Yet another Digital Nomad from EU

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leaveNet

Silver Member
Hi everybody,

first of all: You guys rock. Thanks for all the great content.

So, I know, there's quite some content here already regarding Digital Nomads. I read all of it but most of the topics fit to my situation only partly.

About myself:
- German passport, living in Germany
- North African passport possible (probably doesn't help much)
- Not much savings, maybe 30k€
- Business is not yet running / no company present
- Business would be IT Security, IT XYZ Consulting/Development -> Can lead to a selling digital product but not in the beginning
- Business will earn ~50k€ @ year one I think -> 100k€+ after year one
- Digital Nomad Life for 2-5 years

As far as I understood, I have three fields to battle:
1. Tax residency, center of live, in another country
2. Incorporate at least one company somewhere
3. Building up a new company while traveling

Number 3 is nothing you can do about. Let's concentrate on 1 and 2.

To find a suitable solution for 1 and 2, I have to admit that I prefer an easier and stable solution in favor of a solution with less taxes.

I know that many people in Germany go with Estonia e-Residency, Canada LLP or US LLC and do not have a tax residency. I think they will have issues coming back to Germany though. What are your experiences here?

Solutions I found:
1. Malta
2. Cyprus (looking at you @CyprusLaw)
3. UAE (looking at you @Fred)
4. Romania
5. Bulgaria

Romania and Bulgaria is a no go for me. I simply don't like these countries and don't want to live there by any means.

Most German tax lawyers recommend Cyprus at the moment, also because of the 60 days rule. Malta is probably too expensive and a very small island.
UAE is almost never recommended. Maybe because it's also expensive or because of the latest bad news about UAE being a tax heaven? I'm not sure.

Do I miss something? Is there another solution? Do I overthink the situation regarding "US LLC + no tax residency"?
 

polonieth

Entrepreneur
Hi everybody,

first of all: You guys rock. Thanks for all the great content.

So, I know, there's quite some content here already regarding Digital Nomads. I read all of it but most of the topics fit to my situation only partly.

About myself:
- German passport, living in Germany
- North African passport possible (probably doesn't help much)
- Not much savings, maybe 30k€
- Business is not yet running / no company present
- Business would be IT Security, IT XYZ Consulting/Development -> Can lead to a selling digital product but not in the beginning
- Business will earn ~50k€ @ year one I think -> 100k€+ after year one
- Digital Nomad Life for 2-5 years

As far as I understood, I have three fields to battle:
1. Tax residency, center of live, in another country
2. Incorporate at least one company somewhere
3. Building up a new company while traveling

Number 3 is nothing you can do about. Let's concentrate on 1 and 2.

To find a suitable solution for 1 and 2, I have to admit that I prefer an easier and stable solution in favor of a solution with less taxes.

I know that many people in Germany go with Estonia e-Residency, Canada LLP or US LLC and do not have a tax residency. I think they will have issues coming back to Germany though. What are your experiences here?

Solutions I found:
1. Malta
2. Cyprus (looking at you @CyprusLaw)
3. UAE (looking at you @Fred)
4. Romania
5. Bulgaria

Romania and Bulgaria is a no go for me. I simply don't like these countries and don't want to live there by any means.

Most German tax lawyers recommend Cyprus at the moment, also because of the 60 days rule. Malta is probably too expensive and a very small island.
UAE is almost never recommended. Maybe because it's also expensive or because of the latest bad news about UAE being a tax heaven? I'm not sure.

Do I miss something? Is there another solution? Do I overthink the situation regarding "US LLC + no tax residency"?
For me, it'd be much easier to actually start running the business first before making grand plans around tax residencies. You haven't made a cent yet, but 'it will make 50k in year one". So start it, make 5k a month consistently for a few months to get proof of concept and then look at options for moving in year two when it is meant to start making decent cash...
 

CyprusLaw

Mentor Group Gold
Hi everybody,

first of all: You guys rock. Thanks for all the great content.

So, I know, there's quite some content here already regarding Digital Nomads. I read all of it but most of the topics fit to my situation only partly.

