Malta vs Cyprus vs Estonia vs UAE paired with NHR

[JMan94]

Hi all
I am moving to Portugal very soon under NHR (so staying in portugal for 6 months and one day) and am looking for some help wrt fiscal optimalizations.
I am a software dev for a US firm and I am also a freelance consultant as secondary job, currently I have an LLC.
I am looking to setup somewhere else in order to pay as little tax as possible. I net about 150k a year from my freelance activities, so its not like I have millions
Does anyone know what country would be most optimal for me?

So far I have seen Malta - Estonia - Cyprus and UAE being suggested...

 

[FantomOffshore]

I would consider Cyprus, there is a relatively vibrant software dev. community there. Malta is interesting too, it has a lower tax rate than Cyprus but is more expensive to live and yet more British.

UAE will have you paying even less tax but it is not for everyone.

Keep in mind that if you live in Portugal you become a Portuguese tax resident and will have to pay the NHR Portuguese tax rate irregardless of where you place your LLC.

I am not an expert at all on Portugal, but I don't think there is a ton of optimization to do there. There's the flat tax, social security and that's that.

 

[Marzio]

I'd say you have two options:

1. Romanian micro-company pays 1% CIT + 8% dividends
2. If you are EU citizen you could move to Malta and manage an offshore company paying tax only on sums remitted to Malta + 5K flat tax year

The Malta option could be more tax efficient but you have to stay in Malta 183 days / year and it's not everybody's cup of tea.

 

[RealDude]

I would consider Cyprus, there is a relatively vibrant software dev. community there.

Which city?

 

[JMan94]

I would consider Cyprus, there is a relatively vibrant software dev. community there. Malta is interesting too, it has a lower tax rate than Cyprus but is more expensive to live and yet more British.

UAE will have you paying even less tax but it is not for everyone.

Keep in mind that if you live in Portugal you become a Portuguese tax resident and will have to pay the NHR Portuguese tax rate irregardless of where you place your LLC.

I am not an expert at all on Portugal, but I don't think there is a ton of optimization to do there. There's the flat tax, social security and that's that.

it is my understanding I can setup a maltese company while living in Portugal and just pay for substance then pay myself divident under NHR and pay 0 tax in Portugal and 5% in malta

 

[Marzio]

it is my understanding I can setup a maltese company while living in Portugal and just pay for substance then pay myself divident under NHR and pay 0 tax in Portugal and 5% in malta

Who will be operating the Maltese company?

The Phantom of the Opera?

 

[JMan94]

A nominee director..

 

[Sols]

If questioned, nominee directors do not help you at all for tax residence purposes. Tax authorities disregard them and look at the UBO.

 

[JMan94]

If questioned, nominee directors do not help you at all for tax residence purposes. Tax authorities disregard them and look at the UBO.

So offshoring isnt viable in this particular case then?

 

[FantomOffshore]

So offshoring isnt viable in this particular case then?

No, not in Portugal I think. Do you really want to be in Portugal?

 

[Sols]

So offshoring isnt viable in this particular case then?

Well, you wouldn't be the first (and not the last) person to do it under the Portuguese NHR program. Portugal is currently attracting a lot of wealthy people and they don't really want to scare them away by enforcing the full extent of the tax law. But if things change and you find yourself in a hostile situation with the tax authority, a nominee structure isn't going to be worth much.

Portugal's NHR program is meant for people with passive income. You can play make believe that your income is passive by appointing nominees, and chances are it won't be questioned. For now.

 

[FantomOffshore]

Which city?

Take a look here and go to the Discord, every city has meetings but Paphos is the largest I think. And there seems to be a low-rate of dropshipping / e-commerce / influencer type people too.

I'd say you have two options:

1. Romanian micro-company pays 1% CIT + 8% dividends
2. If you are EU citizen you could move to Malta and manage an offshore company paying tax only on sums remitted to Malta + 5K flat tax year

The Malta option could be more tax efficient but you have to stay in Malta 183 days / year and it's not everybody's cup of tea.

