Good low tax place to live/relocate

[dziter]

Hello,

I am IT freelancer living in a high taxed country with my girlfriend (still not working). My turnover is around 100k€/year.
We are EU citizens and want to relocate in the next weeks/months to another country to be able to save on taxes and have a good quality of life.
To achieve this goal : I need to close my soletrader business, open a company somewhere else and change the place to live.

I read a lot on internet: blogs, some forums, FB groups but I would really like to know your opinion and if you can share with me your experience, some pros and cons.
I imagine I am not the only one coming with this thinking and probably many people here already did it (not only digital nomads).


What is important to us?

English speaking
Safe
Affordable
Good internet
Good transport connection (international airport needed not far)
Interest in yoga, running
Green area
Food: Vegetarian diet

Will you be traveling a lot or will you be staying in one place for most of the year?

Staying in one place most of the year, but going to visit family or other countries of course.

What climate do you prefer?

Not so cold, not too rainy, sun is good?

Do you want to stay close to Europe or are you willing to go somewhere else?

EU is preferred but open to any suggestion.

Countries to live I have in mind?

From what I read, I already saw:
Cyprus, Malta : Currently giving a closer look
UAE : We don't want
Panama : I know only from the reputation, nothing more
Bulgaria, Georgia : No specific opinion
Portugal : NHR as a developper, but doesn't seem interesting with social contributions
Montenegro: interested about the landscape but don't know anything there


Thank you in advance for your suggestions, I am looking forward to read from you.

 

[Tax Cow]

I want to take a moment to thank this young fellow for not being an imbecile yellow vest or BLM shop lifter.

Voting with feet when unsatisfied is the right approach to life. Throwing stones on the street, demanding things be your way is not an optimal use of anyone's twenties.

So you want low tax and English-speaking?

- Singapore. A vibrant city with plenty to do for young couples. The cost of living is a tradeoff, as is the humid hot climate.
- Malaysia. Very similar to Singapore at 1/4 the budget expense. Kuala Lumpur is very livable. Climate problems aside, book a weekend to visit and see for yourself if this could be the place for you. Malaysia can be a stepping-stone to Singapore.
- Posh Caribbean Islands (Bermuda, Bahamas, Cayman). Proximity to Miami and New York which are never boring. Local beaches are fabulous. I'm sure you can eventually afford them, but just keep them on your radar for now.
- Affordable Caribbean (Trinidad, Jamaica, St. Kitts & Nevis, Antigua). A little further from the U.S. Laid back culture with almost exclusively black communities. I find those island blacks to be very warm and welcoming, but I would not live in any of those places for more than 3-4 months a year. Getting along and being able to make friends is not quite the same as having a sense of belonging. Maybe a suitable stepping stone to the "posh" islands while you're building yourselves.

And really there's not much left. Tiny commonwealth places around the U.K - IoM, Guernsey and Jersey are a better fit for people aged in between 40 to 60. By a stretch, consider Jersey if you enjoy spending time in Paris.

 

[JustAnotherNomad]

Cyprus, Malta might work. You should go there to see how you like it. It wouldn’t be for me.
UAE you don’t want, ok.

I think Portugal could be an option if structured properly. I know some people combine Portuguese NHR residency with companies in Malta/Cyprus. You should talk to an experienced Portuguese tax lawyer.
You would still pay some tax and there would also be some cost associated with the structure, but it should be a LOT cheaper than Poland.

Another option: Czechia. For sole proprietors, they have a simplified tax system. I think you would pay 15% on your revenue or so with no accounting requirements.

Romania, Hungary are also options that are sometimes suggested. Maybe Hungary could be nice since you don’t mind living in Poland?
Romania, Bulgaria I’m more skeptical about.

What about Lithuania? I haven’t been there, but it’s supposed to be nice.
Maybe Ukraine? I’ve heard Lviv is very nice.

Of course, in Eastern Europe, fewer people will speak English.

 

[John Andrews]

Take a look at Croatia, with a good accountant and structure you'll end up at 10% tax with lots of possible deductions. It's similar to a Czech sole proprietorship as written above.

more info: Administrative aspects of freelancing from Croatia

 

[daxbr]

I have a hard time accepting this obsession with compliance. With EU papers and atm cards, one can live in pl forever.

 

[Sols]

It sounds like a decision that's going to come down to Cyprus or Malta, so let's compare your requirements to those two.

As a foreigner with a high income, both offer a lot of tax incentives and ways to reduce your tax burden. There are a lot of resources available. Depending on how you structure your income, one might be a few percent higher or lower than the other.

English speaking

English is an official language in Malta and practically everyone speaks English (although not always the best). All government information is available in English.

