Never Declared Income - Gotta Start Now

[speedster]

1. Romania has a worldwide taxation system that means that they will tax on all your income no matter if you lived there or not.
2. As long as you are a tax resident in Romania, and you are for sure as you did not change that, you have to declare and pay tax there.

Worst case scenario: some of the financial institutions you used reported you to Romania, the tax authority will calculate the tax you owe, all the social security contributions, will add a huge % as an interest rate. If you have any bank accounts or properties in Romania they will seize them.
Unlikely, but possible and pretty easy, they can go after your bank accounts within the EU especially if they know where they are.
If you have accounts outside the EU the chances they will be able to seize them is 0.1% and if we are not talking of hundreds of thousands of euros they will not even bother.
Eventually all your debts will be prescribed and you will be good as new.

Best case scenario: Nobody reported you so the fiscal authority thinks you either work somewhere else and forgot to change your fiscal residency or you just do not work at all. If they do not see any financial movement on your accounts or if nobody reports you they can not do anything about it.
You may want for example to obtain a residence in Portugal, register as a non dom (NHR) tax resident so you will not pay tax on foreign sourced income for 10 years.
Once registered, with the Portuguese tax certificate you can cancel your Romanian tax residence.
As a freelancer with the NHR residency you might be taxed in Portugal but you are for example exempt to pay tax on foreign dividends. So you can easily open a company in a lower tax jurisdiction (but not a tax heaven because then Portugal will tax you), get the dividends from there and pay 0% in Portugal.

Good luck!

From the KPMG page on Romania

Exempt income includes the following (however certain conditions must be met):

employment income derived from non-Romanian employers in respect of work done outside Romania, unless this income is paid by or on behalf of a Romanian employer

 

[burden]

let's cook it down to the fact that if you have a s**t load of cash and you want to move out of your country you will have to take it out of your country in portions of max 10K euro at a time. Bad s**t if you have millions but that's if you want to be safe.

 

[Clip]

let's cook it down to the fact that if you have a s**t load of cash and you want to move out of your country you will have to take it out of your country in portions of max 10K euro at a time. Bad s**t if you have millions but that's if you want to be safe.

You can do some crypto deals via OTC cash, its costly, but less that having to take flights

 

[GuevaraGoldberg]

From the KPMG page on Romania

Please note the word "EMPLOYMENT". As a Romanian tax resident this means that you need a valid work contract abroad, you need to declare your income in Romania and if it comes from a low tax jurisdiction you will have to pay tax too. It does not apply for freelancers because they are not employed.

 

[blockchain4ever]

1. Romania has a worldwide taxation system that means that they will tax on all your income no matter if you lived there or not.
2. As long as you are a tax resident in Romania, and you are for sure as you did not change that, you have to declare and pay tax there.

1. Is most likely false,. Is that usually the actual facts matter, not the formal registration. If OP was actually out of the country and did not register as such, he was actually not tax resident. If he can prove he was outside the country, that's what matters in a court.

 

[nomad999]

From Deloitte Romania 2019

Personal taxation:
Basis – Resident individuals are taxed on their worldwide
income, irrespective of the type or source of income;
nonresidents are taxed only on Romania-source income.
Residence – An individual is resident in Romania if
he/she fulfills at least one of the following conditions:
his/her domicile is in Romania; his/her center of vital
interests is in Romania; he/she is present in Romania for
a period or periods that exceed, in the aggregate, 183
days during any consecutive 12-month period ending in
the relevant calendar year; or he/she is a Romanian
citizen who is serving abroad as an official or employee of
Romania.
The Romanian tax authorities determine an individual’s
tax residence using a specific procedure. All individuals
entering or leaving Romania for a period exceeding 183
days within 12 consecutive months must submit a
questionnaire along with supporting documents to the Romanian authorities.

Taxable income – All salaries and related income are
subject to tax. The taxable income of employees under an
employment contract is determined as the difference
between gross income from salaries (including salary-
related allowances and benefits in kind) and allowable
personal deductions, union dues paid, mandatory social
contributions payable at the level of the employee and
contributions to private pension/private health insurance
funds (including subscriptions to private medical services
paid directly by the employee). Contributions to each
fund are limited to EUR 400 per year.

In short : Better play dead, get a tax residency somewhere else and keep your money out the country.
From now on make sure you get a tax certificate each year from the country you pay tax to.

 

[JohnLocke]

1. Is most likely false,. Is that usually the actual facts matter, not the formal registration. If OP was actually out of the country and did not register as such, he was actually not tax resident. If he can prove he was outside the country, that's what matters in a court.

Very true but the problem can most often be that these type of cases can be very expensive and sometimes impossible to prove depending on how "aware" you have been about your situation.

