LLC Company in Europe

[climbwave]

Hi All,

I'm wondering which country in Europe is favorable to creating an LLC company. I noticed Poland has a reduced CIT tax for company income less than 2M Euro, I'm wondering about Hungary or Estonia.

My company will sell clothes.

Any advice really welcome.

Thanks!

 

[Gediminas]

Hey,

In the EU, you might be interested in:

Malta – effectively allows benefiting from 5% tax (achieved by using a refund scheme);
Estonia – applies 20% corporate income tax. But it is applied only when profit is distributed, as long as you don’t pay dividends, tax is not paid.
Lithuania, 0% the first year, 5% if turnover is not higher than 300 000 EUR;
Cyprus – flat rate 12.5%, tax authorities not very aggressive, so you would have more freedom to deduct expenses.

In any case, the final tax result depends on your residency, and the effective place of management of such company. If you reside in a high-tax country and would own a company in a low-tax country without proper substance, all income still might be taxable in your residency country under PE rules.

 

[JustAnotherNomad]

Where are you based?

 

[climbwave]

Hi,

I'm a resident of UAE but hold an EU passport.
I have one company in UAE but want another in the EU. I'm looking around of where is it suitable.
I do mainly sell online but considering physical stores as well. I need VAT and CIT, etc.

I'm wondering if Malta is a good choice. I'm not going to live in Malta but can have the company there.

Where are you based?

UAE

Hey,

In the EU, you might be interested in:

Malta – effectively allows benefiting from 5% tax (achieved by using a refund scheme);
Estonia – applies 20% corporate income tax. But it is applied only when profit is distributed, as long as you don’t pay dividends, tax is not paid.
Lithuania, 0% the first year, 5% if turnover is not higher than 300 000 EUR;
Cyprus – flat rate 12.5%, tax authorities not very aggressive, so you would have more freedom to deduct expenses.

In any case, the final tax result depends on your residency, and the effective place of management of such company. If you reside in a high-tax country and would own a company in a low-tax country without proper substance, all income still might be taxable in your residency country under PE rules.

Hi,

I'm a resident of UAE but hold an EU passport.
I have one company in UAE but want another in the EU. I'm looking around of where is it suitable.
I do mainly sell online but considering physical stores as well. I need VAT and CIT, etc.

I'm wondering if Malta is a good choice. I'm not going to live in Malta but can have the company there.

I'm wondering about Estonia. It's mentioned a fast process and easy to open LLC online only.

 

[JustAnotherNomad]

You can try Estonia and pay yourself a salary - the salary will be tax free in Estonia. But there is a risk that the company will have to register for corporate tax in the UAE (but it will be like that with a company from any country), it's a bit of a hassle and the legal situation in the UAE is still unclear.
You could also consider operating through an Estonian company with a UAE branch.

 

[climbwave]

You can try Estonia and pay yourself a salary - the salary will be tax free in Estonia. But there is a risk that the company will have to register for corporate tax in the UAE (but it will be like that with a company from any country), it's a bit of a hassle and the legal situation in the UAE is still unclear.
You could also consider operating through an Estonian company with a UAE branch.

In UAE from 1st June this year companies have to have a CIT.

I’m into opening another company in EU and keep it as separate. So I will have a 2 LLC’s in this case. There will be the same name but it will work Independant.

If I open EU company in Estonia I will
Import goods from outside EU and resel it under my brand. Have to pay taxes, etc. from it.
So now i’m looking around where is the best place in EU to open company, pay little tax, accountant is simple, etc.
I thought about settle in Spain but they have high CIT

Will be looking around then.

 

[JustAnotherNomad]

Even if you register your company in Spain, in theory, the UAE could still say you have to pay CIT in the UAE. Then you can end up with double taxation.
It's important you choose a country that has a tax treaty with the UAE to avoid this risk (Estonia does).
You have to understand the basics of international taxation and not just choose a country at random.

 

[Marzio]

Have you considered Georgia?

Georgia has a free trade regime with the European Union (EU), the European Free Trade Association (EFTA), Commonwealth of Independent States (CIS) countries, Turkey, China and Hong Kong.

Georgia has double tax treaty with UAE and since in UAE one of the qualifying activities is owning shares of related parties you should be exemptet from CIT in UAE.

Also, you can settle in a freezone and pay little to none taxes.

If instead you want settle in EU then Hungary could be another good choice.

 

[Conte Ugolino]

On a side note,since you said Europe and not EU explicitly, Albania has a 0% corp tax until 2029. You'd need an accountant there to handle the paperwork ( around 500 euros a year and city tax of 1k a year ) but otherwise, you can set that up there and every service is electronic ( Estonia style ).

 

[AnonymousCryptoOTC]

On a side note,since you said Europe and not EU explicitly, Albania has a 0% corp tax until 2029. You'd need an accountant there to handle the paperwork ( around 500 euros a year and city tax of 1k a year ) but otherwise, you can set that up there and every service is electronic ( Estonia style ).

Is personal presence needed for the process?

 

[climbwave]

@JustAnotherNomad I do have personal income so as a UAE resident, there is no income tax, and that's great. Basically, I do work as a freelance worldwide and those who hire me pay taxes.
Before 1st June in UAE, there was no CIT, now there is, and my company has to pay.
NowI'm looking for a place to partially live in the EU with as close as possible climate to UAE. Spain is greater I think but income tax is high, and CIT is as well, not sure about the benefits of paying taxes.
As You mentioned I can't have company in place A and not even be there but that's what I did so far.
So, I'm looking for advice.

