Remote software developer generating mid 6 figures, where to incorporate?

[Cloudbanck]

in which case in your opinion would this make sense? do you mean if he stay in the Netherlands?

It makes sense in territorial tax countries, zero tax countries, de facto territorial countries, under the radar situations, some non dom countries, and if you are not a tax resident anywhere.

So in most of Latam (maybe not Brazil though), in Africa (except South Africa), in the Middle East/Gulf countries, in Central Asia, usually still in Southeast Asia, on Pacific and Caribbean islands and in zero/low tax microstates.
Then in China Im not sure, probably not in India. Maybe under the radar in Russia, Belarus.
Could work as non dom in Ireland and Malta with substance elsewhere. Rest of EU/EEA, and UK, typically no point.
Probably works in the non-EU Balkan countries.
Probably not in Japan, South Korea. Not sure about Taiwan.

 

[ShillGates]

stay in NL, setup a holding BV above your trading company - after the corporate tax, divi it all out to the holding above it which is then tax free after that. then this holding can send money /lend money to your other bv where you can invest in property stocks whatever.

Its not only how much you earn and keep its also , what you want to do with the excess cash.

the only banking i found reliable i the uae banks, these are reliable. But to get access to this you only need to pass by once every 6 months - still being taxed nl way as you live there.

also bear in mind to what contributed to where you are now. for example if ING gave you all the backing and the fact you live in nl with a good timezone, or infrastructure - dont move to panama where the electricitry fails many times for example, or go to hong kong where the humidity kills you

 

[JustAnotherNomad]

It makes sense in territorial tax countries

Depends. Some territorial tax countries like Singapore (or maybe Malaysia) enforce PE rules, so they would treat your income as locally sourced.
Just because you incorporated the company doesn't mean anything.

stay in NL, setup a holding BV above your trading company - after the corporate tax, divi it all out to the holding above it which is then tax free after that.

It's still 25.8% tax and you can't spend the money on personal expenses.

 

[Don]

If you want to stay in NL some more time and enjoy some gouda cheese while cycling under the rain i'd suggest you to take a look at the NL IP Box which could lower your tax rate to 7%.

In CY you'll lower tax rate to 2.5% but i would gladly pay 5% more for access to better banking.

https://ipbox.cy/

I like that idea.
I would look into establishing a company abroad and operating through a branch office or a PE in Netherlands.
Assuming OP qualifies for IP box then effective tax could be reduced down to 7% this way.

If OP chooses the correct jurisdiction (e.g., cyprus, malta, estonia) and establish sufficient substance so the company will not be considered tax resident in Netherlands then this could be a great way to optimize tax as paying withholding taxes could be avoided, and it gives the opportunity to pay out the profits tax free in the future (apart from paying this 7%). Until then the entity could reinvest the profits.

 

[Cloudbanck]

Depends. Some territorial tax countries like Singapore (or maybe Malaysia) enforce PE rules, so they would treat your income as locally sourced.
Just because you incorporated the company doesn't mean anything.

In most of the world it means a lot. Bureaucrats are just not very good handling a foreign country's system, or with international cooperation, and PE rules are typically flimsy and unenforced.

But yeah, first world countries are better at this and can enforce PE rules. There arent so many first world countries with territorial taxation though. Singapore is one example yes. I dont know Singapore very well, but I would assume that you would have to establish substance/PE outside of Singapore. So it would work similarly to non-dom in Ireland or Malta, which is essentially territorial tax with enforcement of PE (stricter in Ireland than Malta).

 

[Roo]

With an EU passport in Malta you can just go rent a place (you only need cash and an ID) and live there, no one will ask you anything at least not for a few years
Maybe if you actually go to do paperwork but otherwise no one knows or cares at least as long as you don't stand out in some way. Not a great place to live though, small, bad traffic a bit boring.

 

[jafo]

With an EU passport in Malta you can just go rent a place (you only need cash and an ID) and live there, no one will ask you anything at least not for a few years
Maybe if you actually go to do paperwork but otherwise no one knows or cares at least as long as you don't stand out in some way. Not a great place to live though, small, bad traffic a bit boring.

How's the cost of living in Malta?
How about safety & crime?

