Bulgaria or Cyprus for company and residency?

[traveller79]

I decided to try Bulgaria this year, and so far, I have been quite happy. Setting up the company with bank account was about 500 euro, took one visit to the notary and second to open the bank account (process has two phases, the lawyer who did the company papers opened bank account for the capital with PoA, I went alone to open the actual current account, internet banking, debit cards), got a personal account the same time too.

Bulgaria has much nicer climate than the Northern Europe, prices are one of the lowest in the EU. Language is difficult, but if you know some Russian, not impossible.

There are no perfect options, it's always a compromise, but I wouldn't call Bulgaria a shithole. People are nice and friendly, English is widely spoken in cafes, restaurants, shops and Sofia feels like an easy place to live.

 

[Reboot]

I decided to try Bulgaria this year, and so far, I have been quite happy. Setting up the company with bank account was about 500 euro, took one visit to the notary and second to open the bank account (process has two phases, the lawyer who did the company papers opened bank account for the capital with PoA, I went alone to open the actual current account, internet banking, debit cards), got a personal account the same time too.

Bulgaria has much nicer climate than the Northern Europe, prices are one of the lowest in the EU. Language is difficult, but if you know some Russian, not impossible.

There are no perfect options, it's always a compromise, but I wouldn't call Bulgaria a shithole. People are nice and friendly, English is widely spoken in cafes, restaurants, shops and Sofia feels like an easy place to live.

Did you get Bulgarian residence as well?

 

[JustAnotherNomad]

Consider CZ. If I remember correctly, as a sole proprietor, you can choose a simplified accounting model. Instead of keeping receipts, your profit is calculated as revenue minus a lump sum deduction of 60% (capped at 50k EUR or something). They have a flat tax of 15% or so, plus an additional wealth tax on income over a certain amount. My calculation was that you would be paying around 6% tax with an income of 100k if I recall correctly - and you don’t have to keep receipts.
It’s an EU and Schengen country.

 

[halaba]

Much worse than just paying taxes is paying taxes and getting nothing in return. I am in the same situation, but I came to a conclusion that money doesn't matter when you love the country where you live. And it's not just about taxes, it is also about banks, bureaucracy, safety, language, social circle. That's why UAE, Cyprus, Georgia and other popular countries suck in the long term. A huge disadvantage is that you can't simply change the residence, it's a full of s**t process.


Romania is definitely a better option to Bulgaria, taxes are lower but quality of life is higher. However they have an exit tax and they disclose company's income to general public. Combining it with a beneficiary disclosure under 5AML is a total privacy disaster.

But the exit tax only applies on company assets, not private. So if i close the company in romania and after 2 months move me and my assets to another european country, i won't pay an exit tax?

I'm planning to relocate next year to romania from germany doing business a couple years, paying 3% cooperate tax, paying 5% dividende tax, no vat (saying my microtransactions made outside of europe or at least romania).
Considering quality of life, i'm guessing that's a good place to be, if u r in a big university city/bucharest or at the coast.

 

[Reboot]

Consider Romania doing a setup under the micro enterprise regime. Romanian language has quite some resemblance with latin languages too.

Romanian micro company is not suitable for consultancy, am I correct?

 

[halaba]

Romanian micro company is not suitable for consultancy, am I correct?

It is not suitable if it is above 20% of your turnover.

 

[Martin Everson]

Romania is definitely a better option to Bulgaria, taxes are lower but quality of life is higher.

Let the battle of the sh*tholes commence . What a choice to have to make .

 

[Ready to discuss]

Hello, I'm an EU citizen and considering of Bulgaria or Cyprus for a company and having residency there. My clients are in the EU, I'm currently billing them with a UK company (consulting services).
Let me list some pros and cons of each country, feel free to add to this list and with personal experiences (I have seen many people in the forum mentioning Cyprus, but not a lot Bulgaria).

Bulgaria:
+ : 10% company flat tax + 10% personal tax for distributing income from the company.
+ : You can have European insurance for really cheap, and then you can add private insurance if you wish.
+ : You can have a very cheap residency, outside of Sofia. You can even buy a flat in the mountains if you like skiing, for less than 300Eur/m2.
+ : Close to Europe with planes, plus you can say you were visiting with a car in case of control for the 6-month residency.
- : Official language is Bulgarian, do you need to translate the documents?
- : Trustful banks? Euro is not the official currency, which may cause issues.
- : Regulation and what if there are some unknown rules/taxes etc.

Cyprus:
+ : 12.5% company tax, no tax on distributed dividends.
+ : Can provide more options for secrecy.
+ : Euro is the official currency.
+ : English is an official language.
- : More expensive for residency, especially if you want to buy property
- : Weird situation with Turkey and neighbors
- : Far from Europe, lack of planes from main EU cities
- : Untrustful banks (see what happened in 2012-13)
- : If you want insurance, you need a salary which can be more expensive than Bulgaria

If anyone has personal experiences, please share them!

Dividends are non taxable if you are not Cyprus Tax Resident. However, please note that you need to declare the dividend in your country you are living. If you move to Cyprus then you will become tax resident in Cyprus (you need to deregister as tax resident from the country you live now). In that case you will be considered tax resident on Cyprus but with the status "non-dom". This gives you exemption form tax on dividends for 17 years.

Tax on profits. Your right, you pay 12,5% on the net taxable profit.

Cost of living: A new apartment is around 200k-250k euro. For a house (plot 280sqm). Around 430k-440k easily.

Vat: if you invoice EU companies, no vat under the reversed mechanism taking into consideration tha they are vat register in their country.

