if so, how much corporate tax do they pay?

Just to clarify, the previous question related to non-domiciled individuals but Cyprus taxed companies.

If your question relates to companies that operate from abroad then they would be considered tax resident in the country of their management and control. Please note however that as of next year Cyprus has changed the definition of substance, and all companies will be automatically considered as Cyprus tax resident companies unless otherwise proved/challenged.

 

[Don]

Are non resident / non domiciled Cyprus companies taxed in 2022 and if so, how much corporate tax do they pay?

The new amendments of income tax law will come into force on 31 December 2022. Accordingly any company having its registered seat in Cyprus, even if the management and control are executed outside of the Republic of Cyprus will, nonetheless, be considered a tax resident. Prior to that, the company could be considered as a tax resident if it had its management and control in Cyprus, regardless of its registered seat.

However, it is important to note that if a company is a tax resident in another jurisdiction, the new test will not be applicable to it.​

https://ibccs.tax/cyprus/additional-corporate-tax-residency-test-our-remarks/

 

[CyprusLaw]

The new amendments of income tax law will come into force on 31 December 2022. Accordingly any company having its registered seat in Cyprus, even if the management and control are executed outside of the Republic of Cyprus will, nonetheless, be considered a tax resident. Prior to that, the company could be considered as a tax resident if it had its management and control in Cyprus, regardless of its registered seat.

However, it is important to note that if a company is a tax resident in another jurisdiction, the new test will not be applicable to it.​

https://ibccs.tax/cyprus/additional-corporate-tax-residency-test-our-remarks/

Hi Don, just a clarification here, the new law provides that “It is provided that, a company which has been established or registered pursuant to any law in force in the Republic, it is considered that it is resident in the Republic, unless the said company is tax resident in any other country”. So there is no provision saying that if the management and control is abroad it would still be a Cyprus tax resident. It just says that for Cyprus by default the company will be a Cyprus tax resident - so the Cyprus authorities will not be making any checks, but if another authority challenges this then the Cyprus company will still have to prove management and control in Cyprus, otherwise it will be deemed to be a non-Cyprus tax resident

 

[Marzio]

@CyprusLaw in case somebody wants to operate a Cyprus non resident company with the new rules you will need to first obtain tax residency in another country to get Cyprus to accept that is not tax resident in the Repulic, right?

Just out of curiosity, does a CY non resident company still needs to have a director and a secretary even if in the new tax residency country the secretary is not mandatory for example?

 

[CyprusLaw]

@CyprusLaw in case somebody wants to operate a Cyprus non resident company with the new rules you will need to first obtain tax residency in another country to get Cyprus to accept that is not tax resident in the Repulic, right?

Just out of curiosity, does a CY non resident company still needs to have a director and a secretary even if in the new tax residency country the secretary is not mandatory for example?

The secretary, by law, has to be a Cyprus resident, same as with the registered address. So you can not incorporate a company without that, however the director (which is what affects the management and control) can be a non-Cyprus resident and therefore claim tax residency in another jurisdiction

 

[Marzio]

A CY non resident company will still able to obtain VAT ID? I guess no but who knows

 

[Don]

A CY non resident company will still able to obtain VAT ID? I guess no but who knows

The question is where is the CY company a tax resident then?
Perhaps a CY non-resident company, as a non-EU seller, can use an intermediary to use IOSS and get the VAT done this way.

 

[disconnected]

Cyprus is an excellent choice when combined with the NHR. In Cyprus dividends are tax/sdc free for non-dom individuals, and under the NHR dividends will not be taxed. Therefore, your tax obligation would be limited to 12.5% corporate tax in Cyprus.

Wouldn't Portugal still tax the company as its director lives in Portugal, creating a PE? How about minimum salary requirements and social security?

 

[CyprusLaw]

Wouldn't Portugal still tax the company as its director lives in Portugal, creating a PE? How about minimum salary requirements and social security?

The above comment was made on the assumption that substance would be created in Cyprus, at least with the use of nominee director(s) to ensure that the Cyprus company would be deemed a Cyprus tax resident.

 

[sonato]

definition of substance, and all companies will be automatically considered as Cyprus tax resident companies unless otherwise proved/challenged.

means all have to pay 12,5% corporate tax from that on?

 

[piratechain]

As it seems only EU Companies makes sense with a Portugal Residency for tax effecincy.

EU Countries with double-tax-treaty are:
Austria
Belgium
Bulgaria
Croatia
Cyprus
Czech Republic
Denmark
Estonia
France
Germany
Greece
Hungary
Ireland, Republic of
Italy
Latvia
Lithuania
Luxembourg
Malta
Netherlands
Poland
Romania
Slovakia
Slovenia

I heard that Malta and Romania are often used for a Portugal residency because of best tax structure on dividens distributions.

Can someone confirm that or has another suggestion?

Can someone recommend a lawyer for Malta or Romania?

 

[JimBeam]

Avoid Cyprus as things are quite expensive there, especially if you have such a huge list of countries that could work for you.

 

[JohnLocke]

Avoid Cyprus as things are quite expensive there, especially if you have such a huge list of countries that could work for you.

Which one would you prefer over Cyprus ?