Netherlands BV

[VladDracula]

Hey there!

Ukrainian citizen looking for a new home due to well known reasons. I would like to open a company in the Netherlands and move there.
Currently making ~400000$ annualy from my online business. I live a modest lifestyle, don't need that 400k right now, so here is the plan i've come to:

- open a BV, pay 15% corporate tax on that 400k
- take around 50000 euro as a salary every year and pay a relatively small tax on it
- invest the rest in stocks using the BV
- after a while sell few percentages of stocks every year (I'm a FIRE movement guy), pay 15% corporate tax on it, pay myself a salary
- live hapilly and maybe buy a house to use the mortgage and deduct the mortgage interest from my taxes

Pros:
Living in the great country not paying half of your income in taxes
Avoiding wealth tax, as all my money stays in BV

Cons:
I don't know if I can structure it like this, Dutch taxes are much more complicated than in Ukraine
If it is possible, than I will pay corporate taxes on stocks return, comparing to no capital gains if I invest privatly

What are your thoughts about this? Thanks.

 

[johndunham]

Let's start by stating that the 15% CIT is not fixed. Every euro you earn above the 400 K profit, you pay 25,8%.

Then. The Dutch government requires you to take a “normal salary”, in Dutch "gebruikelijk loon", for a director. The short version of this is that with an annual profit of 400 K, they will not accept if you “only” pay yourself 50 K for the long term. First couple of years you can arrange a lot of things with them, but if the BV is structurally netting 400 K, the 50 K salary won’t suffice imo. Remember that you pay progressive tax on this salary.

Then, you must ask yourself if you would like to have stocks in your BV. This is also a lengthy discussion, I won’t go into that here. Quick tip: capital gains tax is non-existent in the Netherlands.

If you are actually moving to the Netherlands, then I would suggest you use the financial statements to get a mortgage indeed. Renting in this country is stupid, since real estate prices will keep soaring. However, keep in mind that mostly it's only really lucrative with a personal mortgage, and not a business loan.

What makes you think Dutch taxes are complicated? They're actually fairly simple compared to most countries

 

[VladDracula]

@johndunham Thank you for the reply!

I'm ok with paying 25.8% if I make more than 400k.
The idea was to invest the rest in stocks to reduce profits of the BV and than a 50k salary will look good for a director. I see this will not work, the Dutch tax man is smart. I would like to pay taxes in NL, but 50% is a kill.

Dutch taxes are complicated compared to Ukrainian (I pay 5% corporate taxes, 20% capital gains and that's it) , I agree that they are simple compared to other EU countries.

 

[johndunham]

The idea was to invest the rest in stocks to reduce profits of the BV and than a 50k salary will look good for a director.

Investing in stocks does not decrease your fiscal profit (unfortunately haha).

You will never pay 50% personal income tax in the Netherlands. The tax system is progressive. Regarding straight up income tax: 37,07% for everything up to about 69 K per year. All income above that number is taxed 49,5%.

Depending on your situation, there are a lot of tricks you can use to lower your tax base of course. If you're thinking of fooling a tax agency, I would try that in another country if I were you. The Dutch are pretty effective in catching evaders.

 

[VladDracula]

Investing in stocks does not decrease your fiscal profit (unfortunately haha).

Oh, that's where my perfect plan is falling apart haha.

But a salary decreases the company profit, right?
So if I pay myself like 250k, I will pay 100k in self-employed taxes (using online calculator).
Then corporate taxes will be 400k-250k = 150k * 15% = 22500.
Total taxes will be ~122500 euro which is like 30% and that is acceptable for me.

If my assumptions are wrong then it is better to come to Dubai, make some money there and then find a way to Netherlands after a while.

I don't want to fool a dutch tax agency, just want to find a legal ways to reduce my taxes because my business is not very sustainable and I need to accumulate as much in stocks as I can.

 

[johndunham]

Doing this one remote, so bare with me.

So. You have 400 K gross profits. You pay yourself 100 K salary gross. I don't have the exact numbers right now, but that'll cost the BV around 120 - 140 K (social security costs, insurance, etc).
You are left with (100 K - 40,875 K) = 59,125 K net salary. (gross minus PIT)

The thing is. You may take dividends as well at 15%. It just has to be reasonable for the tax man (that's why they have the "gebruikelijkloonregeling"). In short: the Dutch require you to take a normal salary, before you take out dividends. They just want to get paid.

Back to the example:
400 profits - 100 salary - 30 costs = 270 K -> 270 K * 15% CIT = 40.5 K.
So you have 229,5 K left in the BV for dividends and 59 K net salary.

