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

[i888]

Flat prices are so cheap in Bulgaria...
You can check some of the flats and prices in here: Login • Instagram

DISCLAIMER: I'm not affiliated with that site or the company... I just happen to follow them on IG... The sub €500/m2 prices for new beach properties seem unreal...

Bulgaria is saturated with old or new construction, many bought as investment, few are quality and a real investment. At 500 eur per square meter I don't think that is a good investment, better check that out and if you like it then talk with a construction engineer, he should tell you if it well built! In many places, doesn't matter if it's Romania or BG or even Italy they used less and poor quality materials, so you end up buying a bunch of garbage in some 10 years.

Personally I would buy something old like 2-4 years old because if it's crap made and maintained then it's easier to see.

 

[i888]

Interesting place to research a little. I was aware of that Bulgaria was cheap but not the many options for those of us willing to relocate. I wonder how it may be to live in either Romania or Bulgaria with a 400K Euro income per annum?

Those money should be more than enough for a normal life.

There are clubs with more than 10k eur per bottle of wine or smth else

 

[ilpablo]

Constanta and other cities next to the sea or in or near the Danube delta are ok to live ONLY during summer months, afterwards you'll feel depressed.
Let's say 3 months.

Where would you live then?

Guys, I'm having some real trouble understanding which one is the best option for me between Romania and Bulgaria.

Can you help me?

I wouldn't really live there, but to be safe from my home country at least I would rent an apartment and live between different countries and move every 2/3 months (my home country 4/5 months, Spain/Portugal 2/3 months, somewhere else the rest of the time).

I would set up the company and maybe next year or after 2 years or so move somewhere else.

THE PROBLEM:
I need to officially relocate before the end of June, to don't be a tax resident this year in my country.
The easiest move could be to go to Malta and keep my Ltd (now under 100k/y) at least for a while, but the process to get the Residence Permit became longer due to the covid procedures and I will not be in time anymore. Btw I expect the business to grow up, so the company will be still an issue since they will raise taxes and after 100k I will have to pay the VAT as well. I considered also going to Dubai, with the nomad visa, and switch my LTD into an LLP and get a zero-tax residence scheme, but still, I will spend a lot on the apartment if I want a nice one or around 4k in a place I wouldn't live in. So at this point, I'm not sure how much it makes sense.

WHO:
A single man around 40, 100% online business (digital goods and marketing services), I like the city life as well the beaches and sometimes the mountains, I want to travel as much as possible and live in different places during the next 1/2 year, I have a good English, poker player (the biggest problem for Dubai), and actually, I run a Uk Ltd.

ROMANIA WHERE:
Timisoara, Brasov, or Bucharest would be my way to go.

ROMANIA PROS:
Slightly cheaper setup costs (not relevant)
Cheaper taxes (relevant)

ROMANIA CONS:
I'm not sure where would I live, it seems more bureaucratic (but maybe I'm wrong), renting prices seem kinda similar to Bulgaria but properties to buy in good places seems way more expensive. Also, the cost of living seems a bit higher than in Bulgaria.

ROMANIA DOUBTS:
Timisoara seems convenient to reach by car and with very cheap flights connection with my hometown and some other cities (but limited in general, compared with Sofia and Bucharest), while Bucharest is not convenient to reach by car, but is more international and well connected with the rest of the UE. While in Timisoara there is a large Italian expats community, the international expats community seems to be more present just in Bucarest, which is more expensive than Timisoara and maybe a bit more than Sofia as well.

------

BULGARIA WHERE:
Sofia, Bansko, Varna or around there.

BULGARIA CONS:
I have never been to Bulgaria, and this is probably the bigger cons for me (since I have to decide quickly and move before the end of the month). The second biggest cons are the higher tax rates compared with Romania (10% on profit vs 3% on revenue). The 3rd cons are the Bulgarian language that I don't really understand, while I can understand a bit Romanian (this concern is more related to legal issues, than daily life, because I would speak English as much as possible).

BULGARIA PROS:
I'm not sure about it, but in terms of bureaucracy, the people I've been talking with seem more confident that I will have fewer headaches than I could have in Romania. This is also very important to me since I've got used to the smooth LTD UK management. Bulgaria seems slightly cheaper and maybe more expat-friendly. You can actually still buy a property for a very cheap price in Bansko or around Varna, compared to Romania.

BULGARIA DOUBTS:
At this point, I don't know how much it makes sense to care about the tax savings since we are talking about few thousand per year.
The problem is that once I take this decision I want to work hard to grow my business and I expect to increase the revenue/profits. Also, the accountants told me I can't deduct as many expenses in Bulgaria as I could in Romania (restaurants, travel, etc...), but on the other hand, maybe I could stay more during the year between Sofia, Varna, and Basko, and spend less money. I can also buy a small apartment and make a small investment instead of paying for rent.