Salary: My opinion is better to be registered as employee of you own company except if you purchase the services you are providing to your clients.

 

[GrumpyMess]

Consider CZ. If I remember correctly, as a sole proprietor, you can choose a simplified accounting model. Instead of keeping receipts, your profit is calculated as revenue minus a lump sum deduction of 60% (capped at 50k EUR or something).

It's capped at 2kk CZK with the effective tax rate of 12-13% including social charges. Not a bad option and much better than BG.

plus an additional wealth tax on income over a certain amount

it can be avoided, but not so easy

I'm planning to relocate next year to romania from germany doing business a couple years, paying 3% cooperate tax, paying 5% dividende tax, no vat

Are you ok with the fact that the company's income and UBO will be disclosed?

 

[Spinat]

You can simply do a setup where the UBO is hidden and replaced by either darks or nominee (illegal I know) but that's how the big players rule this game!

 

[Clip]

replaced by either darks

I see in this forum talking about darks like pretty common but in my opinion it's pretty easy to get caught, right?

 

[Spinat]

I see in this forum talking about darks like pretty common but in my opinion it's pretty easy to get caught, right?

That's your opinion and why you never will go that path I guess! Once you figure out how this world works you will see that darks isn't a problem if you have figured out how this game is to play.

So to answer your question, there is no risk? and forgive me, I have read all the posts about these super loyal people around here who say you will get caught with darks, sorry but I give a s**t.

 

[Clip]

why you never will go that path I guess!

Because I decided to move my a*s from a tax hell to a tax heaven. Can you explain how the world works?

 

[Sols]

I see in this forum talking about darks like pretty common but in my opinion it's pretty easy to get caught, right?

In the grand scheme, it's a very small niche. It's just disproportionately popular in specialised communities like this one.

Most people use their own identities or trustees/nominees (which can include family members).

However, among criminals, the use of bought, stolen, or synthetic identities is common.

The risk of getting caught is determined largely by the quality of the identity and the volume of the business.

Synthetic identities fail easily if the identity is looked up against actual records.

Stolen identities only fail if the victim gets wise to it and the financial institution is alerted, one way or another. This varies a lot by jurisdiction.

Bought identities are the "best" in that the person is real and doesn't mind having their identity used for it. These only fall apart if the identity is questioned and carefully investigated on a human character level. All proof of identity docs and interviews a financial institution craves can be fulfilled, but if it comes down to it, it can be tricky to explain how a poor babushka selling potatoes for a living made enough money to start a multi-million dollar business.

 

[Loizos]

Being in both countries for many years. You are doing a mistake out of ignorance , because all the others are doing the same mistake. Dividents in cyprus are not taxable for no residents or get a 1 year exemption if you take a cyprus tax residency. That means that dividents are taxable in your own country and that country especially if EU when desires will take this information gladly from Cyprus and sh@t will hit the fan. Secondly , Cyprus is a tourists island so everything, especially real estate is inflated so in order to fix your domicile you pay a premium. Both Sofia and Cyprus (especially Limassol, paphos, larnaka) are villages but in Cyprus you will be completely landlocked. take this in mind if you have any special issues with your existence) . Bulgaria everything is cheaper but you will have a better understanding from people in your special needs, something for which you will have to spend $$$$$ in Cyprus because everybody is spoiled.

You are wrong regarding the taxation of dividends. A Cyprus tax resident can obtain a non-domicile status (if he has not been a tax resident in Cyprus for 17 out of the last 20 years, OR if he can prove his parents were not Cypriot and he was not born in Cyprus) and not pay any tax on dividends for the next 17 years.

 

[Spinat]

Because I decided to move my a*s from a tax hell to a tax heaven. Can you explain how the world works?

That's a good move and wise decision - For sure not in the public forums. But you can open a thread in the mentor group (which I see you have access to) and I will reply there. It is not a one answer fits all question.

 

[Joe Blasco]

You are wrong regarding the taxation of dividends. A Cyprus tax resident can obtain a non-domicile status (if he has not been a tax resident in Cyprus for 17 out of the last 20 years, OR if he can prove his parents were not Cypriot and he was not born in Cyprus) and not pay any tax on dividends for the next 17 years.

yes I know , wrong punching of numbers , it is not 1 but 17 years I made a correction exactly to the next message I posted after this message. Problem is, that to do this process in Cyprus- company-accounting - residency- tax residency you need more than 10000 E cheapest to the bones solution and bulgaria costs 1500-2000 E everything included. Ofcourse is not that chic as cyprus, I agree but I want to save money not to be a fashion mofel...

 

[Clip]

That's a good move and wise decision - For sure not in the public forums. But you can open a thread in the mentor group (which I see you have access to) and I will reply there. It is not a one answer fits all question.

https://www.offshorecorptalk.com/threads/darks-how-the-world-works.27643/

 

[GrumpyMess]

Problem is, that to do this process in Cyprus- company-accounting - residency- tax residency you need more than 10000

Really? I thought a company around 2-3k and residency papers a couple of hundred euros.

 

[Joe Blasco]

Really? I thought a company around 2-3k and residency papers a couple of hundred euros.

you need adress. It s a tourist attraction, so the cheapest chicken house , just for the adress costs 500 E and we are talking about chicken nest. People are relativelly well off and not very btave so you will not find easily somebody desperate enough to give you his adress unless you pay $$$$. The residency process is not that easy because Cyprus like Greece is infested with Taliban which they never mention so in immigration the waiting line is right outside the street. It is very difficult to find somebody to make for you the whole package . They only ogfer to proceed your papers with you at immigration for 200-250 euro so you will not be alone with the Taliban.