Low tax burden life plan suggestion for freelancer

[khinkali]

I am really interested about countries which they don't require to spend a lot of time there.

Georgia's Special Residency Regime is for high network (or income) individuals who don't want to spend 183 days here.

But why is it helpful to get another tax residency if it doesn't reduce any other tax obligations? You might be able to use an offshore tax residency's TIN to get bank accounts, broker accounts etc. and illegally evade taxes where you're resident. The penalties are likely to be severe if you're caught.

There are some approaches discussed on these forums for using DTA loopholes between specific countries. But I'd say this needs expert and experienced advice to keep you clear of prosecution. It's not a simple do-it-yourself process like moving to a lower tax country from a country that doesn't tax citizen ex residents.

 

[JustAnotherNomad]

He is thinking about living somewhere else on paper and living in Poland as a tourist.
Which is obviously illegal, but it’s also unlikely he’ll be caught.
This is different from living in Poland on paper and hoping not to get caught using tax documents from an offshore country. In that case, the risk is much, much higher.

 

[khinkali]

unlikely he’ll be caught

True, it seems easy to float around EU countries as a short term tourist and avoid tax residence as long as you make the strongest tie and longest stay with a country that has clear residency rules.

With no border checks I guess Schengen provides the world's easiest opportunity to overstay as a non-declared tax resident, paying your way with cash.

 

[JustAnotherNomad]

True, it seems easy to float around EU countries as a short term tourist and avoid tax residence as long as you make the strongest tie and longest stay with a country that has clear residency rules.

Which he wouldn’t do. But I know a lot of people who have moved from their home EU country to another EU country (being a nomad, I hand out with expats a lot), their customers are in their home country, they bill them from their home country (parents’ address or company in home country), and then they just don’t pay tax in the new country, despite being registered as a resident. Instead they just file taxes as if they still lived in their home country. In the cases I know about, both countries are high-tax countries and people probably didn’t even realize they were doing anything wrong.
I know of one such case, where a guy’s company in his home country was audited and as part of that, the tax authorities in his home country moved his tax residence to his “new” country (where he has lived for 15-20 years). They even paid back his taxes and said he should pay them to the other country.
So it’s extremely rare that anything like that happens, and usually only as part of an audit.

With no border checks I guess Schengen provides the world's easiest opportunity to overstay as a non-declared tax resident, paying your way with cash.

That’s why I don’t see the point with Cyprus, as Cyprus is not part of the Schengen area, at least if you spend almost all your time in Poland. But what do I know, I guess he should talk to a Polish tax lawyer and get a legal opinion. After all, the first tie-breaker is where he has a “permanent home available” - would that be in Poland if it’s his girl-friend’s apartment and they aren’t married? I would say the answer is probably yes if he spends almost all his time there. But again, the big question is how likely he is to get caught.

 

[JustAnotherNomad]

Actually @dziter you could also look into Romania. They have some tax incentives for software companies. I believe there is no income tax for software developers.

http://www.fredpayroll.com/income-tax-exemption-it-employees/https://home.kpmg/ro/en/home/insights/2018/01/salary-tax-exemption-software-development.html
Ideally you could set up a company in Romania and get personal residency there. Then pay yourself a really high salary and pay almost no corporate income tax.
Just another option...

 

[dziter]

Of course if you can convince them that you fulfill the tie-breaker rules specified by article 4 in the DTA (which basically means that you have closer ties to Cyprus than to Poland)

If I have a rent in Cyprus and a company in Cyprus, I think it’s clear than my biggest ties will be with Cyprus and not Poland, no?
I have to be under the radar. By the way, I am wondering how they could try to be in contact with me if I leave Poland in case of..

And if they won’t matter anyway, why even bother with such a complicated setup.

I totally agree. So I am lost to be honest and I come point to the beginning (situation I was in June). Where it’s easy to be tax resident with good tax rate without spending too much time there?

I’m just saying that Bulgaria is probably easier and it might also be easier to claim you were in Bulgaria and you drove across the border (though not really because they’ll ask for receipts).

I start to read and I am doing research on Bulgaria.
Something is just bothering me. It was said before than it will be better to setup somewhere in Schengen area and move free to Poland easily.
The thing is: Bulgaria (and Romania, Cyprus..) are not in Schengen area. They are in EU but they are not in Schengen.
So I am wondering even with that if it’s easy option?
Or even if they have border, the fact we can move by the road and train are making these places still great options?

