Bulgaria or Cyprus for company and residency?

[JohnLocke]

And what would you do if (as in your case here) Spain says that we do not recognize that you live in Bulgaria and therefore you must pay tax in Spain? Then you would have to pay tax both in Bulgaria and in Spain.

The problem in general is not the country where you pay taxes but the country where you avoid them. If you stay in Spain for a long time of the year you might run into trouble with Spanish authorities.

exactly my point!

 

[polonieth]

@polonieth I don't know what impact the Euro would have. At the end the lev is already fixed to Euro...The low debt to me is a nice-to-have. It gives me hope that the state is able to work with the taxes they receive.

It's fixed to the Deutsche Mark. Which obviously became the Euro. I see this remark all the time; it's the main argument used by politicians, pro-European clowns etc., etc as it works, people can just about grasp this concept "Ah, we are already pegged to the Euro, how bad can it be"

Most people don't understand that Bulgaria has a currency board that limits the amount of money one can have based on foreign currency reserves. Thus, there's a hard limit on how much debt the government can accrue, which is why Bulgaria has the lowest debt/GDP ratio in Europe.

Once the Euro comes in, those controls are gone, so the government can borrow money in vast quantities, and they will; government spending will skyrocket.

None of that money will translate into productivity, leading to more inflation, and eventually, the debt will become unsustainable. Then you get a Greece, Irish, Spanish, or Portuguese bailout.

It's unsurprising that politicians are the biggest proponents of the Euro, as it will make them rich while the average Bulgarian gets poorer.

I can't believe the court said no to a referendum despite 400k signatures I hope Bulgarians wake up; they will lose the two most important aspects of control - money supply and interest rates. The public needs to get these clowns out of office and get a statesman in there who wants Bulgaria to do well, which it can certainly do with its own currency and strategic interests, not be some EU vassal.

 

[Dandyline]

And what would you do if (as in your case here) Spain says that we do not recognize that you live in Bulgaria and therefore you must pay tax in Spain? Then you would have to pay tax both in Bulgaria and in Spain.

As long as you stay under 183 days, its fine. Even if you stay more than that, it's highly unlikely that the even know that you are in Spain. How could you possibly attract the attention of the Spanish government in the first place? The entire country is full of tourists all year around.

 

[Ade]

I don't know the details but at the end national goverments decide how much debt they make - either with Lev or Euro. But I understand your mistrust in Goverment when they have access to more debts. Lets hope Bulgaria chooses the best way for their people.

get a statesman in there who wants Bulgaria to do well

I think thats true for most countries in the world. Unfortunately.

 

[polonieth]

I don't know the details but at the end national goverments decide how much debt they make - either with Lev or Euro. But I understand your mistrust in Goverment when they have access to more debts. Lets hope Bulgaria chooses the best way for their people.


I think thats true for most countries in the world. Unfortunately.

No, you don't get it. The currency board peg is backed by currency reserves, which limit the amount of levs in circulation and control inflation. There is a limit on how much debt the government can have. Do you think Bulgaria has a low debt-to-GDP ratio through magic and honest politicians? No, it's due to the currency board working as intended.

Once the euro comes, that control is gone. That is precisely what happened to Greece. The 'leaders' took out massive loans from German and Dutch banks and stole the money, leaving the country with an unsustainable debt.

 

[Ade]

No, you don't get it. The currency board peg is backed by currency reserves, which limit the amount of levs in circulation and control inflation. There is a limit on how much debt the government can have. Do you think Bulgaria has a low debt-to-GDP ratio through magic and honest politicians? No, it's due to the currency board working as intended.

Once the euro comes, that control is gone. That is precisely what happened to Greece. The 'leaders' took out massive loans from German and Dutch banks and stole the money, leaving the country with an unsustainable debt.

Let me repeat. These are not problems bound to Euro. If Bulgarian goverments will "steal the money" as you write for Greece than this is a national reason. If they wanted - even with Euro - they could come up with a limitation of debts. It depends on their own national politics. Estonia has the lowest debt to GDP in the EU. And they have the Euro.

Its the same with the US who had the Dollar backed by Gold. After they removed this limit they started printing money. But these are decisions the Goverments make.

 

[polonieth]

Let me repeat. These are not problems bound to Euro. If Bulgarian goverments will "steal the money" as you write for Greece than this is a national reason. If they wanted - even with Euro - they could come up with a limitation of debts. It depends on their own national politics. Estonia has the lowest debt to GDP in the EU. And they have the Euro.

Its the same with the US who had the Dollar backed by Gold. After they removed this limit they started printing money. But these are decisions the Goverments make.

I don't think you understand how the Eurozone works. Either that, or you're being obtuse. If you think some "limitation of debts" accounting rule is going to work, then you live in a parallel world where politicians don't rob the country blind.

When you enter the Eurozone, the ECB produces the currency and decides how much to circulate, so the Bulgarian government has lost control of inflation. Interest rates can be locally controlled with the lev. Under the Euro, interest rates tend to parity throughout the Eurozone. There will be no control, and banks will lend freely as they know the ECB will bail them out. The currency board limits these things, when you remove that, it's open season. The problems I describe are bound to the Euro. Because in the current setup - they can't really happen.