The main problem is that in this situation with the covid restrictions, I couldn't easily take a plane and just go there and listen to my feelings.

So now I have to make a quick decision by just googling which makes everything more difficult.

I appreciate anyone who would contribute with some good advice

Thanks!

 

[uplana]

Guys, I'm having some real trouble understanding which one is the best option for me between Romania and Bulgaria.

Which country do you like the most?

 

[ilpablo]

Which country do you like the most?

This is the problem, I don't know. I've been in Romania a few times but never in Bulgaria.

This solution should be mostly for the company setup and let me travel 1/2 years without many trouble to stay 183 days.

Then I can decide where to actually live.

 

[fabyoga]

This is the problem, I don't know. I've been in Romania a few times but never in Bulgaria.

This solution should be mostly for the company setup and let me travel 1/2 years without many trouble to stay 183 days.

Then I can decide where to actually live.

I was in a similar position and choosing between Romania and Bulgaria and ultimately decided for Romania.

Here are a couple of thoughts that might help you:

1. Are you sure about the fact that you need to move before end of june? I am asking because there was a similar misconsception I had about this here in Germany which turned out to be wrong. In Germany the criteria is that in any given rolling 365 day window you spend no more than 183 days in Germany. It is not connected to the calender year. If you haven't verified this, I would advise you to double check with at least two italian tax consultants who are experienced with emigration matters.

2. If this is a longterm setup you are planning (like it is for me), I would ask myself if you want to learn the language at some point. For me I definitely want to. Romanian is a romance language, so it's much easier to learn than bulgarian (slavic language with cyrillic alphabet). For you even more because you know Italian.

3. If you plan to stay under 1mn EUR annual revenue in the near future, then 3% (1%) tax on the corporate level in Romania is still significantly less than 10% in Bulgaria.

4. To make such a move into a country that I haven't visited before would not have been an option for me.

I hope these points help.

 

[JohnLocke]

3. If you plan to stay under 1mn EUR annual revenue in the near future, then 3% (1%) tax on the corporate level in Romania is still significantly less than 10% in Bulgaria.

4. To make such a move into a country that I haven't visited before would not have been an option for me.

Point 3 makes good sense, however, point 4 what exactly do you mean?

I assume anyone considering to relocate to a new country i.e. Romania, Bulgaria etc. will at least take a flight there and stay for 14 days or even a month to get some impression about what this country and the town / city of your choice is a place you can feel would work for you.

I can't imagine that I would feel good living in Romania or Bulgaria, but Bahamas, the USA and Caribbean Islands would work well for me, so Switzerland would work, if I just had to lesson to my feelings.

 

[ZurielS]

Something to consider, if you're looking to travel around or live on countries other than your tax residence.
In most countries, in order to be officially tax resident (and get a certificate), you need to be there for more than 180days per year.

E.g.
Let's say you're a German citizen, but you want to become a UAE, Romania, etc. tax resident. You create your setup in the relevant country and earn money!

Germany will at some point ask you for proof of
1. not living in Germany for more than 6 months per year
AND
2. living in UAE, Romania, etc. for more than 6 months, coz otherwise you still have to pay your taxes in Germany.

You might circumvent this problem by living in Europe and moving around anonymously (i.e. cars or trains).

Bottom line:
Avoid flights or stay in your tax resident country for more than 6 months!

 

[ilpablo]

Flights don't prove much as you can go by flight for example in Barcelona, but come back by car/train/etc...
Anyway you must have something to prove you live there if they ask you. I believe a rental contract and some expenses are sufficient if you live in a 3rd country for a while (Example: you are German, you move to Romania, but you live 5 months in Barcelona, 2 months in Lisbon and 5 months in Germany). You don't have anything in your name in Germany, a rental contract in your new country, your company is there. How can they ask you to pay taxes in Germany in this case? I believe they have to prove you are still living in Germany.

 

[ilpablo]

I was in a similar position and choosing between Romania and Bulgaria and ultimately decided for Romania.

Here are a couple of thoughts that might help you:

1. Are you sure about the fact that you need to move before end of june? I am asking because there was a similar misconsception I had about this here in Germany which turned out to be wrong. In Germany the criteria is that in any given rolling 365 day window you spend no more than 183 days in Germany. It is not connected to the calender year. If you haven't verified this, I would advise you to double check with at least two italian tax consultants who are experienced with emigration matters.

