Portugal NRH and Estonian company

[oscurete]

Hi! I am new to the site and new to this world of taxes optimization.

I am full of doubts and looking for some info/help. My current situation: programmer self-employed in Spain working for a Norwegian company.

I am considering moving to Portugal for NHR and creating a company in Estonia (I just read on this site that Cyprus and Malta could also be interesting).

As far as I know, if I pay myself a salary, I won't pay taxes in Estonia but I will pay in Portugal; 20% from NHR plus social security, unemployment, etc

But, if I only grant myself dividends, I will pay 20% in Estonia but 0% in Portugal. Is that right? If that's the case, why not pay me a monthly dividend? Is ok to have a company with no employees (just myself without a salary)?

Other doubts I have. Currently, I don't have to add VAT to the invoices in Spain, as my client is Norwegian. If I invoice them from the Estonian company, do I have to apply the VAT?

I am also considering buying a property, let's say in Spain, and renting it. Where do I have to pay taxes for those benefits? Is there a difference if I buy the property myself or the company?

And, as I will be working from home and need to rent a flat in Portugal, can the rent be declared an expense? Can I just rent the place as the company office?

Finally, regarding Cyprus and/or Malta. What are the advantages over Estonia? Can I create and run a company there over the Internet, without being in the country?

Thanks!

 

[indexomega]

I think you can benefit by being under the simplified regime in Portugal instead of the NHR. You'll end up paying arround 19% in total (income+socials) if you make under 200k a year.

Please take a look to:
https://www.offshorecorptalk.com/th...-self-employed-in-portugal.37702/#post-217368
The problem with the structure you suggested is that you will trigger permanent establishment, dependant agent, soured income (your work is being actually done in Portugal) and CFC rules (I think it's not a problem with PT-EE).

As for Cyprus, you can pay 0% tax on that type of income if you register as non-DOM resident (15 years) and stay in the country less than 90 days a year.
For more info: Cyprus 90-day rule for foreign employment income

 

[Marzio]

stay in the country less than 90 days a year

It’s about staying at least 90 days abroad, not staying less than 90 days in Cyprus

 

[indexomega]

It’s about staying at least 90 days abroad, not staying less than 90 days in Cyprus

Correct, I wrote it wrong

 

[oscurete]

I think you can benefit by being under the simplified regime in Portugal instead of the NHR. You'll end up paying arround 19% in total (income+socials) if you make under 200k a year.

Looks interesting. Thanks!

 

[yggdorf]

New on the forums, but I spent quite a lot of time researching this. I'm in a very similar situation to OP. My plan was to go for Portugal NHR with a Cyprus LTD but decided now to go for a full Cyprus setup instead. Why? Portugal requires >183 days of stay, even through the NHR. If investigated, I think I would have a hard time proving that I have not effectively managed the Cyprus company from Portugal (making it a Portugese tax resident) given that I've spent a majority of time there. I guess the risk is small, but this made me re-think: The Taxation of the effective Place of Management as a Permanent Establishment

The full Cyprus setup is more inconvenient given the 60 days stay and slightly worse from a tax-perspective (2.65% dividend tax, 26% social fees on paid salaries even if salaries are kept below the income tax threshold), but I'd rather have a legit, risk-free setup.

 

[thedirtyteller]

I think you can benefit by being under the simplified regime in Portugal instead of the NHR. You'll end up paying arround 19% in total (income+socials) if you make under 200k a year.

Please take a look to:
https://www.offshorecorptalk.com/th...-self-employed-in-portugal.37702/#post-217368
The problem with the structure you suggested is that you will trigger permanent establishment, dependant agent, soured income (your work is being actually done in Portugal) and CFC rules (I think it's not a problem with PT-EE).

As for Cyprus, you can pay 0% tax on that type of income if you register as non-DOM resident (15 years) and stay in the country less than 90 days a year.
For more info: Cyprus 90-day rule for foreign employment income

This I have completely missed. I only heard about this for owning an actual company, not on personal income. Will this also work for a self-published writer, and how long will I have to stay in Cyprus? Are there any caps between or hidden fees?

