Singapore Ltd and Portugal NHR

[robocorp]

I've read through most if not all NHR posts but I didn't see anyone mentioning Singapore Ltds as a possible candidate for offshore dividend source.
I mostly see Cyprus or Malta mentioned for those looking to reside in Portugal under the NHR status and limit their tax burden. It allows drawing dividends (tax free under NHR), with a low corporate income tax rate (12.5% in Cyprus, 35% in Malta with 29% that the receiver of dividends can claim).

Assuming one is ready to have (or fake) substance regardless of the country, I'm curious to hear why Singapore wouldn't be a good alternative for smaller fishes ($100-250K/year). SG and PT have a double-taxation agreement which under NHR renders dividends tax-free, and CIT tax rate is up to 17%, although you get a major tax exemption the first 3 years:

In the first three years:
0 - 100,000 SGD: 4.25%
100,001 - 200,000 SGD: 8.5%
200,001 - 2,000,000 SGD: 17%

After the first three years:
0 - 10,000 SGD: 4.25%
10,001 - 200,000 SGD: 8.5%
200,001 - 2,000,000 SGD: 17%

Effectively, that makes 250k/yr taxed at 8.5% for the first three years, and 10.03% for the subsequent ones. Add 4-5k or yearly running cost (book keeping, local services, etc), still pretty interesting.
Am I missing something here? Curious to hear opinions and first-hand experience if anyone has gone this route so far.

 

[stivemoose]

Very interesting post, no one have an opinion?

 

[Marzio]

Add 4-5k or yearly running cost (book keeping, local services, etc), still pretty interesting.

The biggest problem is tax esidency of the company.

The mere fact of incorporating a company in SG doesn't mean that the company is tax resident in SG.

If you think you can get away with 5K yearly running cost, think again.

"Under Singapore tax law, the tax residency of a company is determined by where the business is controlled and managed.

Some examples of scenarios where the control and management of a company may be considered not exercised in Singapore include:

• The local director is a nominee director while the rest of the directors are based outside Singapore
• No strategic decisions are made by the local director in Singapore
• No key employees are based in Singapore

Tax Residency of a Company

Your company is a tax resident of Singapore when its control and management is exercised in Singapore.

www.iras.gov.sg

In other words you have to create substance in SG if you want your company to be considered tax resident and substance has its costs associated with to the point that locations like Cyprus end up cheaper.

 

[bandanna]

I heard about multiple cases of businesses registered in SG while living in PT under NHR. I considered UAE, but was advised against it.

Agree, to me it doesn’t seem Malta or Cyprus are more legit. But hey, if it’s not broken don’t fix it!

 

[Marzio]

Agree, to me it doesn’t seem Malta or Cyprus are more legit

Infact the opposite in true, SG is a super legit juridiction and they want to continue to be perceived as that by having strict rules con who is considered SG tax reident.

 

[toums]

I heard about multiple cases of businesses registered in SG while living in PT under NHR. I considered UAE, but was advised against it.

Agree, to me it doesn’t seem Malta or Cyprus are more legit. But hey, if it’s not broken don’t fix it!

Yes, UAE is on the Portuguese blacklist. Even with NHR statut. Mean if you get dividend from UAE companies you have to pay 35% tax on it in portugal (even under NHR).

Full list of blacklisted countries : Tax Guide 2023 – Favourable Tax Regimes

 

[JustAnotherNomad]

Yes, UAE is on the Portuguese blacklist. Even with NHR statut. Mean if you get dividend from UAE companies you have to pay 35% tax on it in portugal (even under NHR).

No, blacklist status is irrelevant if there is a tax treaty:

https://cms.law/en/prt/publication/nhr-regime-dividends-from-dubai

Does the company have to be tax resident in SG? Is that really a requirement in Portugal?