 

[nomad999]

1. Is most likely false,. Is that usually the actual facts matter, not the formal registration. If OP was actually out of the country and did not register as such, he was actually not tax resident. If he can prove he was outside the country, that's what matters in a court.

That would apply if he had paid tax somewhere else or at least been a tax resident which is not the case here.
In this case OP was clearly a tax resident of romania from the entire time and has clearly failed in is duty or reporting tax.

 

[jscargo]

I have a question...

From 1 to 10, how stupid it would be to go back to my home country, open a sole trader / company or simply file my Income taxes?

Won’t it trigger any red flags for the... decade I haven’t?

I think you can do that, since you said you never had a lot of money in bank accounts there anyway. If you WANT to live in your country and it is not France, Spain, Sweden (or other countries with income tax above 35%) it is reasonable to do it. Specially if you are earning a not very significant income, lets say 5-7k per month, or up to 10k. If you are making like 20k per month and upwards, it may arise some questions. It depends a lot from the country where you are in.

In Hungary I've been recently advised by an accountant that if you bring up to 100k, in all cases that he has dealt so far, nobody asked anything. Then again, in Latvia I've seen people being chased over 18 euros.... not 18k, 18 euros.

 

[cyprus123]

May I ask: why do you guys suggest him to get a tax ID in his country of origin?

My advise is: Get registered as resident in Cyprus, the procedure is very smooth for EU passport holders: you show any bank statement showing that you are not poor (the 10k are more than enough), make a minimum health insurance for 140 EUR a year in Cyprus, show any rental agreement and some employment contract in Cyprus and you are officially resident.
In a second step you open a company or sole trading business in Cyprus in order to apply for your Tax ID in Cyprus. Or you just use the employment agreement you needed for residence anyway.
In a third step you can apply for non domicile status to obtain further tax advantages.

Or you just open a company in Georgia with IT zone status (they changed regulations recently for new applications, be aware) and be corporate tax exempt there. In this scenario you can stay digital nomad without any residency.

Important is in my opinion -and I don't know the system in lovely Romania- to be officially de-registered from your country - to proof that you are not living there anymore. So do anything but don't apply for a Romanian tax ID, you want to move completely out of the country, also formally, so make sure you are out. And don't make steps in order to get back in.

 

[jscargo]

Well, I said that if he WANTS to live in Romania, he should do it.

First of all, income tax for self employment in Romania is just 10%, it is lower than Cyprus. I have a friend working in the same field as I, in Romania and from Romania. He pays just 10% and would pay just 10%, even if he would earn 10x of what he does.

You can tell me why cyprus? What is the advantage of Cyprus, unless he would have a personal preference for Cyprus over RO?

Moreover, cost of living in RO is much lower than Cyprus. Just the weather is worse in Romania.

 

[GC12]

Well, I do not want to live in Romania. I am concerned of two aspects:
1. That setting a second residency is too complex and difficult for me, which was proven false.
2. That I still need to renew my passport from time to time. Technically the only time when I’m actually there is for a new passport.

 

[jscargo]

1. Extremely easy to do it if you are EU and moving to another EU country (in virtually all cases - I have registered already in 4 EU countries, just one of them actually asked me a bank statement). To other countries fairly more complex, and the complexity actually varies depending on the new country.
2. You don't need to be in Romania to renew your passport. Only you live in another EU country, let's say Cyprus, and you have your residence certificate or card there, you go the Embassy of Romania in that given country and apply/get your RO passport there.

 

[countryfree]

The easiest would be to buy property in a low tax country which you like, then you will quickly gain tax residence there.

 

[cyprus123]

Cyprus may have 12.5% CIT, but the effective rate can be lower. It is a completely different mentality than Northern or East European countries.
Anyway I mentioned Cyprus as place of residency, not for the legal entity. He can use a legal entity somewhere else with even lower tax rates.

 

[speedster]

Except the legal entity would most likely be taxed in his place of residence

 

[Clip]

http://www.mondaq.com/cyprus/article.asp?articleid=815922
In this article they mention you can claim in Cyprus a 80% reduction on IP rights from the 12.5%, making effectively a 2.5%

 

[JohnSeed]

There is a lot of misleading information in this thread. Either people don't know about Cyprus in real live because they don't have any business there or they read on articles they find on the Internet and mix things a little.

Fact is, there is no tax on dividend. Another fact is, you can do a loan model to zero the tax in your Cyprus company. Fact is, you can offer a loan to your self (it has to be backed up with a lot of docs) so you zero out the personal tax you would have to pay.

Another fact is, a profits received from a Seychelles company into a Cyprus company are tax free!