Low tax, low cost with good freedom setup: Romania vs Bulgaria is the final match?

[ilpablo]

Hey guys, let's say there is a competition, like the Champions League!

And these solutions comes to the final stage, which one would win if you have to choose?

Given that the "go with this solution" points for many us are these:

- Low taxes
- Low costs of setup and maintenance
- Freedom to travel
- Local expat community
- Good flights connection
- Good quality of living (safety, food, lifestyle, etc...)
- Flexibility to relocate elsewhere later without dismissing you company setup
- English speaking country

Which of these setup could be the final winner?

This is my analysis:

1. LLP Uk + Dubai residency = zero tax rate and should be legal (someone can confirm that is 100% legal to own a UK llp company which is tax transparent while being resident in Dubai, without breaking any rules?), but a bit expensive living there.
2. Maltese company + maltese Holding = 5% tax rate, but very expensive because you need office, employees and local director plus 2 companies = trading + holding. Seems quite expensive and complicated.
3. Romania company + Romania residency = 3% tax rate on total turnover but only 1% if you have an employee + 5% on dividends.
4. Bulgaria company + Bulgarian residency = 10% tax rate on profits + 5% on dividends. More or less same issues and advantages like in Romania about the car, the social contributions, etc, but here I won’t understand anything about Bulgarian language. I think Romanian language is easier). Both Romania and Bulgaria come with these advantages plus: they are both also quite cheap to setup and maintain and to create the "substance" you need if you want to relocate somewhere else in Europe later. You can also rent or buy a car from your company and use to to move within Central Europe. (They have the 183 days rule, but I've been told, it's really hard that someone will check about that (can someone confirm about this?)
5. Andorra company + Andorra residency 10% tax rate but more expensive

To me it seems that if you want to stick around europe and have pretty much flexibility the best solutions are these two:

1) LLP Uk with UAE Residency (then if you want to you can live in Europe 10 months a year (but not in the same country).
It's more expensive but worth considering. The problem is that renting an apartment if you are not living in Dubai is like wasting 10k a year.

2) Company setup in Romania and Bulgaria, with local residency. Cost much less and you are still free to move around europe (and also you have a car to do so if you want to). The main disadvantages are the capital gains taxes (which don't apply in Malta, Cyprus, Dubai and I think also Gibraltar).

But in this case, once you get a local employee, you can also choose to relocate elsewhere later, with pretty much the same benefits:
- Malta (zero tax rate)
- Portugal (zero tax rate)
- Greece (2.5 tax rate)
- Dubai (zero tax rate)
- Gibraltar (zero tax rate)
- Other places with a bit more higher taxes (but only if you distribute dividends, if not it's not an issue)

Maybe it is, but since i'm not ready for that big move now, I believe these could be the best possibile setup, while I will decide where to settle in the near future, let's say in 2/3/4 years from now.

Which is in your opinion the best setup, to live with very low tax rates, low fixed costs, without the need to change your company structure or loose your benefits if you move yourself to another country, be free to travel almost anywhere and whenever you want (for example you can live 5 months in Barcelona and 5 months in Paris, while being resident in Bucarest or Sofia) and also have a car if you want to?

And which one between Romania and Bulgaria would you choose as your favorite solution?

Any consideration on the matter will be very appreciated!

 

[orangekangaroo]

From personal experience. I lived in Malta and I am not built for island living, especially dusty Malta with a population of 450K one of the most densely populated places on the planet. Friendly people though. Andorra is a great place if you love the outdoors and have a family. Quality of life is good although finding good housing is getting more and more expensive. Surprisingly there is a good ex-pat community from all over the globe. Running and growing a business from this place has its challenges.

Romania vs Bulgaria. The micro company taxation makes Romania a lot more competitive.

