Portugal NHR + Maltese company = 5% CIT and 0% dividend?

[pastet89]

Yesterday I hooked up on the idea of the Estonian offshore setup for crypto trading and I am still researching it.

Today, however, I was proposed by a Maltese accountant alternative setup. He claims they have many clients doing it and also discussed with Portuguese lawyers.

The setup is:
- settle in Portugal, get NHR
- Open Maltese company + Maltese director
- Trade in Portugal (untraceble)
- Pay 35% CIT in Malta once per year, within one week refunded 30% = 5% CIT
- Pay 0% on foreign dividend in Portugal

I am a bit skeptical, as it was discussed multiple times if foreign directors work solidly, also when both countries are within the EU and have DTA in place things should be quite traceable...

Has anyone researched or tried this option?

 

[Martin Everson]

Not sure what you are concerned about here. Are you paranoid that the place of operation of the Malta company being in Portugal will be found out, as that is where the companies activity i.e trading takes place?

 

[pastet89]

Not sure what you are concerned about here. Are you paranoid that the place of operation of the Malta company being in Portugal will be found out, as that is where the companies activity i.e trading takes place?

Yes. When I was discussing offshore setups with Bulgarian advisors I was explicitly told me there must be no DTA in place. From what I understand, the reason is that with DTA things are quite clear and the whole situation with the company management/operations is easily reversed to where you live.

 

[Sols]

- Trade in Portugal (untraceble)

How so? What makes it untraceable?

This isn't a compliant structure. This is a structure which relies on continued non-enforcement by Portugal.

 

[pastet89]

How so? What makes it untraceable?

This isn't a compliant structure. This is a structure which relies on continued non-enforcement by Portugal.

I am not sure how it's traceable to be honest. In Bulgaria all lawyers by default would rely on the fact it's untrecable. But your second sentence is correct.

How about the Maltese Director? You have some concerns about remote directors, is it just about a Nominee Director or a real Director as well (and how do you distinguish them)?

 

[Sols]

I am not sure how it's traceable to be honest. In Bulgaria all lawyers by default would rely on the fact it's untrecable. But your second sentence is correct.

When your lawyer is telling you to do things that require secrecy to be effective, you're probably speaking with the wrong lawyer.

How about the Maltese Director? You have some concerns about remote directors, is it just about a Nominee Director or a real Director as well (and how do you distinguish them)?

Having a Maltese director does make for a better case than not. However, Portugal starts enforcing its tax laws similar to its influential neighbour for example, that director might not mean much. Especially if it's a nominee-type director with dozens/hundred of other appointments.

So it's still a matter of relying on continued non-enforcement. I don't mean to imply that you will for sure get caught. I just wouldn't want to confuse this setup with a legal, compliant structure that would hold if questioned/audited.

 

[algotrader]

Yes. When I was discussing offshore setups with Bulgarian advisors I was explicitly told me there must be no DTA in place. From what I understand, the reason is that with DTA things are quite clear and the whole situation with the company management/operations is easily reversed to where you live.

In many Bulgarian DTA's it is reversed to where the place of incorporation is. That is for instance the case with Estonia, Cyprus and UAE. UAE is therefore an ideal offshore jurisdiction for a Bulgarian tax resident precisely because it is explicitly stated in the DTA that only the place of incorporation is relevant when you have PE in both countries.
Another (and much more important) point is whether you will be able to open bank accounts and do meaningful business with your offshore company. I have come to the conclusion that in practise it is necessary to have a residence and permanent home in the offshore jurisdiction as well to do so.

 

[pastet89]

When your lawyer is telling you to do things that require secrecy to be effective, you're probably speaking with the wrong lawyer.

Well as I said in the other topic, I spoke to three lawyers and one accountant, one of the lawyers was a very expensive, top tier lawyer, who works for one of the biggest crypto exhanges in the world by giving them legal advice in Bulgaria.

All of them told me this is legal and they were more than confident. When it comes to secrecy, the accountant gives this setup advice on a public youtube video on a well known Bulgarian crypto channel... You can check the other topic I wrote in today about this but at some point I really felt like: who else should I ask? Isn't is me who is the weird one? How many lawyers I need to ask: until someone tells me it's not legal?

And when it comes to secrecy, I was told, there is no legal mechanism for the tax office to get this information. They can ask as many questions if they wish (but they don't even do it obviously), and if you tell them "I can't tell you" it's end of the conversation.

That's why I asked so many times, but I still don't have clear answer: How these "untraceable" things are traced in other countries? How is the offshore company from another jurisdiction without a DTA even audited by the local tax authorities? How do they find out where do you trade from?

And I am really curious to hear especially your opinion, because trust me, I like your attitude and usually it's me who is the strict one, just like you.

UAE is therefore an ideal offshore jurisdiction for a Bulgarian tax resident precisely because it is explicitly stated in the DTA that only the place of incorporation is relevant when you have PE in both countries.

I think my lawyer mentioned something about this, to look in the UAE and it will work, as it's a specific one.

For the other DTAs, PE is where you work from, so my understanding is that when you submit the annual tax report to whichever country, they exchange information and they fix the corporate tax as per where your PE is. One thing I was explicitly told by my lawyer and the accountant was to NOT have an offshore company in a country which has a DTA with mine. (With the exception of UAE as my lawyer said).

I don't really care that much about the bank, it might be nice to have one day a bank receipt about higher dividend paid to you, but at the end of the day, you can always distribute in-kind in stables and then just sell them for fiat as a natural person and go through your own personal bank account.

 

[Trayon]

Hi pastet89.
Could you pls share some credible Bulgarian lawyers?

 

[pastet89]

Hi pastet89.
Could you pls share some credible Bulgarian lawyers?

I am working with Tax Monkey.

 

[Trayon]

Is he experienced? One end very young.

 

[pastet89]

Is he experienced? One end very young.

I'm not sure what you mean by "one end"?

He is young indeed, and some people in this forum would call him "too brave" I guess. Leaving aside the offshore setups (which, however, I said many times just work in Bulgaria, confirmed by multiple other advisors), he claims in most cases the higher tax which the tax authorities want to be paid for crypto is not the right one and he would not follow their guidance. But he also says he's happy to go in court against them, confident about being right about it.

For me he's effective and he has top reviews. Most importantly, crypto is still quite a tight niche, and it's hard to find someone specializing in it. I haven't find any other lawyer in Bulgaria which deals regularly with crypto taxes (he was even briefly on national TV to explain about that).

I think the best way to get feel of him is to read his website with google translate. He has created a quite big guide explaining which, how much, and on which ground taxes to be paid on crypto, also with the offshore setups. Then based on his reasoning you can agree or disagree. He offers 15 min free consultation, could also help you get a sense of him.

That's for crypto taxes. I know also another lawyer (legal advisor for Bulgaria for one of the biggest crypto exchanges worldwide). He's top level, but focuses rather on regulations than taxes and might be unnecessarily expensive.

 

[Trayon]

Appreciate sincerely your keenness to share.