2. If this is a longterm setup you are planning (like it is for me), I would ask myself if you want to learn the language at some point. For me I definitely want to. Romanian is a romance language, so it's much easier to learn than bulgarian (slavic language with cyrillic alphabet). For you even more because you know Italian.

3. If you plan to stay under 1mn EUR annual revenue in the near future, then 3% (1%) tax on the corporate level in Romania is still significantly less than 10% in Bulgaria.

4. To make such a move into a country that I haven't visited before would not have been an option for me.

I hope these points help.

Thanks man! I did make the same thoughts and I made the same decision!

I've been in Romania 7 times and I know what to expect, but I never been in Bulgaria, so I don't know what I'm missing there.

I hope I made the right decision, but anyway I can still change anytime in the future.

Good luck for everything for both of us!

 

[JimBeam]

Just want to point one more thing.

Let's say you make €500k/year and your business expenses are €100k/year, profit before taxes €400k/year...
In Bulgaria you would pay 10% on the €400k and that equals to €40k in tax per year. You would also have to pay additional 5% dividend tax on this so that's extra 20k/year to bank this money into your name, and that totals your bill at 60k.
You could live REALLY well with this kind of money in Romania.

Let's say you do the same in Romania, you would pay 1% on €500k that is total of €5k. The dividend tax is also 5% in Romania but I'm not sure if you pay it if or not. Even if you do, that would be slightly less than €25k so the total would be €30k.

Now let's say you run your business for a number of years and it will add up.

So, even if 10% tax is pretty low - 1% is really a bargain.
Romanian setup will save you nice amount of money and I would look no further...

 

[ilpablo]

Just want to point one more thing.

Let's say you make €500k/year and your business expenses are €100k/year, profit before taxes €400k/year...
In Bulgaria you would pay 10% on the €400k and that equals to €40k in tax per year. You would also have to pay additional 5% dividend tax on this so that's extra 20k/year to bank this money into your name, and that totals your bill at 60k.
You could live REALLY well with this kind of money in Romania.

Let's say you do the same in Romania, you would pay 1% on €500k that is total of €5k. The dividend tax is also 5% in Romania but I'm not sure if you pay it if or not. Even if you do, that would be slightly less than €25k so the total would be €30k.

Now let's say you run your business for a number of years and it will add up.

So, even if 10% tax is pretty low - 1% is really a bargain.
Romanian setup will save you nice amount of money and I would look no further...

Same thoughts man ✌

 

[jjrapy]

Flights don't prove much as you can go by flight for example in Barcelona, but come back by car/train/etc...
Anyway you must have something to prove you live there if they ask you. I believe a rental contract and some expenses are sufficient if you live in a 3rd country for a while (Example: you are German, you move to Romania, but you live 5 months in Barcelona, 2 months in Lisbon and 5 months in Germany). You don't have anything in your name in Germany, a rental contract in your new country, your company is there. How can they ask you to pay taxes in Germany in this case? I believe they have to prove you are still living in Germany.

usually in tax issues you have to prove you’re innocent

 

[AMD]

Avoid flights or stay in your tax resident country for more than 6 months!

if you do so you will have no proof that you have been there?

 

[fabyoga]

if you do so you will have no proof that you have been there?

as far as I understood from discussions with tax lawyers: rent contract and utility bills serve as proof that you are in the country. Ideally you have also regular withdrawals from a bank account (you could even ask someone to do those for you). Hence if nothing else points at you being somewhere else, that should suffice.

 

[ilpablo]

as far as I understood from discussions with tax lawyers: rent contract and utility bills serve as proof that you are in the country. Ideally you have also regular withdrawals from a bank account (you could even ask someone to do those for you). Hence if nothing else points at you being somewhere else, that should suffice.

Exactly!

 

[AMD]

as far as I understood from discussions with tax lawyers: rent contract and utility bills serve as proof that you are in the country. Ideally you have also regular withdrawals from a bank account (you could even ask someone to do those for you). Hence if nothing else points at you being somewhere else, that should suffice.

honestly, I would not trust that lawyer and what he say to be true!

 

[fabyoga]

honestly, I would not trust that lawyer and what he say to be true!

Why, what else would you consider necessary apart from those?

 

[halaba]

Best practice (but probably not needed anyway) would be also keeping all receipts of your daily life, as well as flight tickets.
In case you want to evade something, travel by train or car and ask a neighbor or some random to collect receipts for you as well, give a little money and everybody is happy.
Serialize all receipts and scan/copy them in order to preserve them readable for years. Avoid using your old Sim card.

You can't do more to proof your residency than that. (+ Rental + Utility Bills)

 

[Shlomo]

I am wondering how Poland compares? The maximum threshold for the low-tax micro-company is much lower, if I am not mistaken?