Moving to Netherlands (from UK) - new setup for contracting work?

[cexifa4793]

Hi all,

so as the post title suggest, I am planning to move to NL.

Currently I am resident in UK (EU citizenship) , employed by a UK company (so standard PAYE setup).
I will be quitting just before current tax year end and telling HMRC that I am moving out etc.

When in Netherlands, I am planning to do freelance work. My clients will be between US and UK (I have this lined up already)

Question, in your opinion what is the most tax efficient way to set myself up?
( The estimated revenue would be around 120k EUR / year)

Should I just setup a limited company in NL and withdraw money via salary/dividends? what is the approximate estimated tax rate?
Could I setup a company in Malta (or elsewhere in EU) and then receive dividends in NL - how would this trigger Permanent establishment rules?

Any other ideas?

I am getting some quotes from tax attorneys in Netherlands at the moment, but would greatly appreciate your advice, and maybe suggestions on what questions should I ask.


Appreciate the help!

 

[Sols]

If you were getting a regular employment, you could look into getting 30% tax ruling. It's available for highly qualified foreigners that move to NL. Valid for five years.

For 120,000 EUR/year, I don't think you're looking at much in terms of savings by doing any kind of corporate tax planning involving multiple foreign companies. Any company you form ends up tax resident in NL through management and control being there. Solutions to that would either come with risk of being non-compliant (i.e. having a bad time when/if the tax authority's increasingly automated workflow catches up with you), or likely end up costing more than just paying Dutch tax.

You'd qualify as a small company and pay, IIRC, 15% corporate income tax under 250,000 EUR or so. Then you just need to figure out what's most efficient: paying yourself a salary and/or dividends. Then I'm sure you can sit down with a tax adviser and work out how to optimise deductions and incentives to get your total net tax down a bit more.

 

[cexifa4793]

Thanks for the reply!

yeah.. this is what I was also thinking...
according to this post (https://www.offshorecorptalk.com/threads/netherlands-company-and-dividends.35219/#post-189710),
doing similar calcs I would end up paying around ~35% tax, which is not great not terrible lol


Just for my future self, at what profit it becomes worth pursuing other solutions? 500k? 1mil +?
Do you think it is even possible (legally?) to run a business as SOLOentrepreneur and for the company not to become tax resident in country where you live?

Appreciate the help!

 

[Sols]

Just for my future self, at what profit it becomes worth pursuing other solutions? 500k? 1mil +?

At whatever the costs of setting up a structure are significantly less than the taxes you'd otherwise pay. A fairly common arrangement is for the UBO to relinquish operational control and function solely as an investor, at which point you only earn passive income taxed as capital gains or foreign income, which in some countries is subject to lower or no tax.

Do you think it is even possible (legally?) to run a business as SOLOentrepreneur and for the company not to become tax resident in country where you live?

No.

 

[Mr Gus]

Thanks for the reply!

yeah.. this is what I was also thinking...
according to this post (https://www.offshorecorptalk.com/threads/netherlands-company-and-dividends.35219/#post-189710),
doing similar calcs I would end up paying around ~35% tax, which is not great not terrible lol


Just for my future self, at what profit it becomes worth pursuing other solutions? 500k? 1mil +?
Do you think it is even possible (legally?) to run a business as SOLOentrepreneur and for the company not to become tax resident in country where you live?

Appreciate the help!

You could make use of the 30% ruling as far as I know. This would however require you to setup the B.V. and get yourself employed with your own B.V. before you actually move to the Netherlands, however I would recommend getting in touch with a professional about this.

As a B.V. you have to pay yourself a minimum salary of 48000 euros every year even if you don't want to. The only way this can be avoided is by being not profitable enough to pay out the salary, and you can't take out dividends before you pay yourself the 48000 salary.

By running some calculations this would be your tax rate.

125000 profit
48000 salary with 30% ruling will leave you with : € 39,166
77000 x 0.85(CIT) x 0.731(Box 2 dividends = €47.843

39166 + 47843 = 87009 leaving you with a tax rate of 30%

Or you could also take out the full profit (125K) as a salary leaving you with € 91,594 and a tax rate of 26.7%.

Maybe the 30% ruling is also applied to the box 2 dividends tax but you would have to inform some professional for that.

In order the further reduce your tax rate could be by buying a home with a mortgage in the Netherlands, if you plan on staying for some time this could save you some more in tax.