About myself:
- German passport, living in Germany
- North African passport possible (probably doesn't help much)
- Not much savings, maybe 30k€
- Business is not yet running / no company present
- Business would be IT Security, IT XYZ Consulting/Development -> Can lead to a selling digital product but not in the beginning
- Business will earn ~50k€ @ year one I think -> 100k€+ after year one
- Digital Nomad Life for 2-5 years

As far as I understood, I have three fields to battle:
1. Tax residency, center of live, in another country
2. Incorporate at least one company somewhere
3. Building up a new company while traveling

Number 3 is nothing you can do about. Let's concentrate on 1 and 2.

To find a suitable solution for 1 and 2, I have to admit that I prefer an easier and stable solution in favor of a solution with less taxes.

I know that many people in Germany go with Estonia e-Residency, Canada LLP or US LLC and do not have a tax residency. I think they will have issues coming back to Germany though. What are your experiences here?

Solutions I found:
1. Malta
2. Cyprus (looking at you @CyprusLaw)
3. UAE (looking at you @Fred)
4. Romania
5. Bulgaria

Romania and Bulgaria is a no go for me. I simply don't like these countries and don't want to live there by any means.

Most German tax lawyers recommend Cyprus at the moment, also because of the 60 days rule. Malta is probably too expensive and a very small island.
UAE is almost never recommended. Maybe because it's also expensive or because of the latest bad news about UAE being a tax heaven? I'm not sure.

Do I miss something? Is there another solution? Do I overthink the situation regarding "US LLC + no tax residency"?
Hello, indeed we have a lot of Germans setting up in Cyprus. Main reasons:

(a) 12.5% corporate tax
(b) Non-Dom Status - dividends are SDC and tax exempt, you only pay 2.65% for GHS, so essentially your effective tax rate is around 15%.
(c) Tax residency with the 60 day rule - stay for at least 60 days in Cyprus and no more than 183 days in another jurisdiction while running a business in Cyprus and you got your tax residency
(d) High quality of legal and accounting/audit services - and not as highly priced as many think - especially for what you are getting in return.
(e) You can ensure that your company has Cyprus tax residency through the use of nominee services

Feel free to PM me if you want to discuss more.
 

ih8socialism

Active Member
For me, it'd be much easier to actually start running the business first before making grand plans around tax residencies. You haven't made a cent yet, but 'it will make 50k in year one". So start it, make 5k a month consistently for a few months to get proof of concept and then look at options for moving in year two when it is meant to start making decent cash...
Yes and No.

Yes, starting your own business alone is difficult and doing this while moving away from your home country or constantly traveling is even more difficult.

No, germany makes it really difficult for you to leave once you make some bucks in germany.

Hi everybody,

first of all: You guys rock. Thanks for all the great content.

So, I know, there's quite some content here already regarding Digital Nomads. I read all of it but most of the topics fit to my situation only partly.

About myself:
- German passport, living in Germany
- North African passport possible (probably doesn't help much)
- Not much savings, maybe 30k€
- Business is not yet running / no company present
- Business would be IT Security, IT XYZ Consulting/Development -> Can lead to a selling digital product but not in the beginning
- Business will earn ~50k€ @ year one I think -> 100k€+ after year one
- Digital Nomad Life for 2-5 years

As far as I understood, I have three fields to battle:
1. Tax residency, center of live, in another country
2. Incorporate at least one company somewhere
3. Building up a new company while traveling
Biggest issue I see here are your savings and the estimated revenue in the first year.
Question is, is 50k revenue enough to relocate, IMO not since most of your revenue will be eaten up by traveling / accommodation and mainting a proper company setup since you need a residency, otherwise only problems with Banks and our friends from the beloved Finanzamt. With 50k in Revenue you will end up paying not that much tax in germany when you just deduct plenty of your stuff from taxes, on the other hand once you started a business in germany it will be harder for you to leave the country.

Probably best solution might be to start with a solo entrepreneurship (Einzelunternehmen, just register a "Gewerbe", if you studied something related to your subject, which I assume with IT Secuirty, prolly Bochum?, you don't even have to pay the full Gewerbesteuer), save up money and then relocate to somehwere else when you have some budget since 30k in savings is another issue, let me explain why.

