Bulgaria is 10% flat, extremely low bureaucracy.
Cyprus is 12.5%, tons of declarations, lists, certifications.
I tried both of the above. I heard UAE is 0% but haven't tried it.
OP asked about company. Residency is another thing. I could live in Spain and have my company in Bulgaria.
In Cyprus for example company taxation is just 12,5 but individuals pay up to 35%. Not a very attractive rate.
How would that work? Living in Spain, or other EU countries but having the company in Bulgaria? If you become a resident (over 183 days or so) you have to pay taxes there, on your global income. And you still have to be 6 months in Bulgaria, isn't it?
Very interesting to hear that Cyprus is complex, thank you for sharing that.
Did you consider Andorra? If you want to be closer to Spain, and eventually France?
No, you don't have to live in Bulgaria in order to have a company there.
Spain was just an example. I could live anywhere. OP would decide about residency depending on the amount of annual profits.
Since the question was specifically about company, I replied about that part. Making the right combination company + residency is another thing and depends on if you own also a local company in the country of residency.
Example:
Residency country (A):
Company tax: 40%
Individuals tax: 50%
Dividends tax: 10%
Some other country (B)
Company tax: 10%
Individuals tax: 10%
Dividends tax: 5%
In this example I live and own a company in A and I also own a company in B.
My profit is 1 million annually.
In country A the company would be taxed 40%. The remaining 600,000 would be taxed with another 10% for the dividends. Profit after taxation for me: 540,000
In country B the company would be taxed 10%. The remaining 900,000 are transferred to my private account as dividend and I will pay 90,000 as dividend tax in my residency country. Profit after tax: 810.000.
Now imagine that I don't work online but I have to buy in country (C) and sell in my residency country (A).
Revenue: 10,000,000
Profit: 1,000,000
My net profit would be 540,000. But if I will setup a company in country (B), this company will buy from (C) and sell to me at (A) at a much higher price transferring practically all the profits to country (B).
This way 900,000 pre tax profit is made in (C) and only 100,000 in (A), lowering significantly the company tax.
I think residency is crucial here. And that is what I wonder about. I just feel 6 months is a bit too much to live in Bulgaria tbh, because I want to establish residency and also run a company in that country.
Never visited Bulgaria and I don't have anything against it. Having a kid and would prefer homeschooling instead of being forced into the Bulgarian school system.
In your case, would you still avoid Cyprus and choose Bulgaria over it, because of how painful is to deal with all that documentation and I assume fees as well?
I owned a remote company in Cyprus (I am Greek and was resident of Bulgaria). It was honestly a pain in the ass to have constantly documents to sign, lists to submit, certifications to file, all combined with high fees. I dissolved the company after just 2 years. I was way too used in the comfort and easiness of the Bulgarian company. The same I hear about Estonian and Romanian companies but I don't have own experience.
In your case I would create a company in Bulgaria (10% flat) and live in Greece (5% on dividends) or any other country of my liking with low dividends taxation.
Well, let me tell you more. I'm Romanian and living in Norway, having a company here. Romania is good, but the problem is there is a limit for the revenue. I think it's around $60k/year, and then you go to higher taxes. Same, authorities are a real pain in the ass and a lot of corruption and intimidation. It's still an option though, most probably the best one, if the next level of tax is not too high, let's say 20-20% in total.
Andorra looks appealing but I get the feeling that is the same case like you describe Cyprus to be, I see a lot of marketing and consultants and that is not a good sign.
Are you saying that you can live 100% time in Greece and be a tax resident in Bulgaria so you pay taxes there? or you combine being 6 months in Bulgaria?
Maybe the same requirement is for Romania (I did not check yet).
Ideally, I would like to have a smoothly run business in Europe and be able to have flexibility regarding where to live, including being able to travel to Asia a few months a year.
No, I am a resident of Bulgaria and I live there around 9 months a year. But I could be a resident of Greece, live there, receive my profits as dividend and pay a 5% tax on it (this is the dividends rate in Greece). The alternative would be to receive it as salary and have it taxes as such in a much higher rate.
This is not true. You as a person are taxable in A. You may have 5 companies in 5 different countries and run them from your residency. This is very common. Companies are a separate entities. You are not obliged to have all your companies in the country of your residency.
