Relocation to Portugal? Or maybe Malta or Andorra?

[blast629]

Hi there!!

I am opening this post after months of researching, trying to find the best new destiny.

I am currently living in sPain. I am young (<30), single and starting to make some money (most importantly, I have been trying to build knowledge and skills, and it is starting to pay off).

Being an employee on diff companies here in Spain is a total nightmare. Turning into self-employed would make the Hacienda go against you 90%, and if you try to setup a SL (Spanish LLC) and try to keep money inside, they will probably force you to take 75% out as personal income.

Couldn't find a real setup that would really work.

My total income (before taxes/Social Security) is around 80k per year, although probably will rise into 100k soon.

Since I am willing to be near to Spain, my 3 choices are Portugal, Andorra and Malta.

Andorra seems the best regarding taxes, but housing is very expensive (at least for my current income).

Malta seems good in all ways, but I will always need a plane if wanna go back home, while on the other 2 I can just take the car.

So here it comes Portugal and the new IFICI.

After checking with lots of lawyers/advisors, only 1 seem to know how to get around it. It seems like making a Portuguese Limited + putting a small salary + getting certified by IAPMEI can do the trick (although he is pending confirmation).

Besides this, to go below the 20% and avoid most Social Security I have been investigating and found:

Option 1 - low salary + PT company. If the PT Limited is put inside inland PT (low density zones), it would be taxed at 12.5% for first 50k.

Due to my current income, can be a realistic option (still much better than the almost 50% sum of Social Security + Income Tax on Spain)

Option 2 - Low salary on PT + offshore company.

2.1 US LLC - seems like a widely used setup, but also the most risky. How have the latest regulations/courts affected these setups? I think sole memberships are more in danger than partnerships?

Could get near to 0%, but how could the substance be created and be fairly safe?

2.2 Cyprus. Read here you could be paying 12.5% + 0% witholding tax. I read about 5k per year would be need on top of that for a nominee, accountancy, etc etc.

In my case I would get close to the 20%, but at least no Social Security.

2.3 Malta or Malta + Singapore Company.

Malta's companies are taxed at 5%, but I think running costs are high.

Also, acording to this post https://www.offshorecorptalk.com/threads/portugal-tax-resident-under-nhr-us-llc.45081/post-319443 , could get a 0%.

However, since my numbers are not that high. What sort of costs do this setup have? Since I mean, if it is very costly, it would eat up all the benefit on my particular case.

2.4 Georgia Limited VZC

Seems like an unexplored setup, but probably much cheaper to run than MT+SG... Although idk how safe it is compared to a classic LLC, or the other 2 setups mentioned.

I guess idea would be to get an office in Georgia + a nominee director + accountant, to create some substance. Therefore, it would also be a 0% option, similar to the LLC costs while more compliant?

All in all, I have been trying to gather as much info as possible. I would be happy to check with a lawyer or tax accountant, but I have been just finding they either just know about local taxes or just to try to sell you an specific "pre-baked" setup, rather than trying to find the best alternative.

Any suggestion is more than welcome!!

Thank you all for this great forum!

 

[Marzio]

My total income is around 80k per year

You are putting the cart before the horse.

With such low income level it would probably make sense to go with the NHR 2.0 where you pay a flat 20% on your professional income. I'm not sure how to structure this since i didn't explore the new NHR rule after they closed the original program but it could be worth for you checking.

 

[blast629]

You are putting the cart before the horse.

With such low income level it would probably make sense to go with the NHR 2.0 where you pay a flat 20% on your professional income. I'm not sure how to structure this since i didn't explore the new NHR rule after they closed the original program but it could be worth for you checking.

Thanks Marzio.

Problem is that if I get everything through IFICI work income, which is taxed at 20%, I will also need to pay Social Security (which is near 30% I think) on top of it, so it is pretty much unattractive.

For a real optimization, on new IFICI, it seems to me that you always need a "double structure". One for complying with PT requisites for IFICI (on which you will pay yourself a low salary with Social Security) and then another one to get part of the income as dividends, not as a salary.

Anyhow, I don't know how the Portuguese AT works, but I know in Spain, if you, for example, declare a yearly work income of 80k for some time, and then all of the sudden, you make a structure, and you try to put just 20-30k as work income, and rest as dividends, you are very likely fucked up, because they will start making inspections. Is the AT not as "challenging" as the Spanish Hacienda?