 

[ilpablo]

From personal experience. I lived in Malta and I am not built for island living, especially dusty Malta with a population of 450K one of the most densely populated places on the planet. Friendly people though. Andorra is a great place if you love the outdoors and have a family. Quality of life is good although finding good housing is getting more and more expensive. Surprisingly there is a good ex-pat community from all over the globe. Running and growing a business from this place has its challenges.

Romania vs Bulgaria. The micro company taxation makes Romania a lot more competitive.

It seems to me as well, but some people still prefer Bulgaria (i've also many friends which have chosen to setup the company and their fiscal residency in Sofia, Bansko or Plovdiv and I'm trying to understand why).

Also Bulgaria (except Sofia) seems to have less good flights connections than other cities in Romania, like Timisoara, Bacau, Iasi and Cluj.

I heard good stuff about Brasov, but since there isn't an airport and it's far away from the border too, i would choose probably Timisoara.

Edit the flights connection with Timisoara are very good with italy, but quite limited with other countries.

 

[orangekangaroo]

Brasov airport is supposed to open up this year.

https://centreforaviation.com/data/profiles/newairports/brasov-ghimbav-international-airport
I have turned into a happy driver this year with all the restrictions.

 

[ilpablo]

Brasov airport is supposed to open up this year.

https://centreforaviation.com/data/profiles/newairports/brasov-ghimbav-international-airport
I have turned into a happy driver this year with all the restrictions.

ahahah yeah me too! Good to know about the airport in Brasov. It's a very beautiful city and the airport was waited for long time

Btw depending where you come from, but Timisoara is still the best options if you travel by car from/to Central/West Europe

 

[i888]

Timisoara has an Italian expat community, so if you are an Italian happy you.

People are choosing Bulgaria maybe because the summer is a little longer and beaches are closer and we'll maintained.

Romanian side figured out that they should maintain also, probably a genius around there, the beaches.

Don't forget that the Danube's delta is north of Constanta and there are also some less known beaches, wild, but people talk less about.


Cities with airports, excepting the capital Bucharest, have only good connection with the countries were big Romanian communities are, like Italy, Spain, De, Uk. Anyway a check on momondo or other sites like this will clean the fog on this subject.

 

[backpacker]

It would be great if you would spend a word about what do you think regarding the comparison between the choice of Romania or Bulgaria.

Because you asked I put it here once again.
I can not talk about Romania because I never looked any deeper into it. A short look into the Romanian tax code reveals that it is less attractive compared to Bulgaria for the things I am interested in: That is bank interest, dividends, capital gains from financial instruments.
Since I am a private individual I only look into personal taxation.
Furthermore:

regarding establishing in the EU: Rather sooner than later politicians will agree on a European wealth levy (no, it is not a tax - just a levy for a limited time due to the *whatever* crisis).

This perceived danger of a wealth levy in the not-so-distant future + the endless bureaucracy in all of these EU states with their overregulation will most likely keep me away from moving there.

 

[ilpablo]

Because you asked I put it here once again.
I can not talk about Romania because I never looked any deeper into it. A short look into the Romanian tax code reveals that it is less attractive compared to Bulgaria for the things I am interested in: That is bank interest, dividends, capital gains from financial instruments.
Since I am a private individual I only look into personal taxation.
Furthermore:

Hi, and thank you to participate in this discussion.

So, as far as I understand, you would benefit from capital gain and passive income.

That's for sure a different story instead of open a company.

Btw in Romania you can still invest through your company and benefit from the same low tax rates (3% or 1% if you hire yourself + 5% on dividends)

In your case I would choose Malta or Cyprus, much better than Romania and Bg, but if you don't like islands, probably this is also a good solution!

 

[ilpablo]

Timisoara has an Italian expat community, so if you are an Italian happy you.

People are choosing Bulgaria maybe because the summer is a little longer and beaches are closer and we'll maintained.

Romanian side figured out that they should maintain also, probably a genius around there, the beaches.

Don't forget that the Danube's delta is north of Constanta and there are also some less known beaches, wild, but people talk less about.