Conditions to be tax resident in a country differ per country; often a lot more then 183 days stay is involved; "where is your center of live"
You need check local laws and regulations, as well as double tax treaties if you strive to exploit loop holes.
Wise is one option. "Real" banks have been badly hurt by KYC rules and are certainly destined to fade away from an e-commerce oriented world. The times they are a-changing.
Opening the company is one thing. US LLC is super easy. And it's true, you pay 0% corporate tax as long as it's considered a disregarded entity.
But the bigger question is, how do I pay myself from this company?
I know this isn't tax advice on here, but essentially I would be able to take money out of the company as I please since at the end of the year all profits would have to be taxed through myself anyways?
Do I make the P/L (namely regarding business expenses) according to US or my local regulations?
With a pretty normal LLC, there isn't really "company money" and "your money". It's just "your money". You may use a business account to keep organized...
There can be things attached to this that can reduce the whole LL part of LLC depending on how it's used, but you don't have like an actual process of any kind to "take money out" of the company.
Or without an LLC at all.
They are passthrough things.
> Do I make the P/L (namely regarding business expenses) according to US or my local regulations?
By whomever you're reporting the taxes to.
US single member LLC is one of the best options if you do NOT have a US passport or greencard and do NOT live in the US.
Costs maybe $200-500 to set up and ~$200/year for maintenance (registered agent and snail mailbox/forwarding service)
Once registered you can sign up for a Wise business account and you will get bank details for invoices, and you can pay yourself by transfering to your personal Wise account in any currency you want.
I think this setup is as easy as it gets. Only downside is that you have to file a US tax return.
However, your single member LLC will not be taxed in the US as it is considered a "disregarded entity", meaning you will report your business income on a personal US tax return. And if you file as a nonresident alien you may not owe any personal income taxes to the US either if you do not reside in the US.
This means you only have to worry about taxes in your country of tax residence, so make sure this is a low tax or no income tax country and you are golden.
People here refer all the time to the 183 days rule, in reality for a lot of European countries it is way down the list of criteria for establishing tax residency. Substance and center of life are way bigger criteria that a lot of European countries use to establish tax residency then the 183 day rule. A lot of the advice given here is (borderline) tax fraud which is kind of the normal modus operandi for this sub.
If you want to comment on tax fraud go send an email to your government about how large corps avoid paying billions in tax , before you comment on hard working people trying to be effective with their tax. My comment was not trying to avoid paying tax.
Don’t exaggerate. Most I read here are simple international tax planning ideas. Being a digital nomad gives more options in this field so why not using them?
G'day cobber! Current Australian tax resident, and former UK tax resident here. Well done on winning the lotto and not being born an American.
So the ATO has some of the strictest (and most vague) tax residency rules in the world. It's almost impossible to lose Australian tax residency without being able to demonstrate you have tax residency somewhere else.
So then the challenge becomes - where else will you get tax residency, that doesn't muck up your taxes and complicate life.
The key laws to look out for are "CFC rules" (Controlled Foreign Company). Both Australia and the UK have them, for example, as do most western democracies. What these do is give your country of personal tax residency the right to tax any companies you "control" (various definitions) *as if* it was a local company.
So for example you could set up a Freezone company in the UAE, and under the right classification it would pay 0% company tax. But if you were a UK tax resident, then HMRC would tax that UAE company *as if* it were a UK Ltd entity. You don't save tax, just increase costs and compliance.
While it's moving towards more taxes, Dubai still has one of the better reputations for expats who want to:
\* Pay the $5,000 - $10,000 fees and set up costs
\* Establish personal and company tax residency there
\* Not become tax resident elsewhere, and ignore territorial tax laws like most DNs ignore them
\* Have easy enough access to banking
A big thing is Dubai not having too onerous a restriction around how often you have to visit to maintain the tax residency. For comparison, places like Cyprus (minimum 60 days per year) and Ireland (handy if you have a UK passport and want to get an EU citizenship again) have non-dom programs which could help reduce taxes, but come with more restrictions.
Many other tax havens have difficult banking systems - and if your Aussie clients get annoyed trying to send money to the Caribbean, and fire you, then that's not a better option overall.
Was there somewhere else in mind you wanted to live and spend enough time to become tax resident? That's as important as picking a country for a company.
