Cyprus or UAE for me? (Low income btw...)

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itsmemario123

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Jan 30, 2023
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#1
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I'm a EU citizen earning no more than 100k USD yearly with my business. Is not that much compared to you in this forum... but is my hard work and still I'm trying to optimize it.

I moved to Romania a while back (beautiful country and beautiful people. Love the Carpathians) but they changed the taxes so, although it is still better than my original place, the net profit went down pretty quick (from 1% to 3% microcompany taxes, they increased the minimum wage like 4 times since I'm here which makes me pay more healthcare and taxes as a requirement is to have myself hired in the company, and they increased the paperwork so my accountant charges me more for the services). In total I'm spending about 13% and is going to get worse each year...

I selected Romania as being a EU citizen, it was pretty easy for me, and I was a bit scared to do the "big jump" out of EU. The thing is that after Romania I'm ready to jump to Cyprus or UAE.

So, EU citizen nomad travelling around, less than 100k USD yearly, I don't care the country but I need for it to be clean with EU (not blacklisted ones like Seychelles) as I'm investing that money. What do you think is better for my company? I've read that UAE has a 9% tax now, but I think that it only applies after 95k, so for me could still be almost 0% (after paying the flat 6k yearly). Which I'm not sure I'm understanding is Cyprus, because everywhere I read a lot of different things...

Also, I'm trying to get a better contract, about 200k USD yearly, so maybe that's something to factor in just in case...

I think that the easiest one is UAE. To get an Advisor to create the company, pay 12k the first year and then 6k each year, 3 months to get the tax residence, then 1 day each 6 months and that's it, to travel around the world and enjoy life
 
#5
You can try with the US LLC which is by far the cheapest for your case. If they do not like it, you can try they usual zero tax places, but they will most likely cost you a minimum of 2500 per year for setup and filing. It costs you more than Georgia's 1% tax on turnover below 500k GEL (180k USD). An alternative would be Bulgaria with 10+5% and then take all business expenses into company costs to get a low profit you could even invoice your labour out into some other jurisdiction or check with @providenceventurer on other ways to get money out of the country. I can recommend him.
 
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#6

US LLC requires me to pay taxes where I'm living, so although I'm travelling around, I prefer to have a document stating that I fulfilled my taxes requisites somewhere as when I'm going back to Spain to invest my money, they will probably ask where that money is coming from.

I'm not sure about the zero tax places that you mean haha. You mean the blacklisted ones by most EU countries? (Seychelles and such). Here I apply the same as before. That would be a mess for me to move the money back to Spain. Coming from a blacklisted country they are going to ask for sure, and I don't want the mess.

Didn't knew about Georgia's 1%. That's quite interesting. Going to read.

I've already seen Bulgaria, but for just 200€ more profit per month than Romania is not worth the hassle now...

Thank you for your input! Going to read about Georgia.
 
#7
Yeah, US LLC sounds good in this case, clean jurisdiction, easy and cheap to set up and maintain, plus good banking access. But why do you want tax residency* in the UAE? Just get residency there, and be out of the Romanian tax net. Then there is no 9% UAE tax or any other tax on your US LLC, assuming you dont accidentally become a tax resident somewhere else.

*Unless you are Spanish, there it seems to get out of the tax net, one de facto needs a tax residency outside Spain. But I think Spain like Italy has anti tax haven rules, so even in this case tax residency in the UAE might not be a good idea, better with a place like Paraguay.
 
#8
itsmemario123 said:
I'm not sure about the zero tax places that you mean haha.
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No, Hong Kong, etc. but forget about these as they won't fulfill your requirements. Check Georgia etc.
 
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#9
Yep, I'm spanish... as you say is like Italy. I left Spain and became a romanian tax resident, but I have spanish nationality, and I'm investing back in Spain as I want to return there at some point in my future life and live out of my properties rentals... So although there are almost 0% tax schemes out there, they are not for me. So with this I'm just trying to optimize the best scheme for me although is not 0%.

The tax residency in UAE is to have documents proving that I paid my taxes there, although it is 0%, but at least that I belong somewhere and have fulfilled my tax documents. I don't know if Spain is going to ask as I'm not a millionaire, but I want to sleep peacefully while travelling around. Of course I'm not going to live more than 183 days anywhere while optimizing my taxes.

So I guess that what you explained me is a scheme where I don't have to fulfill any yearly tax document anywhere where I declare my profits, right?

UAE is not a tax heaven in the eyes of Spain, so that's good actually.

With 100k do I have to pay the 9%?
 
#12
yngmind said:

Since you're Spanish, check this dude on youtube.
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Seems like the typical influencer that explains everything and nothing at the same time and then sells his services to you... :-/

Didn't say anything clear, just the 183 rule we all know, the Beckham law we all know and is just a 24% flat tax which doesn't apply to me, and then all blabbery and "here is my link to my services" xD
 
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#13
Is that eve
Yep, but he’s Spanish, and he managed to escape the Spanish tax hell.
 