He is thinking about living somewhere else on paper and living in Poland as a tourist.

Yes, for now it’s like that. Don’t know about the future and what I will have to achieve/change still..

After all, the first tie-breaker is where he has a “permanent home available” - would that be in Poland if it’s his girl-friend’s apartment and they aren’t married?

If Poland is bothering me, I can always say it’s : my tax residency address + parents home address + rest of the time I travel.

you could also look into Romania.

I read. Seems interesting but complicated and specific too.
They have great soletrader/micro company system. But I need a real company and in this way it seems tricky. But I definitely look for it.

So to sum up, I want to be tax resident in a country which doesn’t need me to spend too much time there and where it’s easy to go/leave without too much questions.

From what I understood, options are:
- Cyprus : I need to have a place to stay full-year, setup company and spend at least 60 days there
- Bulgaria : Buying flat/house and setup the company there is enough. No time there is mandatory.
- Romania : Setup the company there and show them my vital/center interests are in Romania.
- UAE : Spend small time there (for tax residency certificate is 6 months) and setup company there.
It’s difficult to open a bank account, my customers will be scared to deal with my company and maintenance costs is high compared to 70/100k turnover may be.
- Georgia : I don’t satisfy now the conditions for HNWI. Turnover is ok but I started my business 2 years ago and they ask for 3 years activity.

Thank you for answer and I am open to any country suggestion.

 

[JustAnotherNomad]

If I have a rent in Cyprus and a company in Cyprus, I think it’s clear than my biggest ties will be with Cyprus and not Poland, no?

Maybe, maybe not. I don’t know. You should probably ask a Polish tax lawyer. Because what you and I think doesn’t matter, it’s the Polish taxman’s opinion that matters.

I totally agree. So I am lost to be honest and I come point to the beginning (situation I was in June).

Well, not quite, as I recall, in the beginning, you wanted to do things the legal way. Now you have quickly been spoiled by all the bad people in this forum.

It was said before than it will be better to setup somewhere in Schengen area and move free to Poland easily.
The thing is: Bulgaria (and Romania, Cyprus..) are not in Schengen area. They are in EU but they are not in Schengen.

Sorry, my bad. In that case forget about it of course, then there’s little difference to Cyprus.
Maybe Czechia could be interesting at 15% or something in taxes for freelancers without a company.

- Bulgaria : Buying flat/house and setup the company there is enough. No time there is mandatory.

I don’t even think you need to buy anythunf

- Romania : Setup the company there and show them my vital/center interests are in Romania.

If you tell them you live there, I’m sure they will take your tax money. Shouldn’t be

- UAE : Spend small time there (for tax residency certificate is 6 months) and setup company there.
It’s difficult to open a bank account, my customers will be scared to deal with my company and maintenance costs is high compared to 70/100k turnover may be.

Freelance licenses are cheaper and you can always use something like an LLP to show to your customers. EMIs can also solve the banking problem. At least that’s what I’ve heard.

- Georgia : I don’t satisfy now the conditions for HNWI. Turnover is ok but I started my business 2 years ago and they ask for 3 years activity.

I think there are other options like the IT virtual free zone or something like that. You should be able to get residency quite easily.

 

[dziter]

Well, not quite, as I recall, in the beginning, you wanted to do things the legal way. Now you have quickly been spoiled by all the bad people in this forum.

I still want to do as legal as I can.
But now the big difference is: I can’t stay a big part of the year outside Poland (2-3 months maximum I could manage but not more).
So I don’t know the best options.

Maybe Czechia could be interesting at 15% or something in taxes for freelancers without a company.

Yes I saw Czechia. I will read again more but I need a company and not soletrader..

I don’t even think you need to buy anythunf

I read somewhere it’s better for Bulgaria tax office rather than renting these days but may be it was more marketing. I didn’t read a lot of sources.

Freelance licenses are cheaper and you can always use something like an LLP to show to your customers. EMIs can also solve the banking problem. At least that’s what I’ve heard.

Tell me more please.
You mean redistribute LLP profits to Freelance license (UAE) exactly?

Where will be the best for the LLP?
Is it legal? What about the place of management or other things?

