Offshore company in Bulgaria/US residents/ dual citizens in Serbia/tax questions

[iva]

Hello everyone!

So, I am in the process to find international tax consultant (so hard to find a good one), but in the meantime, is some of you familiar with these questions?
Also, feel free to recommend some tax consultant (International or in Bulgaria) who may be able to answer these questions directly and concisely.

A little background:

We are US and Serbian passport holders (residents of the US)

• We are about to open a digital platform (fully remotely) based on a subscription membership model which will operate in Serbia and later expand in the EU.
• For now we will not have any physical offices neither we will earn income in Bulgaria,
• We intent to distribute manager level salaries between owners (basically in the beginning we would be only employees of our company)

So, to be honest we were thinking between Bulgaria and Estonia (e- residency), however, Bulgaria seems more attractive to us.

What we know (or believe to know)
1. We understand we must pay 10% corporate taxes in Bulgaria
2. if we distribute dividends there is 5% withholding taxes
3. Bulgaria have 10% income taxes
4. We must to pay 20 % VAT in Serbia

What we are unsure- Here is where we need help

1. If we open a company in Bulgaria on a US passport, which will operate in the beginning in Serbia, and not earn income in Bulgaria, do we need to pay income taxes in the US or Bulgaria due to DTT? we are unsure how this distribution will work..

2. Also, what about social security taxes, is that included in DTT? if not , and we paid it in Bulgaria (a bit over 30%) will we get credit for it in US- refund? Also, do we need to pay that ss taxes at all?

3. If we open a company on serbian passport in Bulgaria, and live in the US, where will we pay income taxes? (Bulgaria- Serbia also have DTT) The reason for this question is not to avoid taxes but FATCA plus on income taxes in US - banks in the EU must report by law if the account balance is higher than 10 thousands dollars (just one dollar more).

4. Is it a better solution to open a company in Bulgaria on US passport, biz account in Serbia on serbian passport, but there is a question regarding income taxes and whereas we are at all able to open company's biz account on a different passport than we registered company...


Thank you so very much for your assistance, it's so much appreciated in advance!

Best Regards,

Iva

 

[JosephLL]

This convoluted scheme is above my head to give any advice, and I don't want to bring additional bad news, but just a well-intentioned critique because I think you might be conflating tax consequence of citizenship/residence here:

* I think just by being residence in US, you are also tax obliged to USA. Every bank will ask you not only for your citizenship identification but a residence as well and this might trigger reporting to irs. I strongly advise to not joke with USA taxman.

* Serbia doesn't have a tax treaty with US: Списак држава са којима је Србија закључила уговоре о избегавању двоструког опорезивања - Poslovni savetnik
Yes I know, taxman in Serbia is in stone age, but increasingly becoming a threat. This is a question of itself, but further exposing yourself doing business in Serbia is even more convoluted.

* I think it's not possible to conduct any sales to Serbian citizens through foreign payment providers and using foreign currency settlement, so you would have to be somehow registered in Serbia which exposes you in god knows what way to taxes (if you show up in registry papers), since you hold Serbian citizenship.

Why so complicated? Purchasing power of a typical customer in Serbia is less to nothing, conection to financial pipes is non-existent (Mickey Mouse bankning plus Serbia still doesn't appear on most country list drop-down menus on the net) why launching there?

 

[Jerry1911]

Honestly I would just open a US LLC and translate the website into Serbian...

 

[Surgeon]

Do not bother with Estonia.

1. General rule, company is taxed in country where it is a resident, or from where it is controlled. You can get bulgarian manager, to make it taxable only in Bulgaria, and you will be the owner and pay taxes on dividend income, but also can work as a contractor and pay income taxes, both in a country of residence US. It will be very hard to get Bulgarian bank account without residence there.

2. SS is for residents only, you cant pay SS in Bulgaria.

3. In a country of residence, US.

4. I seriously doubt you will be able to do that.

 

[Dasilva]

I recently choice for Bulgaria as my country to place my holding. Till now best decision. If you have any questions I’m happy to answer.

 

[Sols]

Honestly I would just open a US LLC and translate the website into Serbian...

Yep, there really is no compelling reason presented for this to be anything more than local US company. LLC if it's only going to be the two founders. C corp if fund raising/external investors are part of the future plan.

 

[JosephLL]

I forgot to add that PayPal since recently offered settlement in Serbian dinars, so you have the option to register somewhere else but offer the product/service to serbian customers throgh the PP. However they'd then have to have an opened PP account. However if you plan to offer card payment, afaik litteraly zero card payment providers is allowing Serbia, so you'd have to register in Serbia. I think currently, only one bank (Intesa, maybe a recently opened one MTS bank from Serbian telekom does this also) offers a card settlement product for merchants.

 

[iva]

Thank you everyone for your input! Some of this info are really helpful!

Iva

 

[Jerry1911]

I recently choice for Bulgaria as my country to place my holding. Till now best decision. If you have any questions I’m happy to answer.

Yea but you probably aren't resident in the US