Cities with airports, excepting the capital Bucharest, have only good connection with the countries were big Romanian communities are, like Italy, Spain, De, Uk. Anyway a check on momondo or other sites like this will clean the fog on this subject.

Yes, you are totally right about that.

Btw which one would you choose between these two options, and why?

 

[i888]

Yes, you are totally right about that.

Btw which one would you choose between these two options, and why?

Romania

Low taxes, the language sounds better, more cities, many with nice architecture, to visit and stay

 

[ilpablo]

Romania

Low taxes, the language sounds better, more cities, many with nice architecture, to visit and stay

Yup! That's what I thought as well

 

[halaba]

I did choose Romania.
If you relocate to another county (and use your home as company address), then you have to get a new accountant and change your address at the specific gov offices/notary.
That might be a negative point for you, as well as you have to get a couple neighbors to sign that they are okay with a company in the residential building.

If you rent an office or use an attorney as company address, nothing will disrupt your relocation. Accounting is done in most cases just by email.

 

[ilpablo]

I did choose Romania.
If you relocate to another county (and use your home as company address), then you have to get a new accountant and change your address at the specific gov offices/notary.
That might be a negative point for you, as well as you have to get a couple neighbors to sign that they are okay with a company in the residential building.

If you rent an office or use an attorney as company address, nothing will disrupt your relocation. Accounting is done in most cases just by email.

Hi @halaba ! So are you happy with your choice about Romania?

Do you really live there or you setup your stuff just for tax purposes?

I'm probably gonna do the same move...

May I ask you which city did you choose?

 

[halaba]

Hi @halaba ! So are you happy with your choice about Romania?

Do you really live there or you setup your stuff just for tax purposes?

I'm probably gonna do the same move...

May I ask you which city did you choose?

Yes I live in cluj, I'm happy but afterwards I would rather go with Timisoara

You can't just do tax stuff here, you always need to have your center of live there or you gonna repay to another gov, so no apt in your home country, and instead of visiting family for 4 months, just go somewhere else and do holiday from the saved tax money

 

[ilpablo]

Yes I live in cluj, I'm happy but afterwards I would rather go with Timisoara

You can't just do tax stuff here, you always need to have your center of live there or you gonna repay to another gov, so no apt in your home country, and instead of visiting family for 4 months, just go somewhere else and do holiday from the saved tax money

Yup I'm thinking to go in Timisoara and not spending more than 5 months in my home country.

I was wondering if I rent an apartment but I don't stay in Romania for 183 days, but I rather spend let's say another 5 months elsewhere (without triggering the 183 days rules), I think I would not get any problems or I will?

 

[Marc M]

I know both countries quite well and decided to settle in Varna/Bulgaria. Nice beaches and city made my choice besides the tax issue. No beaches like this in romania.
Can support in both countries with company founding and Accounting

 

[tyrexoid]

I chose Montenegro despite higher taxes (9%) because of clean water on the beach, have a look at the photos, it's beautiful ))) , all cities are close to the beach and there's a ferry to Italy from Bar city (to go shopping). Also capital Podgoriza city is 1 hour drive from any other city and has international flights pretty cheap to any location in EU. They also grant residency like the other mentioned places (either with company formation or with house purchase). real-estate is kinda expensive though, but I still bought a 1 bedroom just for the pretty views from a hill. it's just damn pretty country, mountains and hills right next to the sea shoreline. i think they have some skiing in the winter too. gonna relocate next year though, still haven't been there lol only saw photos and videos from youtube

 

[JimBeam]

Romania - 1 to 3% on income + 5% on dividends is a great deal. I would personally go with Timisoarra or similar smaller city close to an airport (and would stay away from the main city). You could get a decent quality of life there with easy access to rest of the Europe by plane or a car. If you don't plan on going over 1M or if your business doesn't have much expenses this is probably the best option.

