Portuguese resident NHR: Best company location/structure

[Expat192]

Hello, I'm a Portuguese resident with NHR (so no personal tax for foreign dividends), with a personal UK LTD company from my past (used to live there) where I get my income from my UK clients.
Will close the UK company.

Looking for a good place to set up a new offshore company.
I see Malta is an option with their convoluted sandwich, audits and high running costs and hopefully 5% corporation tax. Has anyone here done this?
I'm happy to set up substance with rented office, frequent flights there for meetings, and a local employee. Rest are freerlancers in Asia.
Will this be sufficient and legal? If yes can someone please recommend a good agent to set this all up?

Are there any better legal alternatives? (I know about US LLCs, but struggle to think of a way to set up any substance there!)

 

[daniels27]

I know quite a lot of users here that are brave enough to do this with a US LLC. None of them have any substance. Not sure if it fits your risk appetite, but it does fit for quite some guys here.

 

[JustAnotherNomad]

There's supposedly a court ruling that income from US LLCs shall be treated as dividend income in Portugal, even if there is no substance in the US, so no US tax has been paid (double non-taxation/hybrid mismatch).

 

[daniels27]

We had the same discussion some days ago with @troupos13.
https://www.offshorecorptalk.com/threads/llc-for-greek-resident.46929/

Such court cases exist in most European countries. If you are lucky, they consider it NOT as dividends.

The main issue is that such cases are for companies which have substance in the US and paid tax there. That's what the US LLC is thought for. The abuse it then in recent years is definitely not what normally has been discussed in such cases.

https://freshportugal.com/post/the-tax-treatment-of-us-llcs-in-portugal

Case 2360/2016
It is important to remember that such a ruling is limited to the facts of the matter and that it can change in the future. However, the ruling provided important information on the manner in which the Portuguese tax authorities view US LLCs.

In that ruling, the relevant LLC was taxed as a partnership and it was a finding of fact that it was not managed or directed from Portugal.

The main problem is that in the court case, personal tax has been paid in the company profit in the US, while Portugal still charges personal tax on the dividends received. In the NHR case you try to buy pay the US LLC tax.

In any case, it seems that you can fly under the radar for though years until the NHR runs out. I am not surprised as most NHR guys are actually perpetual travellers not residing in Portugal. And only make 50k per year.

I lack enough information to give OP advice. But if the business is serious, a US LLC a standalone company it rarely it any use (unless you have substance there).

In any car, the are a plethora of different options for OP, all with their own limitations. We would need to know the budget and an induction of risk appetite to decide what is best. You can go down to 0% with higher fixed costs. Just all a matter how you pierced l perceive risk and what the business is about, i.e. banking needed etc.

 

[Expat192]

In any car, the are a plethora of different options for OP, all with their own limitations. We would need to know the budget and an induction of risk appetite to decide what is best. You can go down to 0% with higher fixed costs. Just all a matter how you pierced l perceive risk and what the business is about, i.e. banking needed etc.

Thank you.
Yes the business is serious 50k monthly, just software, all income from 2 UK clients via simple monthly transfer (I use Transferwise).
Happy to set up substance and hire employee there. Like to have lowest/zero risk. Of course banking is needed (can a company actually not have bank account? )
Is there anything better than Malta? It just concerns me having to have 2 companies there with audits and relying on the agent there for everything, unless it's a great agent!

 

[daniels27]

Well 600k at 5% tax are still 30k. Plus all the surplus cost. There definitely should be some 0% tax places that you can pull off. How many tractions du you have per year?

Yes you can have companies without bank account. You then use your personal one. Was once employed like this and received the salary from an investor's personal account.

 

[Expat192]

Please note, the Portuguese authorities have blacklisted all tax heavens like UAE, Gibraltar, Channel islands, etc.
That is why I'm talking about Malta being the probable best solution.

Can anyone recommend an agent there please? (Website)

How many tractions du you have per year?

I have 2 incoming payments per month, and many outgoing (to pay freelancers etc).

 

[JustAnotherNomad]

Please note, the Portuguese authorities have blacklisted all tax heavens like UAE, Gibraltar, Channel islands, etc.
That is why I'm talking about Malta being the probable best solution.

The blacklist doesn't matter if there is a tax treaty. There is a tax treaty with the UAE.
However, the UAE now has 9% corporate income tax, so it might not be ideal.
Malta is definitely a popular choice. I would talk to different tax firms in Portugal, they can typically offer you a complete package with a company in Malta or Cyprus. Madeira (5% special economic zone) might work as well, not sure.
I would just compare prices - with a PT tax firm, you'd hopefully be able to get a complete package and not be stuck between different advisors pointing fingers if something goes wrong.

 

[Expat192]

The blacklist doesn't matter if there is a tax treaty. There is a tax treaty with the UAE.

"In addition, non-habitual residents (NHRs) status holders do not benefit from personal income tax exemption on interests, dividends, capital gains, income from immovable property (rents), royalties, intellectual property income and business income) if: these are sourced from black-listed jurisdictions.[19] Therefore, taxation of such income will be subject to the normal rates or to the 35% rate depending on the type of income earned by the NHR status holder."

 

[JustAnotherNomad]

Not sure what you're quoting there, but unless something has changed, it's not correct. There was even a lawsuit regarding UAE companies, which the taxpayer won.

 

[liquidforce]

personally I'm in a similar situation - I use a Malta Ltd company for my consulting income, SaaS fees are leveraged against IP licensensing towards my Malta company from a US LLC. and pay myself quartely dividends from both companies. I don't leave any large amounts of funds in my LLC bank account, but use the Malta company to create an "internal" morgage in the future.