You NEED to move first before you open a company in another country, because you are obligated to report ownership in a foreign company when you are taxable in Germany (Steuerpflichtig) if you own >10% of it, which you most likely will do. If you report this company to the german authorities, they will put this into the calculation of your "Wegzugsbesteuerung" (To avoid this a solo entrepreneurship would be best option), best case would be you can provide your book keeping and just get taxed on this, worst case they will just assume the potential of this company and tax you for money you didn't even make yet.

If you don't report the foreign owner ship and they somehow find out about it you will most likely get fined and in worst case you are guilty of tax evasion.

As far as I understood this process relocating to lets say UAE first, you need to cut all ties with germany first (Wohnsitz abmelden, Verträge kündigen etc. ), travel to UAE get into a nice airbnb or hotel open a company with someone reliable like @Fred within a couple of days and then proceed from there.

Also think about the AStG, there are several pitfalls, for example when you were taxable for more than 5 years in germany they also want to tax dividends you get from your company and other things. Take a look at § 5 Zwischengeschaltete Gesellschaften

I am not a tax attorny or consultant, however I went through this process myself. Its crucial to get your self a good tax consultant before you leave this shithole called germany. If you need a good consultant I can recommend you one who is able to navigate you through all these problems.

Cheers and good luck
 

leaveNet

Silver Member
Biggest issue I see here are your savings and the estimated revenue in the first year.
Question is, is 50k revenue enough to relocate, IMO not since most of your revenue will be eaten up by traveling
Yeah, thank you for pointing that out. 50k is estimated for the case of traveling. I make 90k€ as an employee atm and should easily be able to get it as a company. I'm just assuming I make mistakes in the first year and that it's heavier to find customers during traveling. I could probably also work as a Dev for a former company for around ~10k€/month for the beginning - I hate it, but it's possible.
I also already traveled around the globe with 12k€ for one year. 50k€ minus taxes should be fine, even with the German max taxation of ~50%, that I also have now.

save up money and then relocate to somehwere else when you have some budget since 30k in savings is another issue
It really worries me a lot, but I don't have more at the moment.

Its crucial to get your self a good tax consultant before you leave this shithole called germany.
I'm prepared myself to do that. It's just such a ****-up. I want to be prepared to not lose so much money to them (because I don't have so much as you can see).

I am not a tax attorny or consultant, however I went through this process myself. Its crucial to get your self a good tax consultant before you leave this shithole called germany.
I hope to find one myself.

For me, it'd be much easier to actually start running the business first before making grand plans around tax residencies
Most German consultants say the opposite. It's easier to leave without a company. Although it's obviously easier to leave with a stable income. I'm willing to take the risk and just try it without having customers yet. I mean IT and IT Security… I won't fail because of bad circumstances, I will fail only if I'm unable (read: too stupid) myself.
 

ih8socialism

Active Member
Most German consultants say the opposite. It's easier to leave without a company. Although it's obviously easier to leave with a stable income. I'm willing to take the risk and just try it without having customers yet. I mean IT and IT Security… I won't fail because of bad circumstances, I will fail only if I'm unable (read: too stupid) myself.
Yes thats true, like I mentioned above once you start a business in germany the Finanzamt tries to suck out every single euro from you once you leave. As long as you are an employee its pretty easy to leave.

Yeah, thank you for pointing that out. 50k is estimated for the case of traveling. I make 90k€ as an employee atm and should easily be able to get it as a company. I'm just assuming I make mistakes in the first year and that it's heavier to find customers during traveling. I could probably also work as a Dev for a former company for around ~10k€/month for the beginning - I hate it, but it's possible.
I also already traveled around the globe with 12k€ for one year. 50k€ minus taxes should be fine, even with the German max taxation of ~50%, that I also have now.
ok got that point now. I would probably go with UAE in your case then, its fairly cheap and easy to setup, doesn't require that much of a maintenance.

Cut ties with germany and leave it -> Create UAE Company -> Leave UAE to your desired destination with more affordable and cheaper costs of living would be the best option to start then, but maybe I'm wrong.