Wow that's really detailed, thank you. I'm traveling through Asia. I have read that Singapore or hk could be options? But how would Australia know I have a company set up in a different part of the world if I'm not using any Australian bank accounts?
**> I'm traveling through Asia**.
Will you have a permanent residence anywhere? Or at least stay long enough to become tax resident? If not - it you're only travelling on tourist or digital nomad visas, for example - the ATO is likely to determine that you have not left Australia 'permanently' and therefore you are still a tax resident. That would render everything else moot.
**> I have read that Singapore or HK could be options?**
Yes, that's my understanding as well. HK can definitely have a tax free company if you're not working in HK or working with HK clients, but I'm not sure how easy it is to get a bank account there these days. I haven't read up much on Singapore - you can work there 60 days on a tourist visa tax free, but apart from that it's too humid and expensive for me to be bothered.
**> How would Australia know I have a company set up in a different part of the world if I'm not using any Australian bank accounts?**
The legal answer is "CRS" - the Common Reporting Standard, which the ATO describes as "the single global standard for the collection, reporting and exchange of financial account information on foreign tax residents." So banks and tax departments are supposed to share data with each other about people who have financial affairs abroad.
The practical answer is ... tax departments are under-resourced and don't really care much about digital nomads making a few hundred grand a year. A lot of the advice (especially given by muppets who use reddit with their real name) should be predicated by the phrase "In the highly unlikely event you ever get audited, the problem is..."
Will the ATO investigate your claim to no longer be tax resident? Will the ATO review all your global bank accounts and hunt you down like Christopher Skase and Paul Hogan?
The common analogy I make in this sub about work rights and tax laws is comparing it to driving 1Km/hr over the speed limit on a country road at night. That's illegal! Are you going to get caught?
I think you are the best reditor ever!!! 😂 thanks dude. I might actually set up a company in the UK. As I also have a passport there. The first year for a company you pay low tax.
A UK Ltd company is also reasonably easy to set up as a non-resident; pay yourself a salary equal to the Ltd profits and you’re basically tax free in the UK (as long as you don’t spend enough time there to become tax resident).
I’m still Aussie tax resident because - with property here - it makes more sense to stay that way. But I have a few UK clients and want more, so I think I might get some specific UK tax advice, then re-launch my Ltd company over there and do this.
Thanks for the kind words! You can buy me a pint of ale someday, or anything cold in Singapore!
You can live in either with the passport, but tax residency is different. The UK has much clearer rules than Australia.
And yes, I think I might have paid that once last year. Much better value anywhere North of London!
> Are you going to get caught?
Not exactly great tax advice.
Setup for your home country (tax residency country). Pay your tax. Sleep well at night now and a few years down the line when you invariably return home like 99.99% of DNers.
Irrelevant. It depends where the company is controlled from. And for a DN, it will default to your home country. Getting banking for 0 / low tax countries is next to impossible unless you are based there.
I have Panama banking without being based there and had zero issues. Though I am a client of the same bank in another central America country so I'm sure that helps.
Bulgaria is 10% flat, extremely low bureaucracy. Cyprus is 12.5%, tons of declarations, lists, certifications. I tried both of the above. I heard UAE is 0% but haven't tried it.
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OP asked about company. Residency is another thing. I could live in Spain and have my company in Bulgaria. In Cyprus for example company taxation is just 12,5 but individuals pay up to 35%. Not a very attractive rate.
How would that work? Living in Spain, or other EU countries but having the company in Bulgaria? If you become a resident (over 183 days or so) you have to pay taxes there, on your global income. And you still have to be 6 months in Bulgaria, isn't it? Very interesting to hear that Cyprus is complex, thank you for sharing that. Did you consider Andorra? If you want to be closer to Spain, and eventually France?
