(Tax) residency wanted. Down to the real problem of being a digital nomad

[ilpablo]

Great that you came to the same conclusion with regards to Cyprus. Just a bit sad that the active Cyprus promoters in this forum do not mention the GeSY/GHS problem.

Malta is geographically uninteresting: A small island which always requires you to take a plane wherever you want to go.
Romania: I am not sure if that is cheaper. I would say it depends what you want to do there.

Bulgaria offers the following tax rates: 8% on bank interest, 5% on dividends, 10% upper ceiling for private individuals and last but not least 0% (zero!) for capital gains of securities which are traded/listed on a stock exchange of an EU/EEA member state.
Of course, there is a requirement for health insurance but that is capped and you can determine the amount you insure by yourself. The big advantage compared to Cyprus is that you are full-fledged member right from the start. No silly 5-year waiting period!
I am seeing that from the perspective of a private individual. As such I do not need much accounting, and establishing as a physical person is always the same.

The big problem: All of these countries are EU member states and my concern is that .... ->

This perceived danger of a wealth levy in the not-so-distant future + the endless bureaucracy in all of these EU states with their overregulation will most likely keep me away from moving there.

Hi there my new friend Ahahah we are all in the same page trying to don't live a shitty life as slaves of our idiotic governments rules.

Sometimes I think how much stupid is this! Letting thousands of successful minds flying away from your country with money and willing to work hard grow the economy, is the dumbest things you can actually do while managing a country.

Btw coming back to our own business, let's discuss a bit further into the matter.

I was fascinated by Malta, I lived there for 2 months but I've got discouraged for many reasons (some are those you also talked about).

So I started looking into Cyprus but it seems even worst as we said.

Comparing Romania to Bulgaria, as far as I know it's like this:

ROMANIA:
Romania company + Romania residency (3% tax rate on total turnover but only 1% if you have an employee + 5% on dividends. It’s also quite cheap to setup and maintain and doable without problems I think. Someone blame that Romania is corrupted and high level of burocracy but if you have a digital business you won’t have much problems imho. In this case you can also rent a car from your company and use it all around Europe. Company setup 1k + 1k for annual accountancy. Personal address cost: virtual address or subletting 500€/year, real apartment around 3000/year. Very good flights connections with almost everywhere.

BULGARIA:
Bulgaria company + Bulgarian residency (10% tax rate on profits + 5% on dividends. More or less same issues and advantages like in Romania about the car, the social contributions, etc, they also don’t check your 183 days. Here you won’t understand anything about Bulgarian. I think Romanian language is easier). Company setup 1.5k/2k + 1k/1.5k for annual accountancy. Personal address cost: virtual or subletting 700€/year, real apartment around 3500-4000/year. Very good flights connections.

So I'm a bit confused about the 0% you mentioned on capital gains. They told me it's 10%. Isn't it? Which is still fine btw.

Indeed this could be a good thing for me, since i'm trading stocks a bit lately.

In both countries you can find enthusiasts expat community and you have plenty of choice about the cities where to relocate, despite maybe in Bulgaria you can't reach them easily by plane, except Sofia and Varna. In Romania you have better flights connections with many places (Bucarest, Timisoara, Iasi, Cluj, etc...). From Bucarest you are close to the mountains and the sea as well, and you have a pretty good lifestyle there (i've been many times and I can say it's a fine place to spend some time). People are usually nice and the food is good. I never been in Bulgaria, so I don't have a clear picture of how my life can be over there. Did you ever been there?

Based on this comparison would you still choose Bulgaria instead of Romania? If so please, I beg you, convince me!

I need to take a decision asap and I would go for the best one

 

[ilpablo]

I opened a dedicated thread about this.

Please @Bagpacker come and share some ideas

Low tax, low cost with good freedom setup: Romania vs Bulgaria is the final match?