English is not an official language in Cyprus but due to being a former British territory, massive tourist destination, and a large expat community, everything you need is available in English. Most people speak English, especially in the cities. In some smaller villages you might find people who don't speak it very well or even at all.

Safe

Both are safe.

Affordable

Compared to mainland Europe, both are affordable although real estate prices in Malta have increased a lot in recent years.

Due to being bigger, you have more choice in Cyprus. But if you want to live in/near city centers, costs are about the same.

Good internet

Neither has internet as good as mainland Europe. Malta is slightly better than Cyprus.

Good transport connection (international airport needed not far)

Depends on where you want to travel but Cyprus has slightly more flights and better connections to Asia, Africa, and Middle East.

For air travel within Europe, it's about the same.

Malta only has one airport, while Cyprus has two. There is a third airport in TRNC which only has "domestic" flights to Turkey.

Malta has ferry services to Sicily which are great for short getaways. Cyprus doesn't have anything like that, but there talks about ferries to Greece and Israel.

Both are popular destinations for cruise ships.

Interest in yoga, running

No difference.

Green area

Malta has none. Cyprus has, for being an island, a lot. Look up Troodos Mountains and Paphos Forest.

Food: Vegetarian diet

No difference.

Will you be traveling a lot or will you be staying in one place for most of the year?

Staying in one place most of the year, but going to visit family or other countries of course.

Malta is small and it can feel claustrophobic. Cyprus is larger and more varied.

What climate do you prefer?

Not so cold, not too rainy, sun is good?

Generally speaking, Malta and Cyprus have the same climate. Cyprus is a little bit warmer but also more varied due to the terrain. You get scorching summers and snow in the winters near the mountain tops.

 

[blockchain4ever]

Ukraine, 5% simplified freelancer income tax. You can do the oligarch setup with your wife tax resident in Spain and you need to carry proof that you entered Spain less than 90 days ago when stopped by police.

 

[dziter]

First, thank you all for your answers. I really appreciate the quality of the discussion.

I forgot to give 2 informations:

- I can't have soletrader structure. I need to have LLC. I am working with a specific freelance company which is able to deal with french soletraders but only with LLC for foreigners companies (soletraders are forbidden).
- I would like to be able to use payment gateways/providers like Stripe for my business

I saw on some Facebook groups people saying: it's better to be tax resident in one country, have your company in another country. This setup is not working anymore because of effective place of management, right? I mean, mostly and in my case, legally you control the company from your tax residency country: the place you live most of the time.

I want to take a moment to thank this young fellow for not being an imbecile yellow vest or BLM shop lifter.

Voting with feet when unsatisfied is the right approach to life. Throwing stones on the street, demanding things be your way is not an optimal use of anyone's twenties.

Nice one! By the way, I can tell you that what you can see on news doesn't reflect reality. This is a minority but even.
Thank you for your suggestions and details. Really interesting but still a little bit too much exotic for my current situation I guess. I keep in mind of course.

Cyprus, Malta might work. You should go there to see how you like it. It wouldn’t be for me.
UAE you don’t want, ok.

I think Portugal could be an option if structured properly. I know some people combine Portuguese NHR residency with companies in Malta/Cyprus. You should talk to an experienced Portuguese tax lawyer.
You would still pay some tax and there would also be some cost associated with the structure, but it should be a LOT cheaper than Poland.

Could you tell me why it wouldn't be for you? I am interested about things you don't like.
UAE: is it really a good choice you think? I mean on tax purpose yes but on daily life..

Take a look at Croatia, with a good accountant and structure you'll end up at 10% tax with lots of possible deductions. It's similar to a Czech sole proprietorship as written above.

Really interested. First, we were interested about Montenegro. Nobody seems to think about it. Maybe because of english level of the population? And not enough developed so probably some corruption and too much bureaucracy?

By the way, I like the idea of Croatia but I can't be soletrader. If you know a setup for LLC, I will be interested to know more about it.

I have a hard time accepting this obsession with compliance. With EU papers and atm cards, one can live in pl forever.

Could you give more info about it?
You mean putting nothing at your name in the country you are living and have banks/assets in other countries?

It sounds like a decision that's going to come down to Cyprus or Malta, so let's compare your requirements to those two.

It seems to be very often the choice between these two. Thank you for your detailed comparison.
Do you know which one is more focused on tech? Start-up community or digital nomads?

Ukraine, 5% simplified freelancer income tax. You can do the oligarch setup with your wife tax resident in Spain and you need to carry proof that you entered Spain less than 90 days ago when stopped by police.

