Good low tax place to live/relocate

John Andrews said:

You need to combine offshore + paušalni obrt (sole proprietorship) + d.o.o (limited company) along with a nominee director who's already employed somewhere else

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For lowering the overall corporate tax?
But still personal income tax will be due when you take out some of the profits to a personal bank account

topleaders said:

But still personal income tax will be due when you take out some of the profits to a personal bank account

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Which is why you run everything through the company & sole proprietorship so you can deduct all kinds of expenses such as food for example.

You can also rent out your apartment to the company as an office and take out 900 EUR/month @ 10% tax or less, depending on the address.

Talk to a tax advisor... it's all about expenses and deductions in the EU

JustAnotherNomad said:

What about Lithuania? I haven’t been there, but it’s supposed to be nice.

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Lithuania has a small start-up company tax relief and if you incorporate your first company in LT and dont own controlling ineterst in any other companies then first year 0% corporate tax rate for all profits if turnover is up to EUR 300k. Thereafter 5% corporate tax rate for all profits generated by turnover of up to EUR 300k. If you exceed 300k turnover then 15% rate on all the profit.

Withdrawal of Dividend taxed at 15%. Thus you could have your small personal service company's net money in hand for 15% rate + company admin costs.

Whether over there is not the best. But actually no one would count your actual days of presence there..

OP where did you and you girlfriend moved? It's interesting to learn about your situation.

I don't think this was clarified, but for those interested, Italy's new tax scheme isn't paying 10% in the south. It's that your first 90% is exempt, paying your tax rate (40-50% or whatever) on the remaining 10%. This is for basically Napoli and south, including Sardinia. In the north, it's 70%. There are qualifying factors, but IT works. This is probably the most straightforward way to pay 5% or less. You still get deductions. I'm not an expert on Italy, but it's generally a lot more difficult to deal with their systems and bureaucracy than other EU countries.

I was recently told by a Portuguese consultant that Malta has been put on a sort of "Gray list", so really get clarification on this. One thing about getting paid in dividends in Portugal from your holding company elsewhere is that it isn't income, so it doesn't count towards your social security contribution. Along the note of social security, this is also your public health insurance in Portugal. I would definitely recommend spending the extra for private coverage. You'll have an easier time accessing doctors and getting in with ones that offer services in English. Being in the EU, it's always going to be more difficult to live completely tax-free. DTA and CFC come into play, but if you're set up in the EU where you can minimize your taxes, it's a pretty good place to be to live in the place you really want to be while freely roaming the EU and not pay the 40-50%+ Eu countries charge on income (before the social health contributions most times).

sdreaver said:

I don't think this was clarified, but for those interested, Italy's new tax scheme isn't paying 10% in the south. It's that your first 90% is exempt, paying your tax rate (40-50% or whatever) on the remaining 10%. This is for basically Napoli and south, including Sardinia. In the north, it's 70%. There are qualifying factors, but IT works. This is probably the most straightforward way to pay 5% or less. You still get deductions. I'm not an expert on Italy, but it's generally a lot more difficult to deal with their systems and bureaucracy than other EU countries.

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I've looked at this Italy scheme but it's not as attractive as it sounds at first. You're definitely not going to pay 5% or less in Italy.

You still have to pay social contributions (~25% on your income), up to a maximum payment of ~100000 euros.
You still have to pay IRAP (4-5%).

Italy is in heavy weather financially, so it's not unreasonable to expect higher taxes such as a 'solidarity surcharge'. Since you're committing yourself for at least 2 years with this scheme you can't immediately move out if it goes too far.

There are also banking risks in Italy.

However, I do think it's one of the best offers if you have a very high income (500k or more), because then your effective tax rate goes below 25%, which is pretty good for a country like Italy. You can also use limited liability companies with the transparency scheme, so that you are taxed like a self-employed freelancer but with the legal protection of a limited liability company.

More about this scheme here.

AdamT1 said:

Lithuania has a small start-up company tax relief and if you incorporate your first company in LT and dont own controlling ineterst in any other companies then first year 0% corporate tax rate for all profits if turnover is up to EUR 300k. Thereafter 5% corporate tax rate for all profits generated by turnover of up to EUR 300k. If you exceed 300k turnover then 15% rate on all the profit.