 

[VladDracula]

Thanks, appreciate your input.

So if I would like to take that 229,5k as dividends, I have to pay 15% (34425) in dividend tax, leaving me with net 195k + 59k salary = 254k. That would mean I paid 146k in taxes which is 37% from 400k profit. Also as you said I can use some tricks to lower my tax base? I think I will get a consultations with dutch tax advisor on it. If it is possible to lower taxes to like 30%, then my next challenge is getting a residence permit hehe.

 

[Marzio]

looking for a new home

Is there any reason why you want to settle in NL? I mean shitty weather, high tax…

 

[VladDracula]

Is there any reason why you want to settle in NL? I mean shitty weather, high tax…

I think high taxes is common in continental EU and I don't want to put myself on an island like Cyprus or Malta to save some money. My criteries are safety, developed infrastructure, clean water and air, mild climate (I like rainy weather tbh), english speaking people, taxes below ~30% and ease of getting a residence permit. Another option that comes to my mind is Czech Republic, maybe better taxes but needs some calculations.

 

[johndunham]

Thanks, appreciate your input.

So if I would like to take that 229,5k as dividends, I have to pay 15% (34425) in dividend tax, leaving me with net 195k + 59k salary = 254k. That would mean I paid 146k in taxes which is 37% from 400k profit. Also as you said I can use some tricks to lower my tax base? I think I will get a consultations with dutch tax advisor on it. If it is possible to lower taxes to like 30%, then my next challenge is getting a residence permit hehe.

My apologies, left out the PIT for the dividends. So, you owe (I think) 26,9% PIT over dividends. The BV pays the 15% up front, so when you pay out dividends to a natural person you effectively pay another 12%.


So to pay out 299,5 K in dividends you effectively pay 80,5 K income tax.

 

[VladDracula]

My apologies, left out the PIT for the dividends. So, you owe (I think) 26,9% PIT over dividends. The BV pays the 15% up front, so when you pay out dividends to a natural person you effectively pay another 12%.


So to pay out 299,5 K in dividends you effectively pay 80,5 K income tax.

Which leaves me with 40,875 tax on salary (from your last post) + 80,5k tax on dividends if I understand correctly. That's 30% on 400k, did I miss something?

 

[johndunham]

Yes, you're missing the CIT.

The 400 K will boil down to about 208 K net personal income.
Net salary = 59 K
Net dividend = 149 K

(400-208)/400 = 48%


Moral of the story: you might not want to be paying out all the money to your personal account, but rather (as you initially intended) invest with it in the corporate sphere. You still pay the CIT of course, but that 15% is reasonable. And, of course, some day you will have to pay those PIT if you want to live in the Netherlands and use the money personally.

May I ask the nature of your business? It's digital I guess?

 

[Dandyline]

I think high taxes is common in continental EU and I don't want to put myself on an island like Cyprus or Malta to save some money. My criteries are safety, developed infrastructure, clean water and air, mild climate (I like rainy weather tbh), english speaking people, taxes below ~30% and ease of getting a residence permit. Another option that comes to my mind is Czech Republic, maybe better taxes but needs some calculations.

Maybe a Estonian company, not the best place to settle maybe, but you don't pay any corporate tax if you don't withdraw any money so you can save all the money in the company without paying any taxes, when you decide to withdraw profits you pay 20%.Can't imagine that they have any requirements for a director to take out any salary (Many countries don't), not sure though.

In most EU tier 1 countries, it's difficult to withdraw money without paying at least 50% taxes.

 

[VladDracula]

Yes, you're missing the CIT.

The 400 K will boil down to about 208 K net personal income.
Net salary = 59 K
Net dividend = 149 K

(400-208)/400 = 48%


Moral of the story: you might not want to be paying out all the money to your personal account, but rather (as you initially intended) invest with it in the corporate sphere. You still pay the CIT of course, but that 15% is reasonable. And, of course, some day you will have to pay those PIT if you want to live in the Netherlands and use the money personally.

May I ask the nature of your business? It's digital I guess?

Ok, my calculations were too good to be true, heh.
Back to the initial plan then, I have to check if it is reasonable to make investments using the BV.

I am a mobile software developer, have few niche apps that generate revenue.

My first thoughts were to live some time in Dubai, making money tax free using free zone and eventually come to Europe to live off stocks. Of course it is a philosophical question, what is more important for a person - to make more money living far away from family and friends or build a normal life but pay for it.