Hey guys, let's say there is a competition, like the Champions League! And these solutions comes to the final stage, which one would win if you have to choose? Given that the "go with this solution" points for many us are these: - Low taxes - Low costs of setup and maintenance - Freedom to...

www.offshorecorptalk.com

 

[Golden Fleece]

Montenegro is also exceptionally tax-friendly, with a flat 9% tax on most types of income. It offers a mild Mediterranean climate and a low cost of living that is about a third cheaper than neighboring Croatia.

https://www2.deloitte.com/content/dam/Deloitte/rs/Documents/tax/dttl-tax-montenegrohighlights-2019.pdf

 

[ilpablo]

Montenegro is also exceptionally tax-friendly, with a flat 9% tax on most types of income. It offers a mild Mediterranean climate and a low cost of living that is about a third cheaper than neighboring Croatia.

https://www2.deloitte.com/content/dam/Deloitte/rs/Documents/tax/dttl-tax-montenegrohighlights-2019.pdf

Yes it's interesting, but is not inside the EU and also not very well connected with flights I guess...

 

[Piano]

Cyprus is a good option - Tax residency with 60 day rule.
Corp tax is 12.5%, dividends (as a non dom) will be SDC exempt, you will only pay 2.65% on dividend for the GHS.
Company formation is simple and fast.
Quality legal and accounting services, nominee services etc.

Is it correct that you dont have General Health services for the first 5 years until you become permanent resident ?
what does a Private health insurance cost ?

 

[georgio]

Cyprus is a good option - Tax residency with 60 day rule.
Corp tax is 12.5%, dividends (as a non dom) will be SDC exempt, you will only pay 2.65% on dividend for the GHS.
Company formation is simple and fast.
Quality legal and accounting services, nominee services etc.

If you're a normal resident (not a non dom) is there an extra tax on dividends? What is the 2.65% for the GHS?
Thanks

 

[CyprusLaw]

If you're a normal resident (not a non dom) is there an extra tax on dividends? What is the 2.65% for the GHS?
Thanks

If you have not been a Cyprus tax resident for 17 years out of the last 20 years prior to the tax year in question then you will be considered a non dom for 17 years.

So essentially if you are just moving your tax residency to Cyprus now you will maintain the non dom status for 17 years and dividend payments will be tax/SDC exempt.

The 2.65% is a payment towards the general health system which is something everyone in Cyprus pays.

 

[khinkali]

dividend payments will be tax/SDC exempt.

Is there a problem if the dividends are treated as coming from investment income?

 

[CyprusLaw]

Is there a problem if the dividends are treated as coming from investment income?

no it’s all treated the same

 

[georgio]

If you have not been a Cyprus tax resident for 17 years out of the last 20 years prior to the tax year in question then you will be considered a non dom for 17 years.

So essentially if you are just moving your tax residency to Cyprus now you will maintain the non dom status for 17 years and dividend payments will be tax/SDC exempt.

The 2.65% is a payment towards the general health system which is something everyone in Cyprus pays.

So to recap if I understand correctly:
- If you’re new in Cyprus, you can only be a non-dom resident, even if you stay more than 183 days.
- If you’re a non-dom, you pay the 2.65% and you have public insurance in Cyprus, with the possibility of a European insurance card.

thanks

 

[backpacker]

- If you’re a non-dom, you pay the 2.65% and you have public insurance in Cyprus, with the possibility of a European insurance card.

Yes and No!

• Yes: You pay 2.65%.
• No: You do not have public insurance in Cyprus.
• No: You do not have the possibility of a European Health Card.

Read the following:

As long as a self-funded person (e.g. retiree) is not a "permanent resident" (yellow slip MEU3) he/she will not be able to benefit from Cyprus General Healthcare Service (GeSY/GHS). Only a legally employed person with monthly salary has the "privilege" to benefit from GeSY/GHS within the first 5 years. All others have to wait until they become permanent residents.
That said, for a temporary resident (yellow slip MEU1) the GeSY/GHS is just another tax with all the usual accounting requirements (= 2.65% on a max. of EUR 180'000.-).