Withdrawal of Dividend taxed at 15%. Thus you could have your small personal service company's net money in hand for 15% rate + company admin costs.

Whether over there is not the best. But actually no one would count your actual days of presence there..

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I find it strange that you don't see this option more here. I'm looking to move from my high tax country and Lithuania is on my top list. It's not the lowest compared with micro company in Romania but in my opinion you have more stability. Rules for the Romanian micro company structure have changed several in the last years. Lithuania is more stable IMO and you will have far less hassle when it comes to bureaucracy.

Montenegro is a very good option. We moved to Budva not long ago, and absolutely all conditions for quality living have been created here.

Both interesting options have seen crop up over the years, but never really looked into.

Dazel said:

Montenegro is a very good option. We moved to Budva not long ago, and absolutely all conditions for quality living have been created here.

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What kind of costs is it for the company to be setup in Montenegro? and yearly running? What benefits does Montenegro have for
* tax
* privacy
* banking

freegeek said:

I find it strange that you don't see this option more here. I'm looking to move from my high tax country and Lithuania is on my top list. It's not the lowest compared with micro company in Romania but in my opinion you have more stability. Rules for the Romanian micro company structure have changed several in the last years. Lithuania is more stable IMO and you will have far less hassle when it comes to bureaucracy.

Click to expand...

What kind of costs is it for the company to be setup Lithuania? and yearly running? What benefits does Lithuaniahave for
* tax
* privacy
* banking

Utah said:

I've looked at this Italy scheme but it's not as attractive as it sounds at first. You're definitely not going to pay 5% or less in Italy.

You still have to pay social contributions (~25% on your income), up to a maximum payment of ~100000 euros.
You still have to pay IRAP (4-5%).

Italy is in heavy weather financially, so it's not unreasonable to expect higher taxes such as a 'solidarity surcharge'. Since you're committing yourself for at least 2 years with this scheme you can't immediately move out if it goes too far.

There are also banking risks in Italy.

However, I do think it's one of the best offers if you have a very high income (500k or more), because then your effective tax rate goes below 25%, which is pretty good for a country like Italy. You can also use limited liability companies with the transparency scheme, so that you are taxed like a self-employed freelancer but with the legal protection of a limited liability company.

More about this scheme here.

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Depending on the case, you are indeed going to pay less than 5%.

I know someone who has gone through the process some months ago, I'll explain.

As an example:

TAXES

You make €100,000 in a year

90% (€90,000) is exempt

For governmental purposes, 90% of your income doesn't exist.

The government considers you have earned €10K in one year.

Therefore, your tax rate is 23%.

You will have to pay €2,300 in Income Tax.

Effectively, you have paid 2.3% of your income in taxes.

SOCIAL SECURITY

Case 1:
Regardless if you're going to be self-employed, or under contract, if you’ve paid regular social security contributions in another EU country for two full years before going to Italy (e.g. to look for a job), you’re entitled to social security cover for a limited period from the date of the last contribution made in your home country and you will not have to make any contributions during that period of time. You’re also entitled to be covered by the national health service.

Case 2:
If you are going to be under contract, and you make, for instance, €100,000 in one year, as we've said, the government will consider your actual income to be €10,000, therefore, the social security rate applied to you is 9.19% on the total income (€10,000), this means you will have to pay €919

Case 3:
If you are self-employed, the rate varies depending on your profession, nonetheless, the contribution will still be very low considering only 10% of your income will be taken into account.

TOTAL

Case 1:
€100,000 Income
- 90% (€90,000) EXEMPT
= €10,000 Taxable
23% Tax (€2,300)
+ 0% Social Security
YOU GET: €97,700
YOU PAY: 2.3% (2,300)

Case 2:
€100,000 Income
- 90% (€90,000) EXEMPT
= €10,000 Taxable
23% Tax (€2,300)
+ 9.19% Social Security (919)
YOU GET: €96,781
YOU PAY: 3.2% (€3,219)

Case 3:
Similar to Case 2