Maybe a Estonian company, not the best place to settle maybe, but you don't pay any corporate tax if you don't withdraw any money so you can save all the money in the company without paying any taxes, when you decide to withdraw profits you pay 20%.Can't imagine that they have any requirements for a director to take out any salary (Many countries don't), not sure though.

In most EU tier 1 countries, it's difficult to withdraw money without paying at least 50% taxes.

Estonia was in my list, but now looking at my home (or what is left from it) I would like to move as far from Russia as possible.

Yeah, I think I have to sacrifice some of my criteries if I don't want to pay that 50%.

 

[hc99]

Is there any reason why you want to settle in NL? I mean shitty weather, high tax…

The bikes, don't you know? Just borrow one and you can get anywhere.

Tbh I have s soft spot for NL myself. Wouldn't mind to spend some more time there.

Just some random ideas. What about Switzerland? Some cantons have good incentives. Arguably even nicer there than in NL. I know a UA citizen that escaped to there recently. Italy has a flat tax option. Not sure what eternally insolvent Greece is doing, but supposedly they have some new incentives now too. Ireland, Portugal maybe? Thought that might require some property investment, though I don't know what special options they area providing Ukrainian citizens.

 

[VladDracula]

The bikes, don't you know? Just borrow one and you can get anywhere.

Tbh I have s soft spot for NL myself. Wouldn't mind to spend some more time there.

Just some random ideas. What about Switzerland? Some cantons have good incentives. Arguably even nicer there than in NL. I know a UA citizen that escaped to there recently. Italy has a flat tax option. Not sure what eternally insolvent Greece is doing, but supposedly they have some new incentives now too. Ireland, Portugal maybe? Thought that might require some property investment, though I don't know what special options they area providing Ukrainian citizens.

Bikes are cool, but I'm a petrolhead so NL roads and German autobahns will suit my needs, hah.

Never been to Switzerland, Numbeo says it's damn expensive. Also no english I suppose.
Italy looks nice with € 100,000 lump sum tax, with 400k income it will be 25% taxes.
Portugal with NHR program is perfect if one has passive income (I'm not there yet). With active income it's going to be huge taxes.
Ireland seems interesting with low corp tax, however personal tax will be around the same 50%?

 

[fshore]

Maybe a Estonian company, not the best place to settle maybe, but you don't pay any corporate tax if you don't withdraw any money so you can save all the money in the company without paying any taxes, when you decide to withdraw profits you pay 20%.Can't imagine that they have any requirements for a director to take out any salary (Many countries don't), not sure though.

In most EU tier 1 countries, it's difficult to withdraw money without paying at least 50% taxes.

Estonia has requirement to take a salary for a director (if resident in Estonia). Not sure exactly how big it must be.

 

[VladDracula]

Guys, what do you think about Romania? Maybe not a perfect country to settle, but micro-company setup will lower the taxes to 1%+5%. Probably can spend few years here.

 

[johndunham]

Ok, my calculations were too good to be true, heh.
Back to the initial plan then, I have to check if it is reasonable to make investments using the BV.

I am a mobile software developer, have few niche apps that generate revenue.

My first thoughts were to live some time in Dubai, making money tax free using free zone and eventually come to Europe to live off stocks. Of course it is a philosophical question, what is more important for a person - to make more money living far away from family and friends or build a normal life but pay for it.



Estonia was in my list, but now looking at my home (or what is left from it) I would like to move as far from Russia as possible.

Yeah, I think I have to sacrifice some of my criteries if I don't want to pay that 50%.

The thing is, there are so many possibilities to do things smarter, but it's too much to discuss here.

Are you in Western Europe right now? I am for the coming weeks. Perhaps we are not far from each other in terms of geographics. If you want to meet up for a coffee, let me know.

Guys, what do you think about Romania? Maybe not a perfect country to settle, but micro-company setup will lower the taxes to 1%+5%. Probably can spend few years here.

I've been looking into that myself for a software development agency I want to scale up. Romania is simple: it's only lucrative for HIGH margin businesses (consultancy, software, etc).

 

[VladDracula]

The thing is, there are so many possibilities to do things smarter, but it's too much to discuss here.

Are you in Western Europe right now? I am for the coming weeks. Perhaps we are not far from each other in terms of geographics. If you want to meet up for a coffee, let me know.


I've been looking into that myself for a software development agency I want to scale up. Romania is simple: it's only lucrative for HIGH margin businesses (consultancy, software, etc).

I'm currently in Eastern Europe, going to visit my family in Romania. That's why it came to my mind - I can spend few years there without problems. Yes, as I can see it perfectly suits software companies with the revenue lower than 1 mil euro and no significant expenses.