Interesting. Could you tell me more about that Maltese option for EU citizens. You basically pay 5K EUR + what kind of tax exactly? Links are appreciated. Have everything offshore with that amount of control would be very nice.

 

[Marzio]

A nominee director..

A nominee director is nothing more than a name on paper.

As @Sols said it could work until it won't and then you'll be for a surprise.

Links are appreciated.

https://corriericilia.com/publications/resident-non-domiciled-companies
https://cfr.gov.mt/en/inlandrevenue... for Individuals under the Income Tax Act.pdf

 

[FantomOffshore]

A nominee director is nothing more than a name on paper.

As @Sols said it could work until it won't and then you'll be for a surprise.



https://corriericilia.com/publications/resident-non-domiciled-companies
https://cfr.gov.mt/en/inlandrevenue... for Individuals under the Income Tax Act.pdf

Thanks! Very clear document. I did not manage to find the tax rate you have to pay on the remitted sums though? This has been kind of an eye-opener for me since Malta is brilliant for using an e-bike.

So from what I read there are two options in-play:

1. Having a double-company structure that has you paying 5% tax
2. Having the offshore structure that has you paying tax only on sums remitted to Malta + 5K flat tax if income > 35K.

Is the only big difference between these two structures the amount of income at which it becomes a "better deal"?

 

[Marzio]

Is the only big difference between these two structures the amount of income at which it becomes a "better deal"?

Basically if you want all the money in your name in your bank account go with structure one, if you don't care about having all the mney in your name in your bank account because you want to reinvest the money in other ways go with structue two.

The tax rate paid on the remitted sums should be the subject to personal income tax rates but i guess nobody will go after you if you buy groceries with a foreign card.

 

[FantomOffshore]

Basically if you want all the money in your name in your bank account go with structure one, if you don't care about having all the mney in your name in your bank account because you want to reinvest the money in other ways go with structue two.

The tax rate paid on the remitted sums should be the subject to personal income tax rates but i guess nobody will go after you if you buy groceries with a foreign card.

Incredible, so if I remit less than 9K every year and use savings for the rest of my payments, I won't have to pay any additional taxes on-top of the flat 5K? And I can assume I can just “import” my savings and IB stock account (am EU national)? If true, that makes Malta an impressive option!

Am I correct to assume that this would in short be how it goes:

1. Fly to Malta
2. Sign 1-year rent contract for apartment (and stay for more than 190 days).
3. Set-up offshore firm (UK LLP + Wise Business + Stripe).
4. Set Revolut tax residency to Malta.
5. When tax time comes, report everything nice and clean to the Maltese authorities, including my offshore activities (which is not a problem for me).
6. Pay the 5K + tax on whatever income I remitted into the personal Revolut account from my Revolut Business account or equivalent business bank account.
7. Order a Strongbow and some grub and reminisce on the time I paid a 46% effective tax rate.

 

[Marzio]

You forgot the most crucial point:

8. order Marzio a beer

Jokes aside i'm not sure this could work with a LLP because it's tax transparent, it surely works with a UK LTD treaty non resident in Malta.

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm120070#IDABC25
You have to double check this with a Maltese lawyer, i suggest you to contact the firm that wrote the article about resident non domicile company i posted above.

 

[FantomOffshore]

You forgot the most crucial point:

8. order Marzio a beer

Jokes aside i'm not sure this could work with a LLP because it's tax transparent, it surely works with a UK LTD treaty non resident in Malta.

https://www.gov.uk/hmrc-internal-manuals/international-manual/intm120070#IDABC25
You have to double check this with a Maltese lawyer, i suggest you to contact the firm that wrote the article about resident non domicile company i posted above.

I will check that per your suggestion and very much appreciate your advice. If you are ever thirsty and in Malta, don't feel shy.

 

[Marzio]

I will check that per your suggestion and very much appreciate your advice. If you are ever thirsty and in Malta, don't feel shy.

If you go ahead with the proposed structure please report back your experience!

 

[clemens]

If questioned, nominee directors do not help you at all for tax residence purposes. Tax authorities disregard them and look at the UBO.

Totally agree, you are spending money for nothing, it won't work. Get your self proper setup with office, employee, utility etc.