From my experience, especially when you want to work in IT Security try to find some potential clients and try to find out if they would be fine with some location like UAE etc. or what their due diligence is fine with if you plan to work with / for bigger companies. We are working with one DAX company and a fortune 500 company and I can tell you they can be a pain in the *** when it comes to compliance and in case you **** something up who they can sue lol
 

leaveNet

Silver Member
From my experience, especially when you want to work in IT Security try to find some potential clients and try to find out if they would be fine with some location like UAE etc. or what their due diligence is fine with if you plan to work with / for bigger companies. We are working with one DAX company and a fortune 500 company and I can tell you they can be a pain in the *** when it comes to compliance and in case you **** something up who they can sue lol
Thank you for your feedback! I'm working on finding clients; I prefer to work with smaller customers - less money, less compliance. I'm also really afraid to get sued, IT Security is a risky business.
If you ask me, I would also stay in my current job as an employee and travel, but it's simply not possible, even by law it's just pain in the ***.
 

orangekangaroo

Active Member
@leaveNet

Here is my opinion. With 50k earnings in your first year UAE & Cyprus will bleed you dry. UEA becomes interesting once you earn more than 250K a year. Malta can work but you got to like living on a dusty island. Get over your fear of Romania, it is the perfect place with low tax for startup businesses. Once you have grown the business substantially and can built some substance, then move to Cyprus and create a parent company to get divi from Romania without withholding tax.

There are a few forum members including me that use Romania.
 

Segd

New member
Can recommend Romania. I'm a software dev from Finland and created an LLC there. 3% revenue tax + 5% dividend tax. Around 40-50e for accounting.
There's no minimum residence requirement, so you can rent an apartment for few hundred euros and spend 5.5 months in Germany and the other time somewhere else :)
 

FixieHartmann

Active Member
Another option for you to consider:
- stay employed with your current company for a couple months longer
- leave Germany now while you don’t have any company or substantial income, cut all ties
- get a digital nomad visa and move to Curaçao, Barbados or any other place that won’t tax you or your company
- work with a German tax advisor to make sure that Germany considers you a non-resident and that you don’t have local income
- keep your German tax number in your bank accounts (for now) so that the banks don’t cancel the accounts
- set up a US LLC, because you already left Germany you won‘t have to inform authorities about it
- wait for a couple months and switch all income streams to LLC
- start working on your business and try to increase revenue

Now you’ve left Germany already, so you shouldn’t have any issues with authorities there. You haven’t lost a lot of money by setting up a proper structure in Cyprus or UAE yet. Now you can decide. If you still don’t make any substantial money you can simply stay in your digital nomad visa country and hustle.

If the money starts to come in you get a tax residency in UAE with a local company that owns the LLC and update the tax residencies for your bank accounts. By using the UAE company as holding you avoid any reputational issues with UAE as your customers only see the LLC.

You stay for a couple months in UAE, get your tax residency certificate and then travel again. If Germany ever asks for proof you have a complete paper trail.

Caveat: This setup does *not* work if you indeed plan to spend a lot of time in Germany. You really have to move and cut all ties. If you want to spend substantial time in Germany you should probably go with Romania, Bulgaria or Cyprus. But you should consider that all EU states are compelled (ATAD) to introduce exit taxes. So if you plan to leave the EU in the future a EU structure might cause issues when you leave.

(Obligatory disclaimer: I am not a tax advisor, this is not tax advise. Germany can still try to screw you if they want.)
 
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leaveNet

Silver Member
UEA becomes interesting once you earn more than 250K a year. Malta can work but you got to like living on a dusty island. Get over your fear of Romania, it is the perfect place with low tax for startup businesses. Once you have grown the business substantially and can built some substance, then move to Cyprus and create a parent company to get divi from Romania without withholding tax.

There are a few forum members including me that use Romania.
Uff, UAE is way too far away with 250k€ at the moment. Dusty island, yes, but Malta looks great and has good weather too.
I know Romania fits my needs, but I really don't like it there. And I'll never be able to convince her to go there I think. Only if this is a thing on paper and not way more.