You don't even need to understand the workings of it all. Just look at who is pushing the Euro. Are they people with a track record of improving the lot of ordinary working people? Or?

 

[CyprusLaw]

You can move freely within Schengen, they dont keep track of days. And it's not only the Physical presense that makes you residence.

In Bulgaria, tax residency is determined based on the following factors, so you can make sure to satisfy any of these to mantain tax residency:

1. Physical presence: An individual is considered if they spend more than 183 days in the country within a calendar year.

2. Economic ties: An individual is also considered a tax resident of Bulgaria if they have a permanent address in the country, own or rent property, or have family members living in Bulgaria.

3. Center of vital interests: An individual is considered a tax resident of Bulgaria if their center of vital interests is in the country. This can include factors such as where an individual’s business is based, where they hold a bank account
.
Under point 1, you will be considered a tax resident of Bulgaria only in the year when you have resided in the country for 183 days. On the other hand, you are not required to satisfy the strict residence requirement if you justify that the center of your vital interests is in Bulgaria.



If you start the company on let's say January 1st and begin generating profits immediately, when would it be possible to distribute dividends? I assume that dividends can only be drawn from audited profits accumulated in preceding years?

Under Cyprus law there is no set procedure for the distribution of dividends. This is regulated by the Articles of Association of each company, and guidance also derives from common law. A company can declare and distribute interim and final dividends. While interim dividends are declared and approved by the board of directors out of the profits of the company, final dividends are declared at general meetings and no final dividend shall exceed the amount recommended by the directors. The interim dividends can be declared at any point and without any restriction, as long as this complies with the said company's Articles of Association. The only restriction is that dividend distribution must be from the profits.

 

[Dandyline]

Under Cyprus law there is no set procedure for the distribution of dividends. This is regulated by the Articles of Association of each company, and guidance also derives from common law. A company can declare and distribute interim and final dividends. While interim dividends are declared and approved by the board of directors out of the profits of the company, final dividends are declared at general meetings and no final dividend shall exceed the amount recommended by the directors. The interim dividends can be declared at any point and without any restriction, as long as this complies with the said company's Articles of Association. The only restriction is that dividend distribution must be from the profits.

And what determines profits? Profits from example the past month?

I guess in Cyprus, you could also take a shareholder loan with the 9% benefit in kind and then clear it against dividends on the following year.

 

[Ade]

I don't think you understand how the Eurozone works. Either that, or you're being obtuse. If you think some "limitation of debts" accounting rule is going to work, then you live in a parallel world where politicians don't rob the country blind.

When you enter the Eurozone, the ECB produces the currency and decides how much to circulate, so the Bulgarian government has lost control of inflation. Interest rates can be locally controlled with the lev. Under the Euro, interest rates tend to parity throughout the Eurozone. There will be no control, and banks will lend freely as they know the ECB will bail them out. The currency board limits these things, when you remove that, it's open season. The problems I describe are bound to the Euro. Because in the current setup - they can't really happen.

You don't even need to understand the workings of it all. Just look at who is pushing the Euro. Are they people with a track record of improving the lot of ordinary working people? Or?

If its OK for you I would suggest to leave it at that and return to topic. I made my point clear, so did you. But this topic is about Cyprus vs Bulgaria for company formation and residency and all I added was that debt level in Bulgaria is much lower compared to Cyprus which I consider a Pro as high dept might lead to tax increases. Thats all.

Whether Bulgaria will implement Euro and if so whether it will turn out good or bad for Bulgarian people / economy is hypothetical and actually doesn't even matter for most of us here as we can still move elsewhere if it impacts us negatively

 

[Ade]

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.

Thanks for sharing! Are you still in Bulgaria? Still happy? I'm considering Bulgaria / Cyprus.

 

[Ade]

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

May I ask in which wonderful paradise of state you are living and doing business in?

 

[JohnLocke]

The only restriction is that dividend distribution must be from the profits.

How often can the Cyprus company pay out dividend to their owners?

 

[CyprusLaw]

How often can the Cyprus company pay out dividend to their owners?

This is not regulated under Cyprus law - it is regulated by the Articles of Association of each company - therefore if there is no restriction in the Articles dividends can be declared at any point in the year and as many times, save for the restriction that it has to be from the profits.

 

[Martin Everson]

May I ask in which wonderful paradise of state you are living and doing business in?

No

 

[Marshal]

May I ask in which wonderful paradise of state you are living and doing business in?

For many people on this forum Russia is a paradise lol Each to their own.

 

[JohnLocke]

This is not regulated under Cyprus law - it is regulated by the Articles of Association of each company - therefore if there is no restriction in the Articles dividends can be declared at any point in the year and as many times, save for the restriction that it has to be from the profits.

Thank you, very informative and good to know. But hyou can't just take out dividend replacing a monthly salary I believe. So restricting it to 4 times a year may be the best or what do you think ?

 

[Ade]

No

Thanks. I did not expect anything better than this actually but wanted to be fair and give it a try.

@Marshal My post was irony in the first place as all he "contributed" was shithole, shithole, shithole without providing anything better from own experience either. So I asked which wonderful paradise he chose. Of course you are right and there is no one place for everybody.