Romanian Micro Company or Cyprus while living in France

[Edy]

Hello

I live in France and I am an employee here.

However, I am also getting now royalty coming from (books/ebooks) 15k+ per month through a publishing house in UK. For the moment the money is not being sent to me, they are kept by the publishing house account until I find a solution on how to collect them, in FranceI I would need to pay high taxes. So I need to find a structure to collect the monthly royalties.

Do you think I could set up Romania Micro Company with a local director and benefit from the 1% tax on turnover (max 500keur turnover - good setup as high-profit margin business), while still residing in France and be ok with it? I could accumulate cash inside the company and then when I reach a good amount quit residency in France and move somewhere e.g. Portugal NHR or Dubai or wherelse? to withdraw from the company and pay a low/no dividend and personal income tax?

What about Cyprus (I understand that taxation in Cyprus for IP assets is very favorable like 2.5% but I am not sure if book/ebooks qualify to benefit for the 2.5% tax rate)?

What about setting a company i UAE freezone with anonymous shareholders and nominee director and similarly move there once I want to cash out of the company?

Any advice and opinion is appreciated! Thank you!

 

[Sols]

Won't work. The company is considered tax resident or considered having a permanent establishment in France, and has to comply with French tax law.

Don't like French tax? Don't live in France.

 

[Edy]

What if the director is resident and living in Romania and it will be also employee?

 

[thomasparra]

I would consult a good international tax lawyer, you can definitely afford one especially as they are not that expensive in France compared to other countries.

There might be a setup with a holding company in France that could be done to reduce taxation, but ultimately you will need to pay tax on it. Within that holding you can hold your royalty receiving business, a SCI for real estate etc.

If you want to pay very little or no tax at all legally, then the only option is to move out of France (at least 6 months per year)

 

[Sols]

What if the director is resident and living in Romania and it will be also employee?

Doesn't matter. That's not how France makes these determinations.

If you have an EU passport and if avoiding French tax is such a high priority, why not just move to Cyprus or Malta? Maybe your current employer can keep you on as a contractor. That's a lot nicer than what the tax authority will do you if/when they catch you evading taxes.

As @thomasparra says, look into ways to reduce taxes locally within France. Speak with a good tax adviser. The second you start involving foreign companies, you're playing with fire.

 

[algotrader]

What if the director is resident and living in Romania and it will be also employee?

Could work. Have a look at article 4.3. of the DTA:

3. Where by reason of the provisions of paragraph 1 a person other than an individual is a resident of both Contracting States, it shall be deemed to be a resident of the Contracting State in which its place of effective management is situated.

http://internationaltaxtreaty.com/download/romania/dtc/Romania-France-DTC-Sep-1974.pdf
You will need to prove that all "management decisions" are made in Romania. So, if you intend to be a director as well you will need to travel to Romania for all board meetings. Best discuss with a French lawyer.

 

[Edy]

Thank you all.

So If I understand well, If I can prove to have economic substance / POEM in Romania with 1 director and me being the only shareholder it could potentially work.
I would like to accumulate as much as possible and when there is enough (enough cash in the company, to be defined e.g. 300k-400k) move with my family somewhere with low taxation to be able to withdraw for example as dividends.

What do you think?

Anybody knows something about the Cyprus taxation of 2.5% on royalties, do you think Copyright of books/ebooks apply?

Thank you

 

[scooterguy]

Why not look into moving to Portugal during this year? With the NHR regime you could be potentially exempt from royalties tax if they are paid in a company abroad.

Just an idea, of course, investigate this further or consult with a professional.

 

[uplana]

Not all people around that look for tax freedom are willing to relocate.

 

[CyprusLawyer101]

Thank you all.

So If I understand well, If I can prove to have economic substance / POEM in Romania with 1 director and me being the only shareholder it could potentially work.
I would like to accumulate as much as possible and when there is enough (enough cash in the company, to be defined e.g. 300k-400k) move with my family somewhere with low taxation to be able to withdraw for example as dividends.

What do you think?

Anybody knows something about the Cyprus taxation of 2.5% on royalties, do you think Copyright of books/ebooks apply?

Thank you

Your work wouldnt qualify for the IP regime as copyrights do not fall within qualifying assets.

 

[Kosem]

Your work wouldnt qualify for the IP regime as copyrights do not fall within qualifying assets.

You are talking about the special skills like web developer and so on that fits under the NHR list?

Could work. Have a look at article 4.3. of the DTA:



http://internationaltaxtreaty.com/download/romania/dtc/Romania-France-DTC-Sep-1974.pdf
You will need to prove that all "management decisions" are made in Romania. So, if you intend to be a director as well you will need to travel to Romania for all board meetings. Best discuss with a French lawyer.

But if you are the director, doesn't it fall under the "self management" test of the Tax autorities in Portugal? (because you manage the company by yourself)?

 

[CyprusLawyer101]

You are talking about the special skills like web developer and so on that fits under the NHR list?

No. I am referring to the Cyprus IP regime.