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#14
itsmemario123 said:
Yep, I'm spanish...
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Ah typical! Put in the asterix there because Spain is unusually punitive and difficult on its citizens leaving the tax net. Seemed like a longshot you d actually be from Spain.

itsmemario123 said:
as you say is like Italy. I left Spain and became a romanian tax resident, but I have spanish nationality, and I'm investing back in Spain as I want to return there at some point in my future life and live out of my properties rentals...
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Arghh, why do people want to go back to live permanently in their high tax countries of origin!??? I like visiting mine, but Im never going back permanently!

Well, for the US you have to file forms 1120 and 5472 every year, but those forms only cover where you live including tax residency, and how much money you put in and took out of the LLC every year, not your profits.

For the UAE, if you stay less than 90 days there, then no reporting requirements at all. For 90 to 180 days, Im not entirely sure, rules seem unclear. For above 180 days, your US LLC would have effective management and control in the UAE so legally you would be required to file taxes and meet other UAE reporting requirements. In practice though, it doesn't seem the UAE cares at all about small foreign businesses. I mean, they put in all these rules to get out of greylisting, enforcing them wasnt the objective. We'll see in the future though, how UAE tax authorities act in practice.
itsmemario123 said:
UAE is not a tax heaven in the eyes of Spain, so that's good actually.

With 100k do I have to pay the 9%?
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The limit for the 9% is 375k AED which is about 100k USD. So you pay 9% on profits above 375k AED. But note that profits are after salary expenses, and salaries are tax free in the UAE. Now there are rules (GAAR) against paying crazy high salaries, but you can pay yourself a market level salary for a CEO of a small company, and executive salaries are very high in the UAE. So say you make 250k USD, pay yourself a totally reasonable (even low) salary of 150k USD, and make 100k USD profit, then there is no corporate tax.

On the other hand, for local UAE companies there are registration costs, license fees and possibly audit requirements - and all this can add up to more than 9% of profits for small businesses. With a foreign company you are in a better position with regards to this, but if the foreign company has effective management and control in the UAE, you may not escape it.

A final wrinkle is the definition of effective management and control. It seems you can be an owner of a foreign company living in the UAE, but if most of the board meetings and executive decisions etc with regards to the company are taken outside the UAE , it does not legally have effective management and control in the UAE.
 
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#17
W Fish said:
With these numbers would it not be easier to just increase your expenses a bit and pay less or almost no corporate income tax?
Otherwise there are at least 2 countries in the EU that have 0 CIT.
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That's a good idea. Just reinvest and grow your business and find a way to increase your business expenses.
 
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#18
yngmind said:
That's a good idea. Just reinvest and grow your business and find a way to increase your business expenses.
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He is talking about a contract with a client. You cannot do much "reinvestment" in that sense. You can invest in assets, but they do not lower your profit.

The best option he has is to be resident in two countries while travelling and then claim the travel expenses in both countries.
 
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#19
Cloudbanck said:
Arghh, why do people want to go back to live permanently in their high tax countries of origin!??? I like visiting mine, but Im never going back permanently!
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Yeah I know haha, but my plan is not to live like a millionaire, but to retire early with a decent passive income while I live 365 days near the people I love: Family and close friends. I like going every sunday out with my father, uncles, brother in law, sister and cousins to eat paella in the countryside, and the weekends/midweeks out with my lifelong friends. The problem that I have is that I only know to do one thing, and that thing is giving me money now, but I don't know how it is going to be 10 years from now, so I plan to optimize to invest in properties to rent so I can live the life I want happily without worrying about my future.

Of course I don't like the government to take money out of me, specially when I don't like how they manage it, but my plan for life is to be near the people I love while I own a piece of terrain with animals and plants. I'm truly happy when doing so. And in Spain, although you pay high taxes, you can live really well with just 3k per month, specially if you don't have rent or mortgage.
Cloudbanck said:
Well, for the US you have to file forms 1120 and 5472 every year, but those forms only cover where you live including tax residency, and how much money you put in and took out of the LLC every year, not your profits.
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I thought so, damn...
Cloudbanck said:
For the UAE, if you stay less than 90 days there, then no reporting requirements at all.
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Not required, but can I still do so? So I have the documents.
That's really interesting. So if I get a better contract (which I hope), I can still optimize it. Thanks a lot for this input.
Ok, thank you a lot for all this info. I thought that if you register the company on a free zone, you just pay about 6k flat per year and that's it.

So having a USA LLC, and somehow being able to get the tax certificate from UAE (I have to looks into that) looks like the best plan for me now.

Really insightful answer. Thank you.
 
#20
W Fish said:
With these numbers would it not be easier to just increase your expenses a bit and pay less or almost no corporate income tax?
Otherwise there are at least 2 countries in the EU that have 0 CIT.
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The problem is not the corporate tax, but the personal tax. The corporate tax In Romania is just 3% and I don't have almost expenses in my company. I'm saving the money to buy properties, but the properties are going to be in my personal name, not the company name.
 
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