Yes! Especially if you can use if for personal things (possible in some countries, difficult in others).Lease a Porsche
Or buy some real estate (office space you could rent or living space or land or whatever).
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Question Non greedy setup. Just 10% on total taxes. European mobility
- Thread starter Bimblis
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Or buy some real estate (office space you could rent or living space or land or whatever).
Care to explain that Slovenian setup? That would amount to 4/6% effective tax? Even if you cash out all the money to a bank account?
I have no personal experience with it but according to the scheme it works like this.
100K revenue you deduct 80% leaving you with 20K taxed at a flat rate of 20%.
If you google "flat rate taxation sole entrepreneur Slovenia" you will find more details about it.
Crazy stuff, I found some articles in broken-English. Guess I will have to check it out. Thanks!
A typical freelancer will probably have a turnover of 150-200k€ per year in the EU. How does the taxation look like in Slovenia?
Well, from what I read you can not earn more than 100k€ per year, but from that first 100k€ only 20% is taxed at 20%. First there are differences between If you earn say €80.000 the tax rate will be as follows: Income 80.000€ – normalized expenses 64.000€ = tax base 16.000€ x tax rate 20% = tax 3.200€.
The website where I found this then says the following:
“Once sole proprietors are already conducting business, they have to be cautious of another condition. If they want to remain in the taxation system for normalized expenses, they cannot surpass €300.000 income in two consecutive tax years (so €150.000 per year).”
How this works is unclear to me, but I guess if in the second year:
Income €140.000 – normalized expenses €100.000 (capped at €80.000) = tax base €60.000 x tax rate 20% = tax €12.000.
Slovenia has some interesting benefits, first if you are an EU-national you can of course enter without any hassle, second of all the costs of starting a “sole trade (s.p)” company are €0.00.
It is quite vague, and most recent sources don't mention this structure. Maybe because it attracted some ire from the local population. If I look here for example: Registration of a sole trader (s.p.) | SPOT - Slovenian Business Point the documents under “Legal Basis” seem to be removed which is quite strange if you ask me.
This site Sole proprietorship and flat-rate taxation in Slovenia/EU - Data d.o.o. has been updated as recently as April 2021, so it seems the structure still exists. Perhaps there is somebody on this forum actively utilizing this structure who can enlighten us.
Sources:
Business | SPOT
spot.gov.si
Registration of a sole trader (s.p.) | SPOT
spot.gov.si
Well, from what I read you can not earn more than 100k€ per year, but from that first 100k€ only 20% is taxed at 20%. First there are differences between If you earn say €80.000 the tax rate will be as follows: Income 80.000€ – normalized expenses 64.000€ = tax base 16.000€ x tax rate 20% = tax 3.200€.
The website where I found this then says the following:
“Once sole proprietors are already conducting business, they have to be cautious of another condition. If they want to remain in the taxation system for normalized expenses, they cannot surpass €300.000 income in two consecutive tax years (so €150.000 per year).”
How this works is unclear to me, but I guess if in the second year:
Income €140.000 – normalized expenses €100.000 (capped at €80.000) = tax base €60.000 x tax rate 20% = tax €12.000.
Slovenia has some interesting benefits, first if you are an EU-national you can of course enter without any hassle, second of all the costs of starting a “sole trade (s.p)” company are €0.00.
It is quite vague, and most recent sources don't mention this structure. Maybe because it attracted some ire from the local population. If I look here for example: Registration of a sole trader (s.p.) | SPOT - Slovenian Business Point the documents under “Legal Basis” seem to be removed which is quite strange if you ask me.
This site Sole proprietorship and flat-rate taxation in Slovenia/EU - Data d.o.o. has been updated as recently as April 2021, so it seems the structure still exists. Perhaps there is somebody on this forum actively utilizing this structure who can enlighten us.
Sources:
Business | SPOT
Registration of a sole trader (s.p.) | SPOT
I did some more digging, and apparently these benefits are in the process of being curtailed: Government confirms tax changes - Slovenia Times. I quote the article here:
“Significant changes are also planned for the taxation of sole traders, amidst complaints that the current system is too generous and is being widely abused to minimize taxes.
The existing flat-rate system under which sole traders who make up to 100,000 per year pay only a 4% income tax will be severely curtailed.
The lowest rate will apply only to income below EUR 35,000, any income above that will be taxed at a 12% rate.
The government wanted to originally set the limit even lower, at EUR 25,000, but tweaked the bill after outcry from business associations.
These thresholds only apply to sole traders taking advantage of the simplified flat-rate system, for those who pay taxes based on their current income and expenditure nothing will change.”
Regarding the social security, they seem to be set at about €425 per month. Also, in the first year, you will only pay 50% for the pension and disability insurance. And in the second year, you pay only 30% of these contributions. Still, depending on the chances, 12% is still a decent rate for the quality of life you get in Slovenia. I will keep digging over the coming days and weeks.
What are the options if
- you want to be in Europe
- you can work as a freelancer through a US LLC or an Hong Kong Ltd (zero corporate tax on revenue coming from outside HK)
- you are ok with up to 20% tax overall (corporate and personal), but no more than that
The annual revenue of my work activities would be between 120k and 200k euros
Thanks
- you want to be in Europe
- you can work as a freelancer through a US LLC or an Hong Kong Ltd (zero corporate tax on revenue coming from outside HK)
- you are ok with up to 20% tax overall (corporate and personal), but no more than that
The annual revenue of my work activities would be between 120k and 200k euros
Thanks
Malta, Cyprus, Bulgaria, Romania, Andorra, Monaco and Montenegro.
Thanks! Would you know which ones would be happy with you being outside of their soil for more than 6 months a year?
Also, I see Portugal doesn't make the list but I guess that's another conversation altogether...
Also, I see Portugal doesn't make the list but I guess that's another conversation altogether...
Cyprus non-dom, 60 days per year in country required.
Cyprus and Bulgaria I believe
No Portugal not really interesting in this scenario .. You have a 20% flat tax but you have to add socials as well..
Would an Estonian company that pays you dividends work then? Their corporate tax rate is 20%...
If you are not actively working for the Estonian company, it might work out.
OR if you manage the EE company from PT less than 183 days.
Or you could pay yourself a salary on which you'l pay only 10% WHT and theorically you'll not pay anything else in Portugal because it was already taxed at source in Estonia. Not sure if social security has to be paid in PT.
Also in this case you have to be aware of PE rules and work for the EE company less than 183 days in PT.
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