Portugal tax resident under NHR + US LLC

[disagree23]

Yes, also if someone reading this has the knowledge and will to help, I would appreciate!

 

[Belfort]

Well, you pay 28% tax on dividends when receiving them on your personal bank account ?

If you are a portuguese tax resident and you are portuguese under normal conditions, yes. There might be incentives for foreigners.

 

[tradeall]

Did you find more info about this? I have recently post a thread with a similar situation but with a more complex setup

 

[disagree23]

Did you find more info about this? I have recently post a thread with a similar situation but with a more complex setup

I have no news. Honestly I'm a bit lost.
Can't figure out if people are just avoiding thinking about this based on the fact the the portugal's tax agency is not aggressive or what.

 

[Marzio]

Can't figure out if people are just avoiding thinking about this based on the fact the the portugal's tax agency is not aggressive or what.

There's plenty of NHRs that use a US LLC paired with NHR and simply don't care. To this date I have to hear about Portugal's tax agency going after non residents.

 

[tradeall]

Agree with Marzio. I don't know any case or anyone that have been exposed by tax authorities. It doesn't mean that the setup is right because is not. And the ruling that is in freshportugal webpage talks about a multi member LLC not a c-corp or a single membership.
In my case I think that the smartest thing to do is to have a low profile. Self employee with low invoicing and the rest in dividends from cyprus (ideal setup with NHR)

 

[disagree23]

Agree with Marzio. I don't know any case or anyone that have been exposed by tax authorities. It doesn't mean that the setup is right because is not. And the ruling that is in freshportugal webpage talks about a multi member LLC not a c-corp or a single membership.
In my case I think that the smartest thing to do is to have a low profile. Self employee with low invoicing and the rest in dividends from cyprus (ideal setup with NHR)

Can you better explain about using Cyprus?

 

[tradeall]

Yes, for example, you can set up a company for consulting services.

• Ideally, this company would have a nominee shareholder, director, and secretary (all provided by a law firm).
• You would then obtain a VAT number, allowing you to invoice other companies within the EU (that are also in the VIES) without charging VAT.
• You would issue an invoice to the Cypriot company for €2,000 (paying 20% in personal income tax flat fee and 21.4% on 70% of the €2,000 for social security in portugal because you don't live by air), while invoicing your clients for an additional 5,000 €, 10,000 €, or whatever amount, which would be paid to your Cypriot company.
• Then, you can issue an invoice from your LLC to your Cypriot company to reduce the corporate tax on that amount (bringing it down by 12.5%). The remaining profits can be distributed as dividends.

In this example, if your net profit after closing the books is 100,000 €, you would pay 12.5% corporate tax, leaving 87,500 €available for dividends. These dividends would be tax-free under the NHR regime and can be transferred to your CAIXA GERAL account.

Another option is to use the LLC, transferring 50,000 € to your LLC via invoices and spending from there or moving funds to the crypto world through a corporate account (such as Kraken, for example). The other 50,000 € would be subject to Cypriot corporate tax, meaning instead of paying 12,500 in tax, you would pay only 6,250.

 

[disagree23]

Yes, for example, you can set up a company for consulting services.

• Ideally, this company would have a nominee shareholder, director, and secretary (all provided by a law firm).
• You would then obtain a VAT number, allowing you to invoice other companies within the EU (that are also in the VIES) without charging VAT.
• You would issue an invoice to the Cypriot company for €2,000 (paying 20% in personal income tax flat fee and 21.4% on 70% of the €2,000 for social security in portugal because you don't live by air), while invoicing your clients for an additional 5,000 €, 10,000 €, or whatever amount, which would be paid to your Cypriot company.
• Then, you can issue an invoice from your LLC to your Cypriot company to reduce the corporate tax on that amount (bringing it down by 12.5%). The remaining profits can be distributed as dividends.

In this example, if your net profit after closing the books is 100,000 €, you would pay 12.5% corporate tax, leaving 87,500 €available for dividends. These dividends would be tax-free under the NHR regime and can be transferred to your CAIXA GERAL account.

Another option is to use the LLC, transferring 50,000 € to your LLC via invoices and spending from there or moving funds to the crypto world through a corporate account (such as Kraken, for example). The other 50,000 € would be subject to Cypriot corporate tax, meaning instead of paying 12,500 in tax, you would pay only 6,250.

Regarding this:
"Ideally, this company would have a nominee shareholder, director, and secretary (all provided by a law firm)."

Do you mean the Cyprus LTD?

Can you please also clarify the 2nd point?

 

[tradeall]

Yes. The Cyprus LTD would have that protection so you don't appear in public registries. The cost for this services is around 5K when you setup the company and annually around 2 or 3K.
Bookeeping, accounting, auditing. tax returns etc around 2K

 

[Legal]

Hey there,

SWIM is a Portuguese tax resident under the NHR scheme and lives in Portugal for at least 6 months a year. SWIM is doing independent advisory work for companies outside of Portugal to the tune of 6 figures USD per year.

How viable is it for SWIM to set up an entity such as Delaware (Or Wyoming) to issue the invoices for services rendered, and then later cash out to Portugal through dividends paying 0% due to NHR tax benefits? I know PE-related questions can be problematic but are they really? Is it ever enforced? What are the major risks?

Thank you.

You need to set up not an LLC but C-Corp also, you need state which has minimum state tax, and also you need a nominee director, then USA will work for you and your Dividend will be recognized as excempted dividend.

 

[disagree23]

You need to set up not an LLC but C-Corp also, you need state which has minimum state tax, and also you need a nominee director, then USA will work for you and your Dividend will be recognized as excempted dividend.

Which tax % will my company pay using this solution? (making my LLC a C-corp)

 

[Legal]

Which tax % will my company pay using this solution? (making my LLC a C-corp)

Depends on which U.S. State you will consider as best for you (Essential is that on a state level, there must be tax and no exemption as Delaware does).

 

[disagree23]

Depends on which U.S. State you will consider as best for you (Essential is that on a state level, there must be tax and no exemption as Delaware does).

What about Wyoming?

 

[Legal]

What about Wyoming?

It will not work; you need to pay corporate tax.

 

[disagree23]

It will not work; you need to pay corporate tax.

So what's the state with the lowest tax % in the US? Can you incorporate in any state, so you can find the lowest tax rate and have your C-corp there?

 

[Legal]

So what's the state with the lowest tax % in the US? Can you incorporate in any state, so you can find the lowest tax rate and have your C-corp there?

Check rates and conditions and find best for your arrangment.

 

[Despina]

You need to set up not an LLC but C-Corp also, you need state which has minimum state tax, and also you need a nominee director,

That’s overkill. As @Marzio and @Sols said Portugal is not enforcing its tax laws for NHR residents. Use a US LLC and don’t send $$$ to Portuguese bank account, instead pay or withdraw cash with your US LLC debit card.

 

[Legal]

That’s overkill. As @Marzio and @Sols said Portugal is not enforcing its tax laws for NHR residents. Use a US LLC and don’t send $$$ to Portuguese bank account, instead pay or withdraw cash with your US LLC debit card.

It will be tax evasion.

Tax planning will be reached if following will be reached:
1. Portugal Tax Haven Blacklist.
2. Foreign Companies from where dividend comes have effective tax on dividends.
3. Central management and control will not be in Portugal.

After considering all this, tax can be planned.

 

[Despina]

It will be tax evasion.

It’s a border line tactic, I could give you that but it can be safer by hiring a US LLC manager in a tax free jurisdiction or a friendly jurisdiction like Panama so that US LLC is not considered tax resident in Portugal.