I remembered in the « past » I had advice to do soletrader + company (in Poland) to invoice my customers and have benefits of soletrader structure

You should be able to get residency quite easily.

Residency (even second passport sometimes) is quite easy.
But what I need is to get tax residency (that I could prove to France for example if needed) and not only simple residency.

Am I wrong?
Thanks for your help in the long duration.

 

[JustAnotherNomad]

If you spend almost the whole year in Poland, it’s going to be difficult. The legal way would be to build substance somewhere else, but that might not be worth it for you.
You could try the options you have mentioned and hope that the Polish tax authorities would accept it (closer ties to the other country than to Poland), should you get audited. For that case, it might be better to pay some taxes than to pay nothing at all. But it’s not very likely you’ll be audited at all. You could ask a Polish tax lawyer’s opinion, but be aware that they may have to report you for asking - I’m not sure about the exact rules unter ATAD.

A LLP is tax transparent. The taxes are paid as if it didn’t exist.
You can also use a limited liability company in any country and invoice it or pay yourself a salary. That salary should usually be taxed where you live/have your tax residency. Then the company would only pay tax on what’s left as corporate profit. You’d have to leave some profit in the company, but then the corporate income tax should be minimal.

As you rightly pointed out, the big question is where you want to have your tax residency. Maybe you should talk to your girlfriend and ask her where she wants to spend time. Maybe she prefers Cyprus over Bulgaria.
But I have no idea what documents the French authorities will demand to let you go as a tax resident. I would be surprised if you have to give a tax residency certificate. I would expect that regular residency documents and a rental contract/utility bill should be enough. But maybe they need more.
In any case you should talk to people who have experience and not just read the theory. Talk to French expats/nomads. Talk to people and service providers who have experience with the countries you’re interested in. Some countries say “you have to spend 183 days to get a tax residency certificate” - but in practice, much less is required.

 

[fshore]

Think about the practicalities of living in Poland without being resident. Will you have private health insurance or do you want to use public hospitals? If using public hospitals you'd need the EU health card from another country (Cyprus) and it's only valid for 3 months stay. If you come and go and use the card several times in a year then this data will be recorded in the system somewhere.
The might be other things that you'd want think about like will you ba having a car?
drivers license - you might not be able to renew the old one if you don't live in that country anymore, might have to renew it in Cyprus.
And these days the lockdown situation would have made it hard for everyone that stay in a country they don't officially live in.

 

[blockchain4ever]

Actually @dziter you could also look into Romania. They have some tax incentives for software companies. I believe there is no income tax for software developers.

http://www.fredpayroll.com/income-tax-exemption-it-employees/https://home.kpmg/ro/en/home/insights/2018/01/salary-tax-exemption-software-development.html
Ideally you could set up a company in Romania and get personal residency there. Then pay yourself a really high salary and pay almost no corporate income tax.
Just another option...

Interesting! I think this option requires a bit more in-depth review, maybe a separate thread. There are significant social security contributions (in %) to be paid in Romania, but I saw in an EY report that there are maximum levels, like in Bulgaria. Also part of the social security contributions are paid by the employee - are those waived or not?

 

[JustAnotherNomad]

Interesting! I think this option requires a bit more in-depth review, maybe a separate thread. There are significant social security contributions (in %) to be paid in Romania, but I saw in an EY report that there are maximum levels, like in Bulgaria. Also part of the social security contributions are paid by the employee - are those waived or not?

I have no idea, we should probably start a new thread and someone should investigate for the sake of all of us.

 

[Max2020]

I am in the same boat as yourself.

Personally I use payroll processors (Portage salarial) from the UK. Many others available in Luxembourg, Malta etc.
This way your payroll is done properly and amount can be split and paid between 2 countries. This result in lower taxes paid. Typically they charge 350 euros per month.

Because you are no longer resident in France you won't have to pay taxes anymore there.

You can open an account with N26 in France and get part of your wages paid there and polish tax office won't know about it. It will be reported to french authorities but it does not matter.

This will save you the hassle of having to open structures with your name all over the public registers as a company director.

Keep it simple. 100k is not enough to justify opening structures to your name .

Which payment processor do you use?

 

[ImKing]

Which payment processor do you use?

second that question.

If you live as a digital nomad you may be able to avoid taxes using a UAE or Seychelles company, have a look in mentor gold to see how it will or can work.