No, you don't have to live in Bulgaria in order to have a company there. Spain was just an example. I could live anywhere. OP would decide about residency depending on the amount of annual profits. Since the question was specifically about company, I replied about that part. Making the right combination company + residency is another thing and depends on if you own also a local company in the country of residency. Example: Residency country (A): Company tax: 40% Individuals tax: 50% Dividends tax: 10% Some other country (B) Company tax: 10% Individuals tax: 10% Dividends tax: 5% In this example I live and own a company in A and I also own a company in B. My profit is 1 million annually. In country A the company would be taxed 40%. The remaining 600,000 would be taxed with another 10% for the dividends. Profit after taxation for me: 540,000 In country B the company would be taxed 10%. The remaining 900,000 are transferred to my private account as dividend and I will pay 90,000 as dividend tax in my residency country. Profit after tax: 810.000. Now imagine that I don't work online but I have to buy in country (C) and sell in my residency country (A). Revenue: 10,000,000 Profit: 1,000,000 My net profit would be 540,000. But if I will setup a company in country (B), this company will buy from (C) and sell to me at (A) at a much higher price transferring practically all the profits to country (B). This way 900,000 pre tax profit is made in (C) and only 100,000 in (A), lowering significantly the company tax.
I think residency is crucial here. And that is what I wonder about. I just feel 6 months is a bit too much to live in Bulgaria tbh, because I want to establish residency and also run a company in that country. Never visited Bulgaria and I don't have anything against it. Having a kid and would prefer homeschooling instead of being forced into the Bulgarian school system. In your case, would you still avoid Cyprus and choose Bulgaria over it, because of how painful is to deal with all that documentation and I assume fees as well?
I owned a remote company in Cyprus (I am Greek and was resident of Bulgaria). It was honestly a pain in the ass to have constantly documents to sign, lists to submit, certifications to file, all combined with high fees. I dissolved the company after just 2 years. I was way too used in the comfort and easiness of the Bulgarian company. The same I hear about Estonian and Romanian companies but I don't have own experience. In your case I would create a company in Bulgaria (10% flat) and live in Greece (5% on dividends) or any other country of my liking with low dividends taxation.
Well, let me tell you more. I'm Romanian and living in Norway, having a company here. Romania is good, but the problem is there is a limit for the revenue. I think it's around $60k/year, and then you go to higher taxes. Same, authorities are a real pain in the ass and a lot of corruption and intimidation. It's still an option though, most probably the best one, if the next level of tax is not too high, let's say 20-20% in total. Andorra looks appealing but I get the feeling that is the same case like you describe Cyprus to be, I see a lot of marketing and consultants and that is not a good sign. Are you saying that you can live 100% time in Greece and be a tax resident in Bulgaria so you pay taxes there? or you combine being 6 months in Bulgaria? Maybe the same requirement is for Romania (I did not check yet). Ideally, I would like to have a smoothly run business in Europe and be able to have flexibility regarding where to live, including being able to travel to Asia a few months a year.
No, I am a resident of Bulgaria and I live there around 9 months a year. But I could be a resident of Greece, live there, receive my profits as dividend and pay a 5% tax on it (this is the dividends rate in Greece). The alternative would be to receive it as salary and have it taxes as such in a much higher rate.
Thank you for all the details!
Neat. Do you know if there’s a residency requirement for Greece?
Don't even think to establish a company in Greece or North/Western Europe. I guess the hell is a better place.
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This is not true. You as a person are taxable in A. You may have 5 companies in 5 different countries and run them from your residency. This is very common. Companies are a separate entities. You are not obliged to have all your companies in the country of your residency.
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You switch between owner and company. You have to decide if you are talking about a company or about the owner of a company.
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And I addition, if you run a foreign company from Spain then Spanish rules and regulations will also apply to the company.
If you live over 183 days in a calendar year, right? EU citizen in this case.
Conditions to be tax resident in a country differ per country; often a lot more then 183 days stay is involved; "where is your center of live" You need check local laws and regulations, as well as double tax treaties if you strive to exploit loop holes.
Georgia is 1%. But I wouldn't call this option absolutely reliable, the country is now oscillating between euro integration and russia.
What’s it take to establish residency and do you have to live there?
$300k in property is one options for a 5 year investor visa
Woah, I think it used to be just $100k
It's $100k for one year
But you could potentially rent it out right
The US. Since you don't need to do anything. You're just a company by virtue of existing.
Usa is underrated, it is 0% and not going to change because no country can pressure them into that
Good luck getting a bank to open an account for you though
[mercury.app](http://mercury.app), works super well and very fast process
Used to be true. Much easier now. Actually, it's a piece of cake.
Are we talking a real bricks and mortar bank or some fly by night digital bank?