@Marzio thank You for the proposals. I have never been to Georgia but maybe it's worth reconsidering. I love sailing and Spain and the Mediterranean Sea sound good to me and my family.

@Conte Ugolino thank You, I will look into it.

As @JustAnotherNomad mentioned I can't live in Spain and have a company in Estonia and UAE. Most probably there is no way to completely avoid tax but maybe there is a way to minimize it.

 

[JustAnotherNomad]

You're not making any sense. If you live in the UAE, you can simply pay out a high salary and avoid the corporate tax that way, worst case you pay a little bit of tax, it will still be cheaper than Europe. Not sure what you're looking for. Just travel around Europe in the summer, spend 2 months in Spain, 2 months in Italy, 2 months in Greece, spend the winter in the UAE. What's the problem?!

 

[climbwave]

@JustAnotherNomad You are right. If I will be single then it's fine. That's what I exactly do, resident in UAE and freedom. It's more complicated when my wife is not EU citizen and we want to live somewhere near the Mediterranean Sea (Spain favorable). If she will become a temporary resident in Spain then at the same time my " Centre of vital interests" become with her.
What I want is to give my wife the right to be in the EU and the same time has the tax benefits same as in UAE.

 

[JustAnotherNomad]

Then Cyprus would be your best option, probably. Or Portugal with the NHR. Definitely not Spain.
Or maybe Italy with the new tax incentives.

I mean, in theory you could try Spain with the Beckham law... But from what I've heard about Spain, it's a nightmare to deal with Hacienda. So I would rather try to avoid that.

 

[climbwave]

@JustAnotherNomad
To maintain UAE residence I need to be there once every 6 months.

In Cyprus not belong to Schengen, unfortunately. I'm looking for a place with access to schengen area.

Portugal NHR. Looks very interesting, have to look into this option. Looks like 0% tax My second half jokd Brazilian passport so I’m wondering if Portuguess have easy access for Beazilians.

Scratch it Spain then.

 

[Don]

@JustAnotherNomad You are right. If I will be single then it's fine. That's what I exactly do, resident in UAE and freedom. It's more complicated when my wife is not EU citizen and we want to live somewhere near the Mediterranean Sea (Spain favorable). If she will become a temporary resident in Spain then at the same time my " Centre of vital interests" become with her.
What I want is to give my wife the right to be in the EU and the same time has the tax benefits same as in UAE.

Since you have an estonian company you can easily leverage that for legal residency for your wife. You can possibly avoid tax residency if structured right.

 

[climbwave]

@JustAnotherNomad NHR in Portugal seems to be fine. I try to look and educate myself. In general, 182 days rule applied. NHR will not allow my wife to have a free Schengen visa to travel in/out EU. I looked in Estonia, eResidency will not allow her to travel to EU.

@Don Estonian company, will it allow my wife to have a residency in Estonia?

 

[JustAnotherNomad]

In general, 182 days rule applied.

Not sure what you are talking about.

NHR will not allow my wife to have a free Schengen visa to travel in/out EU.

Please make up your mind what you're asking about. You asked about tax and companies, not immigration.
If you need a Schengen visa, look at Bulgaria or Romania. Or actually, not sure how long you could go to Schengen on a visa from those countries (since they are outside Schengen), but at least you should be able to travel to the Schengen zone without a visa.
Maybe also look at... Albania? I think they have visa free travel to Europe now, but I'm not sure if it's only for citizens or also for residents.

I looked in Estonia, eResidency will not allow her to travel to EU.

No s**t. eResidency is just a digital signature. A digital signature doesn't change anything about your immigration status.

 

[climbwave]

@JustAnotherNomad In UAE having for example company gives You a residency. General does not matter where You are from. I'm looking for a company place and also easy access for my wife to the EU/Schengen area. Even if we/I create a company in an EU country it will not give here residency. So I'm looking for options to not pay taxes and also get my wife rights to be in the EU.

 

[LosAngeles]

Hey,

In the EU, you might be interested in:

Malta – effectively allows benefiting from 5% tax (achieved by using a refund scheme);
Estonia – applies 20% corporate income tax. But it is applied only when profit is distributed, as long as you don’t pay dividends, tax is not paid.
Lithuania, 0% the first year, 5% if turnover is not higher than 300 000 EUR;
Cyprus – flat rate 12.5%, tax authorities not very aggressive, so you would have more freedom to deduct expenses.

In any case, the final tax result depends on your residency, and the effective place of management of such company. If you reside in a high-tax country and would own a company in a low-tax country without proper substance, all income still might be taxable in your residency country under PE rules.

Is that information still accurate? My understanding is that in Estonia, if I were to reside there with an LLC and refrain from distributing profits, I could potentially avoid paying taxes on my LLC altogether.

Alternatively, could I establish two LLCs (LLC1 and LLC2), with one serving as a holding company to retain all profits, and the other designated for profit distribution, thereby subjecting it to a 20% tax rate?

For instance, let's assume LLC1 holds 100K and LLC2 holds 20K. If I distribute 20K from LLC2, would I only need to pay 4K in taxes in Estonia, thus remaining entirely compliant?
@Don

Could you clarify if my understanding is correct?