All in all, is there any "reasonable" alternative to this case?

Maybe due to my current income, the most straight forward option would be to setup a US LLC and try to play to be considered as dividends?

Thanks again!!

 

[NewHorizonsParaguay]

If you can stay less than 90 days/year in Spain (officially), PY residency is also an option. + As a Spanish citizen, you have potential passport play over time with PY.

With 80- 100k/year, keep setup costs low (Malta, Singapore, even Cyprus can be pretty pricey).

 

[Marzio]

What if instead you don't refrain from moving abroad and relocate to Canary Islands?

In the less populated islands with a 50K investment and 1 hire you can get taxation down to 4% thanks to the Zona Especial Canaria.

You could then reinvest all the profits in buying real estate.

If you want to extract profits then you setup a maltese holding, hire an admin in the Canary Islands and you enjoy 4% total taxation.

 

[blast629]

If you can stay less than 90 days/year in Spain (officially), PY residency is also an option. + As a Spanish citizen, you have potential passport play over time with PY.

With 80- 100k/year, keep setup costs low (Malta, Singapore, even Cyprus can be pretty pricey).

Thanks for your answer.

I considered Paraguay in the past, but currently I would like to be near home, so that is why Andorra, Malta and Portugal options arise.

I know I could potentially get a better situation in a country as Paraguay, but moving to outside Europe is not inside my current plans.

Therefore I am OK with paying a bit more in both taxes and other costs, but staying inside Europe, and possibly, and at least for now, near to Spain.

Thanks for your reply again

 

[NewHorizonsParaguay]

Thanks for your answer.

I considered Paraguay in the past, but currently I would like to be near home, so that is why Andorra, Malta and Portugal options arise.

I know I could potentially get a better situation in a country as Paraguay, but moving to outside Europe is not inside my current plans.

Therefore I am OK with paying a bit more in both taxes and other costs, but staying inside Europe, and possibly, and at least for now, near to Spain.

Thanks for your reply again

Ok, I meant you stay in Europe (of course, without triggering tax residency requirements in respective countries).
And have your setup in cheaper options like Py, Georgia, Philippines...

 

[blast629]

What if instead you don't refrain from moving abroad and relocate to Canary Islands?

In the less populated islands with a 50K investment and 1 hire you can get taxation down to 4% thanks to the Zona Especial Canaria.

You could then reinvest all the profits in buying real estate.

If you want to extract profits then you setup a maltese holding, hire an admin in the Canary Islands and you enjoy 4% total taxation.

Thanks for the idea.

The ZEC was one of the first ideas I explored, however except I am wrong, it has a couple of issues:

1) You need to hire 5 people (if it is Gran Canarias or Tenerife) or 3 if you move to other island, and keep those if you want to keep the 4%.

2) You need to invest 50k/100k in Canarias at no choice in 2 years maximum.

3) At a personal level, you are still subject to the "undefined" term of "market salary", which basically means Hacienda can f**k you up if you put a low salary or if they don't want to accept a Labor Salary Market Study as an alternative.

3 can sort of be worked out, 2 could be acceptable as real state investment, but 1? I don't see how it could fit

Looking forward into your ideas!

Thanks again!

 

[blast629]

Ok, I meant you stay in Europe (of course, without triggering tax residency requirements in respective countries).
And have your setup in cheaper options like Py, Georgia, Philippines...

So you basically mean, sort of playing with the minimum says of residence of cheaper countries like Paraguay or Georgia, so saying like 2-3 months (or the specific needed) and still live in Europe? (I know Georgia is Europe as well, but you got what I mean)

Could be an option, but not my main choice as of now...

I guess there should be a sort of more reasonable alternative in either PT, MT, AD...

Thanks again you too!!

 

[NewHorizonsParaguay]

Yeah, more or less, that's what I meant.

 

[Marzio]

3 if you move to other island, and keep those if you want to keep the 4%.

You are correct. I remembered 1-3 people in the less populated islands but the minimum is 3 so yeah with your income level you will be basically only paying salaries.

Instead of ZEC maybe you could use RIC (reserva inversiones Canaria) which basically exempts up to 90% of your revenue from taxation if you promise to use that exempted income to invest in Canarias.

Your income is 100K / year, you only pay 24% CIT on 10K and 90K are exempt.