Considering the other disadvantages of living on an island + the fact that Cyprus is not exactly cheap, I would still consider Bulgaria to be the most attractive option within the EU/EEA.

In other words: During the first 5 years you pay but you can not benefit!

 

[backpacker]

Is it correct that you dont have General Health services for the first 5 years until you become permanent resident ?
what does a Private health insurance cost ?

Yes, it is (unfortunately) correct. You have to pay 2.65% but you can not benefit. I am wondering myself that something like this is even allowed in a member state of the European Union.

 

[CyprusLaw]

Yes, it is (unfortunately) correct. You have to pay 2.65% but you can not benefit. I am wondering myself that something like this is even allowed in a member state of the European Union.

16.-(1) Beneficiaries of healthcare services are any persons who have their habitual residence in the areas controlled by the Government of the Republic, who are also:
(a) citizens of the Republic of Cyprus:
It is understood that the provisions of Regulations (EC) No 883/2004 and (EC) No 987/2009 are applicable as appropriate;
(b) citizens of the Union who are employed persons or self-employed persons in the Republic, or who retain such status, or have acquired the right of permanent residence under the provisions of the Law on Free Movement and Residence of Union citizens and their Families in the Republic:
It is understood that the provisions of Regulations (EC) No 883/2004 and (EC) No 987/2009 are applicable as appropriate;
(c) third-country nationals who have legally acquired the right of permanent residence in the
areas controlled by the Government of the Republic under the Aliens and Immigration Law:


It is understood that the provisions of Regulation (EC) No 1231/2010 are applicable as appropriate;
(d) third-country nationals who have legally acquired the right to equal treatment in the branches of social security under the provisions of the Aliens and Immigration Law;
(e) recognised refugees or persons with subsidiary protection status granted thereto under the provisions of the Refugees Law;
(f) persons who are family members of the persons specified in subsections (a), (b) and (d):
It is understood that the provisions of Regulations (EC) No 883/2004 and (EC) No 987/2009 are applicable as appropriate;
(g) persons who are family members of the persons specified in subsection (c) and who have also legally acquired the right of permanent residence in the areas controlled by the Government of the Republic under the Aliens and Immigration Law:
It is understood that the provisions of Regulation (EC) No 1231/2010 are applicable as appropriate;
(2) Beneficiaries of healthcare services are also any citizens of the Republic who have their habitual residence in the sovereign territories of the United Kingdom of Great Britain and Northern Ireland bases in Cyprus, and any persons who are family members thereof, who have their habitual residence in the areas controlled by the Government of the Republic or in the sovereign territories of the United Kingdom of Great Britain and Northern Ireland bases in Cyprus;

 

[backpacker]

So I'm a bit confused about the 0% you mentioned on capital gains. They told me it's 10%. Isn't it? Which is still fine btw.

Indeed this could be a good thing for me, since i'm trading stocks a bit lately.

No reason to be confused: As I wrote before, upper ceiling in Bulgaria is 10%. You will pay these 10% also on capital gains from securities (bonds, stocks ...). However, EU/EEA listed securities are exempt.
Example:

• You buy/sell equity on the London Stock Exchange and this stock is only traded in London (no EU/EEA double listing) = capital gains are taxed with 10%.
• You buy/sell equity on the Lisbon Stock Exchange = capital gains are currently tax exempt.

It is highly likely that this exemption will be eliminated by 2025.

 

[ilpablo]

No reason to be confused: As I wrote before, upper ceiling in Bulgaria is 10%. You will pay these 10% also on capital gains from securities (bonds, stocks ...). However, EU/EEA listed securities are exempt.
Example:

• You buy/sell equity on the London Stock Exchange and this stock is only traded in London (no EU/EEA double listing) = capital gains are taxed with 10%.
• You buy/sell equity on the Lisbon Stock Exchange = capital gains are currently tax exempt.