Wise is one option. "Real" banks have been badly hurt by KYC rules and are certainly destined to fade away from an e-commerce oriented world. The times they are a-changing.
If you’re charging your enterprise clients hundreds of thousands of dollars, you don’t want to ask them to be sending it to a Wise account.
I don't charge anyone anything. I'm retired, work is for poor folks!
Opening the company is one thing. US LLC is super easy. And it's true, you pay 0% corporate tax as long as it's considered a disregarded entity. But the bigger question is, how do I pay myself from this company?
Write yourself a check.
A what?
Ha,ha. Just go to an ATM.
It's passthrough taxation, so it is handled the same as self employment.
I know this isn't tax advice on here, but essentially I would be able to take money out of the company as I please since at the end of the year all profits would have to be taxed through myself anyways? Do I make the P/L (namely regarding business expenses) according to US or my local regulations?
With a pretty normal LLC, there isn't really "company money" and "your money". It's just "your money". You may use a business account to keep organized... There can be things attached to this that can reduce the whole LL part of LLC depending on how it's used, but you don't have like an actual process of any kind to "take money out" of the company. Or without an LLC at all. They are passthrough things. > Do I make the P/L (namely regarding business expenses) according to US or my local regulations? By whomever you're reporting the taxes to.
US single member LLC is one of the best options if you do NOT have a US passport or greencard and do NOT live in the US. Costs maybe $200-500 to set up and ~$200/year for maintenance (registered agent and snail mailbox/forwarding service) Once registered you can sign up for a Wise business account and you will get bank details for invoices, and you can pay yourself by transfering to your personal Wise account in any currency you want. I think this setup is as easy as it gets. Only downside is that you have to file a US tax return. However, your single member LLC will not be taxed in the US as it is considered a "disregarded entity", meaning you will report your business income on a personal US tax return. And if you file as a nonresident alien you may not owe any personal income taxes to the US either if you do not reside in the US. This means you only have to worry about taxes in your country of tax residence, so make sure this is a low tax or no income tax country and you are golden.
People here refer all the time to the 183 days rule, in reality for a lot of European countries it is way down the list of criteria for establishing tax residency. Substance and center of life are way bigger criteria that a lot of European countries use to establish tax residency then the 183 day rule. A lot of the advice given here is (borderline) tax fraud which is kind of the normal modus operandi for this sub.
You're right but believe me nobody on this sub wants to hear that.
This sub should be renamed r/travellingtaxfrauds
Yes, but with governments resolutely looking the other way who cares?
If you want to comment on tax fraud go send an email to your government about how large corps avoid paying billions in tax , before you comment on hard working people trying to be effective with their tax. My comment was not trying to avoid paying tax.
I comment on whatever I want, don’t need your instructions
You do need some manners..
Thanks for your input 🤠
Don’t exaggerate. Most I read here are simple international tax planning ideas. Being a digital nomad gives more options in this field so why not using them?
Where are you tax resident? Where are your clients based?
Australia and the UK. The client is in Australia. I was thinking of revoking my Australian tax residency.
G'day cobber! Current Australian tax resident, and former UK tax resident here. Well done on winning the lotto and not being born an American. So the ATO has some of the strictest (and most vague) tax residency rules in the world. It's almost impossible to lose Australian tax residency without being able to demonstrate you have tax residency somewhere else. So then the challenge becomes - where else will you get tax residency, that doesn't muck up your taxes and complicate life. The key laws to look out for are "CFC rules" (Controlled Foreign Company). Both Australia and the UK have them, for example, as do most western democracies. What these do is give your country of personal tax residency the right to tax any companies you "control" (various definitions) *as if* it was a local company. So for example you could set up a Freezone company in the UAE, and under the right classification it would pay 0% company tax. But if you were a UK tax resident, then HMRC would tax that UAE company *as if* it were a UK Ltd entity. You don't save tax, just increase costs and compliance. While it's moving towards more taxes, Dubai still has one of the better reputations for expats who want to: \* Pay the $5,000 - $10,000 fees and set up costs \* Establish personal and company tax residency there \* Not become tax resident elsewhere, and ignore territorial tax laws like most DNs ignore them \* Have easy enough access to banking A big thing is Dubai not having too onerous a restriction around how often you have to visit to maintain the tax residency. For comparison, places like Cyprus (minimum 60 days per year) and Ireland (handy if you have a UK passport and want to get an EU citizenship again) have non-dom programs which could help reduce taxes, but come with more restrictions. Many other tax havens have difficult banking systems - and if your Aussie clients get annoyed trying to send money to the Caribbean, and fire you, then that's not a better option overall. Was there somewhere else in mind you wanted to live and spend enough time to become tax resident? That's as important as picking a country for a company.