We are not married. I don't know about this oligarch rule. But we don't want to live in Ukraine. And it's working only for soletrader and not LLC I guess too.

 

[user9823671]

UAE: is it really a good choice you think? I mean on tax purpose yes but on daily life..

I couldn't think of a worse place to live. Depends what you both like. Seeing as you mention green spaces / yoga / vegetarian, perhaps is not for you. If you like city living and day trips to the mall and for a change day trips to a different mall then it might be for you.

Really interested. First, we were interested about Montenegro. Nobody seems to think about it. Maybe because of english level of the population? And not enough developed so probably some corruption and too much bureaucracy?

Have you ever live in a country where you do not know the language, that is less developed more bureaucratic? IT can be a frustrating experience. If you are prepared to learn the language fluently it will be ok, otherwise will be difficult


Not sure where you are from, but Uruguay / Panama "may" be options. Spanish potentially is very similar to your home language thus easier to learn. As with all other aforementioned places has their pros and cons that may (or may not) be better suited to you in the more touristy areas where you will find the yoga / vegetarian options

 

[dziter]

Have you ever live in a country where you do not know the language, that is less developed more bureaucratic? IT can be a frustrating experience. If you are prepared to learn the language fluently it will be ok, otherwise will be difficult

I spent around 2 years in Poland without any problem to communicate. Almost everyone is speaking english or it’s not a problem to understand each other.

Not sure where you are from, but Uruguay / Panama "may" be options.

Yes, I saw a lot of people going to Panama. Is it enjoyable on daily life compared to Malta/Cyprus for example?

 

[user9823671]

Yes, I saw a lot of people going to Panama. Is it enjoyable on daily life compared to Malta/Cyprus for example?

All depends what you enjoy and where you are. Panama city is a big international city for example with everything that comes with living in a big (but not huge) international city, but is also on the coast and Panama is a small country, doesn't take long to be out in the cloud forests in the middle of the country, or humid low lying jungles of the south, or to get up into the mountains with that cool mountain air, if you cross the country to the Carribbean side you have the white sand palm fringed coasts / islands, pacific coast is more barren but is surfable if that is a thing for you. But English isn't widely spoken, and access to Europe (flights) is a hassle.

So it all depends, for some it is a paradise, for others not. If you like the arts and going to the theatre, or seeing big name artists in concert it is most definitely not for you (but then again nor is Malta / Cyprus).

 

[Sols]

It seems to be very often the choice between these two. Thank you for your detailed comparison.
Do you know which one is more focused on tech? Start-up community or digital nomads?

On a high level, they're the same in this regard. Both countries are driven a lot by fintech and financial services. Additionally, Malta has igaming and Cyprus has forex.

Maybe a slight advantage for Malta due to igaming companies typically being more positive and creative work environments than the strict, top-down management style seen in forex companies.

 

[Clip]

How about HK ? Now the housing is more affordable and with the proper structure you only pay 8.25% tax with lots of deductions

 

[blockchain4ever]

I don't understand your sole trader issue. You can have an LLC in any high-tax jurisdiction that re-invoices a sole trader and the LLC will pay no taxes.

 

[dziter]

I don't understand your sole trader issue. You can have an LLC in any high-tax jurisdiction that re-invoices a sole trader and the LLC will pay no taxes.

This is the answer I got in my first topic from @marzio :

----

If it's possible (and we don't speak about the liability), it can change a lot of stuff. I mean, I can live where I want and enjoy the small tax rates of soletrader.

 

[JustAnotherNomad]

You can either have a LLC and invoice it and pay no corporate income tax (since there is no corporate profit). Or you can simply set up a UK LLP or US LLC, which both provide limited liability, but are taxed as a sole proprietorship (but check local laws, your local tax office may have a different opinion). US LLC would probably be your best option if you only care about limiting liability. Maybe that gives you more flexibility? Then you can just move to a country with good taxes for solo traders?

Don’t go to Panama. I have heard of several people who are moving out. COVID-19 was a complete shitshow and they feared for their lives as “rich” expats. They loved it there before and told everyone how great it was and now they just want to get out. It’s also far from Europe and Panama City is said to be expensive.

I’m not a fan of Malta/Cyprus. They’re ok for a visit, but I wouldn’t want to live there. I also feel they are a bit out of the way.
The same goes for Georgia, albeit with a different climate.

I like the UAE because of its location, nice malls and capitalist mindset. But that’s me.
I still think Portugal might be a good option for you, but you’ll really need a good advisor.

 

[dziter]

You can either have a LLC and invoice it and pay no corporate income tax (since there is no corporate profit). Or you can simply set up a UK LLP or US LLC, which both provide limited liability, but are taxed as a sole proprietorship (but check local laws, your local tax office may have a different opinion). US LLC would probably be your best option if you only care about limiting liability. Maybe that gives you more flexibility? Then you can just move to a country with good taxes for solo traders?