Bulgaria - not that favourable geo location... Cheap housing near the see if you want to live on the sea side and buy a real estate there. 10% CIT + 5% dividends... If you have a good accountant it can be a decent setup I guess... Also, I've read on this forum that having expensive car registered in Bulgaria can save you money (Ferraris, Lambos etc)...

Montenegro - great beaches and beautiful country but pretty expensive housing (compared to Romania or Bulgaria) and the worst geo location as you can't move anywhere with a car (mountains all around so you might have that island feeling a bit). 9% CIT + 5% dividends for non-residents... EUR currency (Romania has RON and Bulgaria BGN).

All other options that require having business in one country and living in another (Andorra, Malta or Gibraltar) would be more expensive than any of the 3 above. If you plan to relocate and live there - it all depends on what are your expectations, do you have family, do you need international schools etc.

@tyrexoid - you bought a flat in Montenegro but you never been there? Wow...

 

[tyrexoid]

Romania - 1 to 3% on income + 5% on dividends is a great deal. I would personally go with Timisoarra or similar smaller city close to an airport (and would stay away from the main city). You could get a decent quality of life there with easy access to rest of the Europe by plane or a car. If you don't plan on going over 1M or if your business doesn't have much expenses this is probably the best option.

Bulgaria - not that favourable geo location... Cheap housing near the see if you want to live on the sea side and buy a real estate there. 10% CIT + 5% dividends... If you have a good accountant it can be a decent setup I guess... Also, I've read on this forum that having expensive car registered in Bulgaria can save you money (Ferraris, Lambos etc)...

Montenegro - great beaches and beautiful country but pretty expensive housing (compared to Romania or Bulgaria) and the worst geo location as you can't move anywhere with a car (mountains all around so you might have that island feeling a bit). 9% CIT + 5% dividends for non-residents... EUR currency (Romania has RON and Bulgaria BGN).

All other options that require having business in one country and living in another (Andorra, Malta or Gibraltar) would be more expensive than any of the 3 above. If you plan to relocate and live there - it all depends on what are your expectations, do you have family, do you need international schools etc.

@tyrexoid - you bought a flat in Montenegro but you never been there? Wow...

Yup. but I've been in many countries in the last 10-15 years so I know what to expect, based on some research. Also have friends who've been there and they told me about both pros and cons of the place. Regarding real-estate purchase online it's pretty common AFAIK (well maybe not for luxury purchases, but for average cheap condos and housing it's not a big deal, since the real-estate agents are both providing zoom calls for viewing the place, video recordings if they can't do a live call, warranties by their agency that things are ok legally (house is not illegal construction etc', there are plenty pitfalls with real-estate if doing that without a trusted agency, must be careful).

 

[Verbatim]

Romania - 1 to 3% on income + 5% on dividends is a great deal. I would personally go with Timisoarra or similar smaller city close to an airport (and would stay away from the main city). You could get a decent quality of life there with easy access to rest of the Europe by plane or a car. If you don't plan on going over 1M or if your business doesn't have much expenses this is probably the best option.

Bulgaria - not that favourable geo location... Cheap housing near the see if you want to live on the sea side and buy a real estate there. 10% CIT + 5% dividends... If you have a good accountant it can be a decent setup I guess... Also, I've read on this forum that having expensive car registered in Bulgaria can save you money (Ferraris, Lambos etc)...

Montenegro - great beaches and beautiful country but pretty expensive housing (compared to Romania or Bulgaria) and the worst geo location as you can't move anywhere with a car (mountains all around so you might have that island feeling a bit). 9% CIT + 5% dividends for non-residents... EUR currency (Romania has RON and Bulgaria BGN).

All other options that require having business in one country and living in another (Andorra, Malta or Gibraltar) would be more expensive than any of the 3 above. If you plan to relocate and live there - it all depends on what are your expectations, do you have family, do you need international schools etc.

@tyrexoid - you bought a flat in Montenegro but you never been there? Wow...

montenegro has divident tax only for non-residents? what about residents? is it zero?