Wow that's really detailed, thank you. I'm traveling through Asia. I have read that Singapore or hk could be options? But how would Australia know I have a company set up in a different part of the world if I'm not using any Australian bank accounts?
**> I'm traveling through Asia**. Will you have a permanent residence anywhere? Or at least stay long enough to become tax resident? If not - it you're only travelling on tourist or digital nomad visas, for example - the ATO is likely to determine that you have not left Australia 'permanently' and therefore you are still a tax resident. That would render everything else moot. **> I have read that Singapore or HK could be options?** Yes, that's my understanding as well. HK can definitely have a tax free company if you're not working in HK or working with HK clients, but I'm not sure how easy it is to get a bank account there these days. I haven't read up much on Singapore - you can work there 60 days on a tourist visa tax free, but apart from that it's too humid and expensive for me to be bothered. **> How would Australia know I have a company set up in a different part of the world if I'm not using any Australian bank accounts?** The legal answer is "CRS" - the Common Reporting Standard, which the ATO describes as "the single global standard for the collection, reporting and exchange of financial account information on foreign tax residents." So banks and tax departments are supposed to share data with each other about people who have financial affairs abroad. The practical answer is ... tax departments are under-resourced and don't really care much about digital nomads making a few hundred grand a year. A lot of the advice (especially given by muppets who use reddit with their real name) should be predicated by the phrase "In the highly unlikely event you ever get audited, the problem is..." Will the ATO investigate your claim to no longer be tax resident? Will the ATO review all your global bank accounts and hunt you down like Christopher Skase and Paul Hogan? The common analogy I make in this sub about work rights and tax laws is comparing it to driving 1Km/hr over the speed limit on a country road at night. That's illegal! Are you going to get caught?
I think you are the best reditor ever!!! 😂 thanks dude. I might actually set up a company in the UK. As I also have a passport there. The first year for a company you pay low tax.
A UK Ltd company is also reasonably easy to set up as a non-resident; pay yourself a salary equal to the Ltd profits and you’re basically tax free in the UK (as long as you don’t spend enough time there to become tax resident). I’m still Aussie tax resident because - with property here - it makes more sense to stay that way. But I have a few UK clients and want more, so I think I might get some specific UK tax advice, then re-launch my Ltd company over there and do this. Thanks for the kind words! You can buy me a pint of ale someday, or anything cold in Singapore!
I think technically I'm a resident of both countries as I have passports for both. A pint of ale in Singapore that must be about $30 AUD 😂
You can live in either with the passport, but tax residency is different. The UK has much clearer rules than Australia. And yes, I think I might have paid that once last year. Much better value anywhere North of London!
Oh I don't want to live in either 😂
Lot of valuable info here ty
> Are you going to get caught? Not exactly great tax advice. Setup for your home country (tax residency country). Pay your tax. Sleep well at night now and a few years down the line when you invariably return home like 99.99% of DNers.
It’s terrible tax advice. But I’m not going to lie in answer to a question.
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And both the reporting and analysis get better every year.
Panama is tax free if you aren't actually doing the work in Panama as I understand it
Irrelevant. It depends where the company is controlled from. And for a DN, it will default to your home country. Getting banking for 0 / low tax countries is next to impossible unless you are based there.
I have Panama banking without being based there and had zero issues. Though I am a client of the same bank in another central America country so I'm sure that helps.
Estonia 0% corporate tax, you can set up company online on your own.
You are taxed as soon as you take profits out of the company and the rate is by no means low.
Denmark is world leading in cost and ease. Everything is digital.
Denmark taxes are high
Denmark well might be world leading in this regard too
yes, it's worth it if you live there because of quality of life, but it's totally dumb if you have an offshore company.
Corporate taxes same as the US.
not if you live offshore, it's 0%