Repeat this for a couple of years and quickly you'll have enough money in the company to buy some real estate.

I know first hand a couple of people who are building a real estate empire in Gran Canaria by buying > restructuring > renting through AirBnB and yes they pay taxes but they make enough and are happy to live there.

 

[blast629]

You are correct. I remembered 1-3 people in the less populated islands but the minimum is 3 so yeah with your income level you will be basically only paying salaries.

Instead of ZEC maybe you could use RIC (reserva inversiones Canaria) which basically exempts up to 90% of your revenue from taxation if you promise to use that exempted income to invest in Canarias.

Your income is 100K / year, you only pay 24% CIT on 10K and 90K are exempt.

Repeat this for a couple of years and quickly you'll have enough money in the company to buy some real estate.

I know first hand a couple of people who are building a real estate empire in Gran Canaria by buying > restructuring > renting through AirBnB and yes they pay taxes but they make enough and are happy to live there.

This seems interesting, never heard of it. It sorts of enforce you to be a real state "slave", although, as you say, you can make an real state empire almost tax free (specially strange the sPain situation on taxes).

However, to be honest, i am sort of trying to escape the real state fever that always have surrounded Spain, and instead, focus on other type of investments. Anyhow, and regarding this point of view, out of my yearly income, I would put about 70-80% into stock markets, funds, ETFs and so on. I just need to cover my expenses and rest of it will be invested (I am already doing this, but at a personal level).

Only things besides "daily expenses" that I have in planned for a short-mid term would be to get a nice housing (wether it is PT, MT, Canary Islands or whatever - nothing fancy, but I don't mind even being a less populated zone) + a car (nothing fancy, probably used, maybe 30k?). All besides that, I plan to invest it.

All in all, I would not mind to keep 70/80% of the turnover inside any company (no matter offshore or local), or even buy that future housing or car through the company.

Does this affect any of the plannings? Any idea that could pair well with this?

Thanks and best regards!

 

[Marzio]

This seems interesting, never heard of it.

You never heard of it becaue it's the strategy used by all hotels chains in the Canary Islands to restructure and build hotels for free.

I would put about 70-80% into stock markets

Then you can't use RIC since the exemption from CIT depends on you investing in the Canary Islands.

If you don't plan to use exempt income to buy real estate avoid RIC but then you go back at square 1 becaue at this point Canarias don't make any sense if you don't use either ZEC or RIC.

 

[blast629]

You never heard of it becaue it's the strategy used by all hotels chains in the Canary Islands to restructure and build hotels for free.



Then you can't use RIC since the exemption from CIT depends on you investing in the Canary Islands.

If you don't plan to use exempt income to buy real estate avoid RIC but then you go back at square 1 becaue at this point Canarias don't make any sense if you don't use either ZEC or RIC.

Thanks for your headsup, 100% useful!

I mean, if there is any alternative, outside Spain, coming back to PT, MT, AD; that could make sense paired with actual income level and my plans to use the money.

All in all, if there is no other choice, I will have to recheck my mind to use the RIC and become a real state gang, but is there any other choice to keep "on my idea"?

Isn't there any structure for PT that could make any sense? Maybe the Georgian or the US LLC setup is fairly cheap and decent in terms of risks?

Thanks!

 

[Marzio]

There all other alternatives, depending on your risk appetite.

For example you don't move from Spain and open an autonomo position.

With this automo position you offer your services through portals like freelancer.com to international clients.

At the same time you form a US LLC that you use to sell your produtcs / services online.

You keep all the income in your US LLC.

Then your US LLC will offer a job on the freelancer.com portal that you, as the autonomo, will be awarded.

You will complete the job for the US LLC and you'll pay taxes in Spain only on the amount that you need for your daily expenses.

The key part of this strategy is that the invoce it must be in the name of the portal not in the name of the US LLC.

When you will have enough profits in the US LLC you close your autonomo position and move abroad wherever you please.

Another strategy would be to use the same strategy from Portugal instead of Spain.

Another strategy would be to move to Georgia and pay 1% taxes legally with the individual entrepreneur status.

There are a lot of different alternatives, some riskier than others.

In the end you need to weight pros and cons and know yourself.

 

[blast629]

There all other alternatives, depending on your risk appetite.

For example you don't move from Spain and open an autonomo position.