There's no minimum residence requirement, so you can rent an apartment for few hundred euros and spend 5.5 months in Germany and the other time somewhere else :)
Really? I thought you have to stay there more than 6 months a year.

Another option for you to consider:
- stay employed with your current company for a couple months longer
- leave Germany now while you don’t have any company or substantial income, cut all ties
- get a digital nomad visa and move to Curaçao, Barbados or any other place that won’t tax you or your company
- work with a German tax advisor to make sure that Germany considers you a non-resident and that you don’t have local income
- keep your German tax number in your bank accounts (for now) so that the banks don’t cancel the accounts
- set up a US LLC, because you already left Germany you won‘t have to inform authorities about it
- wait for a couple months and switch all income streams to LLC
- start working on your business and try to increase revenue

Now you’ve left Germany already, so you shouldn’t have any issues with authorities there. You haven’t lost a lot of money by setting up a proper structure in Cyprus or UAE yet. Now you can decide. If you still don’t make any substantial money you can simply stay in your digital nomad visa country and hustle.

If the money starts to come in you get a tax residency in UAE with a local company that owns the LLC and update the tax residencies for your bank accounts. By using the UAE company as holding you avoid any reputational issues with UAE as your customers only see the LLC.

You stay for a couple months in UAE, get your tax residency certificate and then travel again. If Germany ever asks for proof you have a complete paper trail.

Caveat: This setup does *not* work if you indeed plan to spend a lot of time in Germany. You really have to move and cut all ties. If you want to spend substantial time in Germany you should probably go with Romania, Bulgaria or Cyprus. But you should consider that all EU states are compelled (ATAD) to introduce exit taxes. So if you plan to leave the EU in the future a EU structure might cause issues when you leave.

(Obligatory disclaimer: I am not a tax advisor, this is not tax advise. Germany can still try to screw you if they want.)
Let me summarize that just to make sure I understood correctly:
- Leave Germany as a "traveler" but don't cut ties
- Work for clients with (probably anonymous) LLC during that time
- Switch to UAE as soon as there's enough money
- Switch LLC from private owned to UAE company owned

Is that correct?


For the future I plan to stay 2 months a year during summer in Germany plus maybe some days. That's it, don't need more at the moment.
 

FixieHartmann

Active Member
Let me summarize that just to make sure I understood correctly:
- Leave Germany as a "traveler" but don't cut ties
- Work for clients with (probably anonymous) LLC during that time
- Switch to UAE as soon as there's enough money
- Switch LLC from private owned to UAE company owned

Is that correct?


For the future I plan to stay 2 months a year during summer in Germany plus maybe some days. That's it, don't need more at the moment.
No, that is just asking for trouble. If you go traveling but keep your ties with Germany you continue to be considered a tax resident and you will be liable for tax in Germany. Trying to work around that - even with an anonymous LLC - is just asking for trouble and definitely not worth it for the amounts you mentioned.

What I described above implies that you actually cut all ties, move away and become tax non-resident. Afterwards you can legally establish a US LLC and have foreign income that will not be taxed in Germany.

So a hypothetical plan could be:
- you apply for a nomad visa in Curacao right away, it will be granted in 2-3 weeks
- you stay employed and tax resident in Germany until 31.12.2021 and pay taxes for the entirety of 2021
- you tell your employer to pay you as employee until 31.12.2021 and as freelancer afterwards
- you leave Germany for Curacao in the beginning of January
- you deregister yourself in Germany on 31.12.2021 and work with a tax consultant to make sure that in 2022 you are not considered tax-resident nor have income from Germany
- after you left Germany you set up a US LLC
- by the end January and for the next months you send your employer an invoice from the US LLC

You stay in Curacao (or any of the other countries with a digital nomad visa) and keep working for employer while building up revenue for your company. As soon as you have substantial income you quite your old job and decide if you need new tax residency or not. If you do, go the UAE route.
 

leaveNet

Silver Member
You stay in Curacao (or any of the other countries with a digital nomad visa) and keep working for employer while building up revenue for your company.
Digital nomad visa does replace tax residency? This is the thing I don’t get in your story.

