HK or USA LLC for a bulgarian resident ?

[daniels27]

1. Bulgaria has actively decided not to enforce their own laws, in exchange for people spending time there and spending money (same as e.g. Portugal, Thailand, maybe Cyprus)

Yes, and this does not apply to people that cannot and will not move. They can tax them quite a lot before they leave their mother and god alone. And they are doing it. See my post here:

D

Post in thread 'Best Global Locations for Minimizing Personal and Business Taxes with a 190K EURO Budget'

Jan 13, 2025

However, I feel bad for the locals because they pay more taxes than foreigners.

Hahaha! The world is simple. The more you travel and the less local you are, the less you pay and the more you get. Always been like that, always be like that. The reason why foreigners pay less is not discrmination, it is just a result of them being able and willing to move. it is a free market.

• daniels27

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[baliz71]

So, what about to have an LLC here in bulgarie (for example to enter Amazon FBA in USA) then just pay the 10% company tax here in Bulgaria (like a bulgarian company?) - at the end this is the same, but with less paper and hassle with administration from USA side, no ? I just pay a profit from the LLC in bulgaria, pay the 10% tax on profit, and done ?

 

[daniels27]

So, what about to have an LLC here in bulgarie (for example to enter Amazon FBA in USA) then just pay the 10% company tax here in Bulgaria (like a bulgarian company?) - at the end this is the same, but with less paper and hassle with administration from USA side, no ? I just pay a profit from the LLC in bulgaria, pay the 10% tax on profit, and done ?

Not really because most likely, the Bulgarian tax guys want to see the whole accounting as for a Bulgarian company.

 

[baliz71]

Not really because most likely, the Bulgarian tax guys want to see the whole accounting as for a Bulgarian company.

Okey, i was not thinking it was working like that. Just maybe that they asked the profit of the US LLC then tax it and bye. It can be a nightmare if they treat the accounting also like as an bulgarian company.

 

[daniels27]

Okey, i was not thinking it was working like that. Just maybe that they asked the profit of the US LLC then tax it and bye. It can be a nightmare if they treat the accounting also like as an bulgarian company.

The everybody would be doing this and pay all their holidays and cars on company cost.

 

[Island Insider]

I was told by someone that pass though LLC in Bulgaria could be taxed at 5% (dividend tax) if paid out as dividends not monthly income (which would be 10% as i understand). Would be great to hear if anyone has experience with that.

 

[Don]

I was told by someone that pass though LLC in Bulgaria could be taxed at 5% (dividend tax) if paid out as dividends not monthly income (which would be 10% as i understand). Would be great to hear if anyone has experience with that.

10% CIT + 5% WHT (if you are Bulgarian resident)

 

[Island Insider]

10% CIT + 5% WHT (if you are Bulgarian resident)

Thanks for reply, my idea was that Wyoming pass though LLC wont be treated as Bulgarian company for Bulgarian tax resident, but as i understand they will enforce same rules as on Bulgarian company.

I spoke to Bulgarian attorney first he said as well 15% in total and then followed up that if i set up a Bulgarian Company as separate entity, where i pay 200 social tax flat, it might work out that i will pay only 5% for Wyoming LLC that i own as well - if i distribute these profits as dividends or I will pay 10% if i receive funds from this WY LLC as physical person I can declare it monthly with only 10% income tax

But he said that setting up this Bulgarian company separately might help with my idea with WY LLC, so i guess it is a very gray area and there is a good chance that i will pay 10% CIT + 5% WHT as you described

 

[daniels27]

But he said that setting up this Bulgarian company separately might help with my idea with WY LLC, so i guess it is a very gray area and there is a good chance that i will pay 10% CIT + 5% WHT as you described

Yes, exactly. Depends how much risk you are willing to take.

 

[Don]

Yes, exactly. Depends how much risk you are willing to take.

1.5k EUR mistake can end up as a criminal sentence btw

 

[daniels27]

1.5k EUR mistake can end up as a criminal sentence btw

Yes. I am always astonished to see so many around here that are having a sound sleep in Bulgaria with their untaxed US LLC. But again, it really depends on the person how you can sleep.

 

[Island Insider]

1.5k EUR mistake can end up as a criminal sentence btw

Thanks a lot for sharing this! I thought that the only risk is I would be told i owe more tax

 

[Island Insider]

Do you guys know if a Bulgarian tax resident just receives monthly income from a third party US LLC that is not owned by him at all as a private contractor and client relationship (after signing w8 form in US) would that be taxed as 10% flat or would he be liable for any additional taxes.

 

[daniels27]

Do you guys know if a Bulgarian tax resident just receives monthly income from a third party US LLC that is not owned by him at all as a private contractor and client relationship (after signing w8 form in US) would that be taxed as 10% flat or would he be liable for any additional taxes.

In this case, you are most likely self-employed and owe social security contributions too
https://taxsummaries.pwc.com/bulgaria/individual/other-taxes

 

[Island Insider]

In this case, you are most likely self-employed and owe social security contributions too
https://taxsummaries.pwc.com/bulgaria/individual/other-taxes

Thanks!

 

[Don]

Thanks!

I found that Bulgarian company suits well with Estonia residency.
You need Estonia residency and either Estonia holding + Bulgaria subsidiary, or operate through branch office of Estonian company in Bulgaria.
Either way, in such case the total tax is 10%, as the withholding rate can be reduced.

 

[Island Insider]

I found that Bulgarian company suits well with Estonia residency.
You need Estonia residency and either Estonia holding + Bulgaria subsidiary, or operate through branch office of Estonian company in Bulgaria.
Either way, in such case the total tax is 10%, as the withholding rate can be reduced.

As I understand you mean your total tax will be 10% if you dont distribute profits to yourself from Estonian holding or branch? Because I think Estonia taxes both residents and e-residents on distribution of profits eventually.

 

[JustAnotherNomad]

Estonia has no tax on dividends.
If OP moves to Estonia and the Estonian authority accepts that the company shall be taxed in Bulgaria (and not in Estonia, due to PE in Estonia), then the total tax would be 10% - in Bulgaria only, no tax would be due in Estonia.
This would also work with Malta (5%). But I guess Estonia will become stricter with such setups if there is no proper substance in the other country.

 

[Island Insider]

Estonia has no tax on dividends.
If OP moves to Estonia and the Estonian authority accepts that the company shall be taxed in Bulgaria (and not in Estonia, due to PE in Estonia), then the total tax would be 10% - in Bulgaria only, no tax would be due in Estonia.
This would also work with Malta (5%). But I guess Estonia will become stricter with such setups if there is no proper substance in the other country.

Ok clear and as I understand Bulgaria will not withold 5% on dividends knowing that company is owned by Estonian tax resident

 

[Island Insider]

Regarding creating substance in Bulgaria for Estonian resident owned company in Bulgaria. Would you recommend using a Bulgarian or some other nationality nominee director / or second nominee director in addition to Estonian resident who is the owner and director of the Bulgarian company.