Romanian residency + other country incorporation

[callicea22]

Hello all !

I would like to get insight from you about my situation
I am EU Citizen, planing to move to Romanian and to get tax residency also.
My job is HRIS Admin as freelancer and i usually make over 150k gross annualy.

Due to changes in pending on Romania legislation, if i am not mistaken, i will not be able to create a SRL because of the rule consultancy must be 20% of total gross
I was looking to know which country could be a great deal for incorporation, my conditions are :
1) <15% taxes on gross
2) no vat or EU VAT in order to not cost more for my EU client
3) Preferably Salary strategy but not closed to dividend release if permitted to be less than quartely


Thank you for all

 

[Sols]

1) <15% taxes on gross

You have a couple of easy options here within the EU. Cyprus, Ireland, and Malta come to mind.

Keep in mind that any company you own and control becomes tax resident in Romania, which means it (also) has to pay tax like any other Romanian company. For intra-EU, there are usually tax treaties you can rely on so your net corporate tax burden isn't greater than the greater of the relevant jurisdictions.

If all you want is an easy zero-tax entity (so you just pay the Romanian corporate income tax), then you could look into for example Isle of Man or BVI.

2) no vat or EU VAT in order to not cost more for my EU client

No such thing. You can unlawfully evade VAT by charging customers through a non-EU entity. But that might not pan out so well when your company is paying corporate income tax in Romania, in case there are questions about where your customers are based and where your VAT filings are.

3) Preferably Salary strategy but not closed to dividend release if permitted to be less than quartely

That's more a question about local law than foreign law. For example, there is usually no problem taking out monthly or bimonthly dividends in Cyprus instead of salary. But you have to declare the income in Romania and they might make a different interpretation.

If you pay yourself an ordinary salary, you need to check whether your company (as an employer) must deduct income tax, social security, and other payroll taxes. Non-resident workers are usually hired as third-party service providers instead of regular employees.

 

[lostguy]

I'm asking, does it not make sense for a Romania residence to setup a Romanian Micro Company that only pay 1% corporate tax?

 

[callicea22]

You have a couple of easy options here within the EU. Cyprus, Ireland, and Malta come to mind.

Keep in mind that any company you own and control becomes tax resident in Romania, which means it (also) has to pay tax like any other Romanian company. For intra-EU, there are usually tax treaties you can rely on so your net corporate tax burden isn't greater than the greater of the relevant jurisdictions.

If all you want is an easy zero-tax entity (so you just pay the Romanian corporate income tax), then you could look into for example Isle of Man or BVI.


No such thing. You can unlawfully evade VAT by charging customers through a non-EU entity. But that might not pan out so well when your company is paying corporate income tax in Romania, in case there are questions about where your customers are based and where your VAT filings are.


That's more a question about local law than foreign law. For example, there is usually no problem taking out monthly or bimonthly dividends in Cyprus instead of salary. But you have to declare the income in Romania and they might make a different interpretation.

If you pay yourself an ordinary salary, you need to check whether your company (as an employer) must deduct income tax, social security, and other payroll taxes. Non-resident workers are usually hired as third-party service providers instead of regular employees.

Thanks for reply,

It means a Bulgarian Company while being Romanian Resident is taxed in romania in addition to Bulgaria taxes ?

Finally Zero tax entity feels like tax haven and my client won't support it as part of his Environment policy

I'm asking, does it not make sense for a Romania residence to setup a Romanian Micro Company that only pay 1% corporate tax?

I'm fearing that I will not be eligible of Micro Company because my activity is 100% Consultancy

 

[Sols]

It means a Bulgarian Company while being Romanian Resident is taxed in romania in addition to Bulgaria taxes ?

You would need to study (and ideally ask a tax lawyer/advise about) the tax treaty between Romania and Bulgaria to figure out the exact details.

 

[RealDude]

I'm fearing that I will not be eligible of Micro Company because my activity is 100% Consultancy

This could lead to a problem from 2023 at the latest. Not only for you, but also for many companies in the EU, which hire Romanian self-employed labor slaves...

 

[lostguy]

Why would that lead to troubles if you stay below 500K turnover / year for each company?