Unfortunately my employer doesn’t want that at all. They want employees or nothing. It’s stupid but it is how it is.

Thank you very much for clarification again.
 

FixieHartmann

Active Member
Digital nomad visa does replace tax residency? This is the thing I don’t get in your story.
Well, that depends on which country you move to. The ones that I mentioned don’t provide a tax residency under the nomad visas. However, unlike other countries like the UK or Australia, you don’t need to have a new tax residency to loose your German one. If you leave Germany, cut all ties, don’t own any property nor have a spouse in Germany and don’t have any German income you become tax non-resident even if you don’t have a new tax residency.

It is quite straightforward but there are a couple important aspects to keep in mind - therefore I said you have to work with a good tax consultant to make sure that you don’t accidentally keep your German tax residency.

If your employer doesn’t agree to paying you as a freelancer you only have to options:
- keep your job, stay in Germany, pay taxes in Germany
- quit your job and leave

As your business doesn’t make any real revenue right now and it seems you don’t have a lot of savings if I was you I would stay employed and try to get the business running in my free time.

As soon as it takes off you can still quit and leave Germany. If you haven’t set up a company leaving won’t be too complicated - again, work this through with a good tax consultant.
 

orangekangaroo

Active Member
Uff, UAE is way too far away with 250k€ at the moment. Dusty island, yes, but Malta looks great and has good weather too.
I know Romania fits my needs, but I really don't like it there. And I'll never be able to convince her to go there I think. Only if this is a thing on paper and not way more.
It is not a paper thing, same as Cyprus will want you to stay 60 days and rent a property full year.

You will need to make Romania your centre of the universe, you do this with a rental contract, drivers licence, insurance etc, mobile phone etc, this would mean you need to stay the first month to set this all up. After that, you make a few visits a year. I know plenty of guys doing this. Don't get caught in other countries with their residency requirements.

You will get an EU company with an EU vat number and you will have no issues billing your clients.

If you like Germany check out Sibiu in Romania, it is a German town and its airport has lots of German flight connections.

All the other solutions proposed in this thread are complicated or expensive. Just my opinion.
 

uplana

Corporate Services
Mentor Group Gold
If someone recommends you Cyprus in your situation and at your financial level, they simply want to make a milking cow out of you.
can you elaborate want to understand that statement?
 

orangekangaroo

Active Member
can you elaborate want to understand that statement?
Look Cyprus setup is not really viable for someone with 50K earnings.
  • Company setup 3k
  • Company admin 6K per year
  • Corporate tax at 12.5% - 4K
  • Geysa fees on Divi - 2.65% of 37K = 0.8K
  • Flat rental for 1 year - 6K
You look at 20K tax/costs for first-year or 40% gone. and 17K costs for 2nd on 50K. Cyprus will work if you earn more.

Romania
  • Company setup 450 euros
  • Company admin - 600 euros
  • 3% tax on turnover (50K) - 1500 euros
  • 5% divi tax on (48.5K) - 2425 euro
  • NHS fee - 550 euros
  • Flat rental for 1 year 3500 euros
Around 9K for the first year and 8.5K after. So 18% overall tax/costs
 

CyprusLaw

Mentor Group Gold
Look Cyprus setup is not really viable for someone with 50K earnings.
  • Company setup 3k
  • Company admin 6K per year
  • Corporate tax at 12.5% - 4K
  • Geysa fees on Divi - 2.65% of 37K = 0.8K
  • Flat rental for 1 year - 6K
You look at 20K tax/costs for first-year or 40% gone. and 17K costs for 2nd on 50K. Cyprus will work if you earn more.

Romania
  • Company setup 450 euros
  • Company admin - 600 euros
  • 3% tax on turnover (50K) - 1500 euros
  • 5% divi tax on (48.5K) - 2425 euro
  • NHS fee - 550 euros
  • Flat rental for 1 year 3500 euros
Around 9K for the first year and 8.5K after. So 18% overall tax/costs

The admin fees are certainly lower than what you have mentioned. Also noting that if he relocates to Cyprus he can act as director and secretary of the company and therefore no admin fees needed other than accounting/audit which will be much lower than what you suggest.
 
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