 

[Roo]

It's been a couple years since I've been there, it was a bit more pricey than Spain/Italy since everything was imported. Eating out was 15-30 euros per person for a portion of food. Public transport wasn't expensive but the buses didn't stick to schedule, drivers weren't very nice and decided by themselves if the bus was too full and didn't want to stop, they were also quite racist, they left black people standing in the station many times.
Rentals were crazy, some were renting place without even seeing them in Sliema (popular tourist area). It was around 1k/month for a spacious 3 bedroom apartment in smaller towns back then but build quality was awful, rain in autumn meant mould in the apartment.

It was quite safe, although from time to time you read about some fights or crimes, never had issues.
Btw, they are crazy about fireworks there, they will drive you nuts with them

 

[Marshal]

It's been a couple years since I've been there, it was a bit more pricey than Spain/Italy since everything was imported. Eating out was 15-30 euros per person for a portion of food. Public transport wasn't expensive but the buses didn't stick to schedule, drivers weren't very nice and decided by themselves if the bus was too full and didn't want to stop, they were also quite racist, they left black people standing in the station many times.
Rentals were crazy, some were renting place without even seeing them in Sliema (popular tourist area). It was around 1k/month for a spacious 3 bedroom apartment in smaller towns back then but build quality was awful, rain in autumn meant mould in the apartment.

It was quite safe, although from time to time you read about some fights or crimes, never had issues.
Btw, they are crazy about fireworks there, they will drive you nuts with them

Now prices are even higher during a tourist season. Agree about quality of building work. Some apartments are in such a dire condition that you wouldn't spend a night there even if they paid you. If there's a choice go for new builds and avoid ground floor/basement apartments.

 

[roamcorp]

stay in NL, setup a holding BV above your trading company - after the corporate tax, divi it all out to the holding above it which is then tax free after that. then this holding can send money /lend money to your other bv where you can invest in property stocks whatever.

You cannot lend any decent amount anymore (esp. next year, 17k), and you're forgetting a 33% dividend if you want it use it personally. All profits and appreciation on investments will be taxed in full if you do it this way.

 

[pieceofmind]

I'm facing the same challenge and at this point I'm leaning towards opening a Samoa company. I would put software IP on the balance sheet which is code, libraries, and trade secrets that I've come up with over the past few years. I would have a mailbox, phone number, and even a Samoa ".ws" domain and a physical server that hold sensitive company documents and trade secrets there. I would then accept contract invoice payments under the pretext of trade secrets and IP, because they are really hiring my experience.

Then my Samoa company hires myself as an employee for $50K/yr to do monkey coding from Malaysia for example. My monkey coding would be considered locally sourced income and would pay tax on that $50K salary.

When I need to sign contracts, update trade secrets, plan projects, make strategic decisions, etc for the Samoa company, I would travel as a digital nomad to another country for a few days (say to Singapore), have the Samoa company rent a workspace there for a day, and do some control and management of the company, update the meeting minutes book, etc then fly back home to my 9-5 employee monkey coding work.

Any thoughts, advice, or anything missing on this structure?

 

[DeepDrilling]

I heard Panama has the most satisfied expats world wide, It is measured by the standard of living, costs of food and rent, as well as taxes, and it is also easy to find a high-quality home there. It sounds very appealing.

 

[Alkatraz]

It could make sense if he's in a tax-free country, if he's a PT (no tax residency) or in a country with territorial tax that doesn't care about PEs.
For example Bahrain, maybe Malaysia, maybe Panama, maybe Paraguay, possibly Thailand (if staying fewer than 180 days per year), possibly Hong Kong (not sure), China.

What is PT?

 

[Sols]

What is PT?

PT = Permanent Traveller. A (largely outmoded) concept where you live nowhere and don't spend enough time anywhere, so you're legally not tax resident anywhere.

Was entirely possible for a long time. Has become increasingly difficult in the last 10—15 years.

Nowadays it's still technically possible for some people, but it can make things like banking difficult in this day and age of ever increasing controls and surveillance. The more modern PT-like setup is having a place of residence in a zero/low tax jurisdiction and spending much but not most/all of your time there.

 

[Houdini]

OP
It would be great to know if you have followed any of the advice shared in this thread or if you have found out something completely different. That way, you could also show all the users who responded that you appreciate the time they have spent on you!