It is highly likely that this exemption will be eliminated by 2025.

Thank you very much for the clarification!

It would be great if you would spend a word about what do you think regarding the comparison between the choice of Romania or Bulgaria.

Why would you choose one of these option istead the other one. Thanks!

Low tax, low cost with good freedom setup: Romania vs Bulgaria is the final match?

Hey guys, let's say there is a competition, like the Champions League! And these solutions comes to the final stage, which one would win if you have to choose? Given that the "go with this solution" points for many us are these: - Low taxes - Low costs of setup and maintenance - Freedom to...

www.offshorecorptalk.com

 

[backpacker]

@CyprusLaw
Both, @ilpablo and @Bagpacker , were always talking about self-funded residents during the first 5 years (MEU1 vs. MEU3). And this category is not covered by the regulation.

 

[CyprusLaw]

16.-(1) Beneficiaries of healthcare services are any persons who have their habitual residence in the areas controlled by the Government of the Republic, who are also:
(a) citizens of the Republic of Cyprus:
It is understood that the provisions of Regulations (EC) No 883/2004 and (EC) No 987/2009 are applicable as appropriate;
(b) citizens of the Union who are employed persons or self-employed persons in the Republic, or who retain such status, or have acquired the right of permanent residence under the provisions of the Law on Free Movement and Residence of Union citizens and their Families in the Republic:
It is understood that the provisions of Regulations (EC) No 883/2004 and (EC) No 987/2009 are applicable as appropriate;
(c) third-country nationals who have legally acquired the right of permanent residence in the
areas controlled by the Government of the Republic under the Aliens and Immigration Law:


It is understood that the provisions of Regulation (EC) No 1231/2010 are applicable as appropriate;
(d) third-country nationals who have legally acquired the right to equal treatment in the branches of social security under the provisions of the Aliens and Immigration Law;
(e) recognised refugees or persons with subsidiary protection status granted thereto under the provisions of the Refugees Law;
(f) persons who are family members of the persons specified in subsections (a), (b) and (d):
It is understood that the provisions of Regulations (EC) No 883/2004 and (EC) No 987/2009 are applicable as appropriate;
(g) persons who are family members of the persons specified in subsection (c) and who have also legally acquired the right of permanent residence in the areas controlled by the Government of the Republic under the Aliens and Immigration Law:
It is understood that the provisions of Regulation (EC) No 1231/2010 are applicable as appropriate;
(2) Beneficiaries of healthcare services are also any citizens of the Republic who have their habitual residence in the sovereign territories of the United Kingdom of Great Britain and Northern Ireland bases in Cyprus, and any persons who are family members thereof, who have their habitual residence in the areas controlled by the Government of the Republic or in the sovereign territories of the United Kingdom of Great Britain and Northern Ireland bases in Cyprus;

@CyprusLaw
Both, @ilpablo and @Bagpacker , were always talking about self-funded residents during the first 5 years (MEU1 vs. MEU3). And this category is not covered by the regulation.

A company’s shareholder who’s only funds are dividend payments can be a beneficiary by becoming an employee of the company - there is no salary requirement

 

[backpacker]

Thanks. I understand that.
However, these are constructed models and do not align with my original intention (being a simple retiree, as pointed out in the very first post a few weeks back when I asked). I like to keep things simple.

 

[CyprusLaw]

Thanks. I understand that.
However, these are constructed models and do not align with my original intention (being a simple retiree, as pointed out in the very first post a few weeks back when I asked). I like to keep things simple.

Apologies if I have missed the original info. I should note that there is a discrepancy I am trying to resolve with GHS. The official Greek text of the law refers to employed or not employed, while the English version refers to employed or self employed. So this is something they need to clarify

 

[backpacker]

Apologies if I have missed the original info.

Thank you for explaining it. I was always wondering why nobody picked up the original question.

I would very much appreciate if you can post the clarification from GeSY/GHS once you receive it. I think it would be of great help for many who are currently in limbo.