With this automo position you offer your services through portals like freelancer.com to international clients.

At the same time you form a US LLC that you use to sell your produtcs / services online.

You keep all the income in your US LLC.

Then your US LLC will offer a job on the freelancer.com portal that you, as the autonomo, will be awarded.

You will complete the job for the US LLC and you'll pay taxes in Spain only on the amount that you need for your daily expenses.

The key part of this strategy is that the invoce it must be in the name of the portal not in the name of the US LLC.

When you will have enough profits in the US LLC you close your autonomo position and move abroad wherever you please.

Another strategy would be to use the same strategy from Portugal instead of Spain.

Another strategy would be to move to Georgia and pay 1% taxes legally with the individual entrepreneur status.

There are a lot of different alternatives, some riskier than others.

In the end you need to weight pros and cons and know yourself.

Thanks for your reply.

I am willing to take some risks (I mean, I think I have no choice on my situation?), but somewhat "controlled".

The Spain + US LLC combo is one of the first alternatives I studied, but anyways, it implies moving abroad further down the line, and means you can't invest the LLC money in Spain in a house or a car. Money needs to be hidden "until further notice".

If I am right, even in the grey zone, this can be done "more legally" however on the PT NHR (or new IFICI, which for dividends is still the same), since you can take the dividends at 0%, so you could bring that money to your personal level in PT and use it inside Portugal.

I guess creating substance in the US LLC with a director/manager would help, and maybe paired with a local office? (Although Idk if this would imply C-Corp taxes)

On the other side, for a "safer setup", what's the cost of running a MT or CY corporation with substance to make the NHR/IFICI setup "less risky"?

Would maybe the Georgian VTZ with NHR work in a similar way to the MT/CY?

Anyhow, overall isn't the PT NHR/IFICI alternative better than Spain+LLC? (In terms of freedom to spend/invest the money).

Thank you so much for all!!

 

[Marzio]

You don't think about creating substance in the US or running a MT or CY corporation from another country when you don't even get at 100K / year.

First you should be clear on your end goal because i don't understand if you want to stay in Spain or leave at some point.

If you want to stay in Spain then you follow one path.

If you want to leave then you follow another one.

You can't have real estate, a car and untaxed profits while living in Spain.

 

[blast629]

You don't think about creating substance in the US or running a MT or CY corporation from another country when you don't even get at 100K / year.

First you should be clear on your end goal because i don't understand if you want to stay in Spain or leave at some point.

If you want to stay in Spain then you follow one path.

If you want to leave then you follow another one.

Hi Marzio:

Thanks for the message again. Maybe I was not clear, yes, I am willing to leave Spain, but I want to be near to, so I can come back whenever I want to, and even better if I can do it by car (hence Portugal and Andorra).

You can't have real estate, a car and untaxed profits while living in Spain.

Of course, this is the reason why I am looking into moving outside, rather than just running an LLC while staying in Spain, plus trying not to make ties to Spain -> because on this scenario I wouldn't be able to freely use those profits.

My main goals overall are:

-Relocate to a more tax-friendly country, to avoid half of my income going into the State.
-Be near to Spain (I consider Malta to be near since it is 3 hour direct flight, and Portugal and Andorra are obvious, since borders are shared).
-Be able to use the money freely: either investments, real state, cars or whatever.
-Balance risks/benefits/costs (as you say, I can't be planning on a very difficult structure which is by itself more expensive than just paying taxes)

Hope this help clarify what my goals are!

Thanks!

 

[NewHorizonsParaguay]

Live below tax residency requirements in each country (3months PT, 3months ES, 3months Andorra, 3months Malta)

Get a paper residency from some cheap country we discussed earlier + a US LLC tied to the cheap country residency.

 

[blast629]

Live below tax residency requirements in each country (3months PT, 3months ES, 3months Andorra, 3months Malta)

Get a paper residency from some cheap country we discussed earlier + a US LLC tied to the cheap country residency.

Thanks for your idea, but my idea is to move to 1 country and don't keep on moving across the other 3.

My end goal is not to live in Portugal, Malta or Andorra. They are means, not ultimate goals by themselves.

I am looking for a residence where I can truly live, visit Spain from time to time and travel to some other countries I may want to.

Not planning to live in 4 countries at same time. 2 would be fine though (I guess I would need a 3rd one not to fire the 183 days rule)

Thanks again!