 

[Marzio]

Portugal requires >183 days of stay, even through the NHR

Not true

https://taxsummaries.pwc.com/portugal/individual/residence

 

[yggdorf]

Not true

https://taxsummaries.pwc.com/portugal/individual/residence

This was my assumption as-well

But, having talked to two different PT law-firms working with NHR, it seems otherwise. This is what one of them replied to me:

"NHR means non-habitual resident tax regime.

The name is very unfortunate. It may lead a taxpayer (PT or non-PT) to think that they don`t have to be a tax resident in Portugal and live here at least 183 days in a period of 12 months.

You will have to stay here at least 183 days to maintain your tax residency status. You can have a place of abode to trigger the tax residency status without staying here more than 183 days in a period of 12 months and using your temporary permission issued by SEF but after you become a tax resident you should stay here the minimum period of 183 days per year.

Please note you can also trigger a tax residency status elsewhere if you stay abroad more than 183 days."

 

[yggdorf]

This was my assumption as-well

But, having talked to two different PT law-firms working with NHR, it seems otherwise. This is what one of them replied to me:

"NHR means non-habitual resident tax regime.

The name is very unfortunate. It may lead a taxpayer (PT or non-PT) to think that they don`t have to be a tax resident in Portugal and live here at least 183 days in a period of 12 months.

You will have to stay here at least 183 days to maintain your tax residency status. You can have a place of abode to trigger the tax residency status without staying here more than 183 days in a period of 12 months and using your temporary permission issued by SEF but after you become a tax resident you should stay here the minimum period of 183 days per year.

Please note you can also trigger a tax residency status elsewhere if you stay abroad more than 183 days."

Actually, I think I stand corrected (and the firms aswell). I did some additional research and came across some official-looking pages/docs:

PT: https://info.portaldasfinancas.gov....codigos_tributarios/cirs_rep/Pages/irs16.aspx
Pres in EN: https://info.portaldasfinancas.gov....r_residents_Registration_for_tax_purposes.pdf

So, it seems you are right. And, I might actually go for a CY+PT combo instead. Interesting.

 

[Marzio]

So, it seems you are right.

 

[yggdorf]

Though a 3rd firm just said that the law says something different than those documents. How can this be so hard

 

[Marzio]

Though a 3rd firm just said that the law says something different than those documents

So the law firm knows better than gov documentations and OECD, that's amusing.

https://www.oecd.org/tax/automatic-...ance/tax-residency/Portugal-Tax Residency.pdf

 

[yggdorf]

that's amusing.

Indeed it is

 

[vito]

Hi! I am new to the site and new to this world of taxes optimization.

I am full of doubts and looking for some info/help. My current situation: programmer self-employed in Spain working for a Norwegian company.

I am considering moving to Portugal for NHR and creating a company in Estonia (I just read on this site that Cyprus and Malta could also be interesting).

As far as I know, if I pay myself a salary, I won't pay taxes in Estonia but I will pay in Portugal; 20% from NHR plus social security, unemployment, etc

But, if I only grant myself dividends, I will pay 20% in Estonia but 0% in Portugal. Is that right? If that's the case, why not pay me a monthly dividend? Is ok to have a company with no employees (just myself without a salary)?

Other doubts I have. Currently, I don't have to add VAT to the invoices in Spain, as my client is Norwegian. If I invoice them from the Estonian company, do I have to apply the VAT?

I am also considering buying a property, let's say in Spain, and renting it. Where do I have to pay taxes for those benefits? Is there a difference if I buy the property myself or the company?

And, as I will be working from home and need to rent a flat in Portugal, can the rent be declared an expense? Can I just rent the place as the company office?

Finally, regarding Cyprus and/or Malta. What are the advantages over Estonia? Can I create and run a company there over the Internet, without being in the country?

Thanks!

Hi @oscurete what was your final solution? I have your same situation