Thank you for this suggestion. I will try to have information in this direction because it can clearly be a small eldorado for a freelancer or solo director. You have clearly more choices or countries. For outside, I have the LLC and inside, it’s like now for me soletrader. Except the unlimited liability, I don’t really see negative things about it.
Just to be clear, we agree that LLC + soletrader should be in same country and so the tax residence? (for substance and effective place of management..)

In France, it’s forbidden to do LLC + soletrader because they say you are using your soletrader structure to have tax benefits. Even if it’s not unlimited because the legal turonover limit of soletrader is 70k€ in France for services. And if you invoice only your LLC, it’s like a relationship employer-employee which is forbidden too

I hope in other countries LLC + soletrader is a legal setup.
[/QUOTE]

I still think Portugal might be a good option for you, but you’ll really need a good advisor.

I am working on it these days. For now, they seem to tell me that claiming the 0% taxation (without speaking about the hight social taxes) is really specific and really complicated. I will continue on this.

Thank you for your help again

 

[JustAnotherNomad]

With a US single-member LLC or a Canadian LP or UK LLP, there is no company to tax. From a tax perspective, you are a solo trader. Period. You do not invoice the LLC. Because for the tax office, you “are” the LLC.
But if there is a liability claim, they cannot go after you personally, only the LLC (usually at least).
But if you live in France, then of course the French tax office can say: “We don’t care about the US rules. For us, the LLC is still like a French SARL and we will charge corporate income tax.”
So you have to check the rules for where you live and you will need a good accountant who understands international taxation.

When you invoice an LLC that is treated as an entity of its own for tax purposes, i.e. a corporation (for example if you had a Polish sp. z o. o.), then there are transfer pricing restrictions and similar rules like you mentioned. You may not be allowed to invoice the company, you may have to pay a salary or dividends etc. There can also be restrictions for how much you can pay yourself.

But all of this will depend on where you are tax resident (=where you live).
So you are in a bit of a hen and egg situation, in that you want to move somewhere with good tax laws, but in order to find out if the tax laws work, you would have to decide on a country first.
I think you should first narrow down the selection to a few countries where you could imagine living. You have received some suggestions now. As you can see, as long as you are willing to pay some taxes, there are many options. Especially in Eastern Europe, many countries offer tax rates of less than 20% total.
Then you should talk to a tax lawyer/accountant for the details.

For Portugal, I can give you the contact information of a tax lawyer. I think the typical NHR structure is a combination of companies in Cyprus and Malta. It costs €5-6k per year for the structure and you pay 5% in taxes in Malta, or something like that. But no tax in Portugal at least. If I remember correctly. But it’s limited to 10 years and I guess there is always a risk that Portugal will decide that the structure was not OK to begin with. But at least you would be one of hundreds of people with this structure, so it’s quite well-tested.

You could actually also check out Italy, they have tax discounts for immigrants. I think you only pay 10% in taxes for 10 years or something like that if you move to Southern Italy.

 

[user9823671]

Don’t go to Panama. I have heard of several people who are moving out. COVID-19 was a complete shitshow

Probably true for 90% of countries.

and they feared for their lives as “rich” expats.

I know many people there, and not one has mentioned a sense of fear. Simple fact is, outside Panama City, it is a developing country with developing country problems. Perhaps they are living in gated communities and are a more fearful type?

and now they just want to get out.

This is true for expats all over, people want to go back home. Even if the covid response in their home countries has been much worse than the country they were living in. A sense for something you know during difficult times is normal, even if not logical

It’s also far from Europe

true

and Panama City is said to be expensive.

Yes and no. The basics no (food rent clothing). But if you want the finest first world luxories, then yes they can cost more. Depends how you want to live. But it is not expensive compared to major developed world cities (London Paris New York.

I like the UAE because of its location, nice malls and capitalist mindset. But that’s me.

As above, one mans paradise can be anothers hell. I'd pick Panama in a heartbeat over the UAE. Shopping malls and desert city have 0 interest for me. Whereas it's the opposite for you.

OP really needs to visit these places, as no one can really tell him which is best suited to them

 

[JustAnotherNomad]

Yes, I think they were living in gated communities. And there were absolutely no flights, basically no way to get out and an “eat the rich” kind of atmosphere, as far as I understood. They are very freedom-loving people and from what I heard, they felt that people just suddenly became very authoritarian.

OP really needs to visit these places, as no one can really tell him which is best suited to them

Yes, definitely.