Romania has 0% witholding tax for resident companies and non resident individuals?

[Marzio]

Yesterday I searched online and it seems the taxes on foreign income for Estonian residents are 20%

Well this is straight from horse's mouth.

"Residents pay tax on their worldwide income. Taxable income includes, in particular, income from employment (salaries, wages, bonuses and other remuneration); business income; interest, royalties, rental income; capital gains; pensions and scholarships (except scholarships financed from state budget or paid on the basis of law). Taxable income does not include dividends paid by Estonian or foreign companies when the underlying profits have already been taxed."

Last sentence means that if the Estonian holding received dividends from any subsidiary, those diviends will be tax exempt when distributed to Estonian residends.

 

[ImKing]

Nope, under the micro-company scheme the least amount of tax payable is 1% of turnover till 1€ million

that's good enough for me.. can we use Wise for a Romanian company or what EMI will work?

 

[Marzio]

can we use Wise for a Romanian company or what EMI will work?

You have plenty of choice since it will be a EU company you will get access to Wise, Revolut, Intergiro, Romanian banks

 

[ImKing]

You have plenty of choice since it will be a EU company you will get access to Wise, Revolut, Intergiro, Romanian banks

how about the setup, can this be done remote, is there any service provider you can recommend for the task and what are the costs?

finally, do we have any privacy or is all public like with a UK LTD ?

 

[Marzio]

In my experience you have to fly there, at least for a couple of days to sign documents and open the bank account for the company used to pay taxes.

Since RO is part of EU there's plenty of sites that show companies data.

 

[AMD]

Since RO is part of EU there's plenty of sites that show companies data.

yeah it is damn s**t

 

[fatcat]

What about the VAT though, or is there a way to avoid charging it?

 

[johndunham]

What about the VAT though, or is there a way to avoid charging it?

If you sell VAT-products to EU-consumers, you should pay VAT to the tax man. It's fairly easy to catch you if you don't.

 

[cuno]

You don't have to buy, you can rent an apartment. It's the same as Portugal

how easy is it to rent an apartment as an foreigner in Portugal or Romania for instant ?

 

[johndunham]

how easy is it to rent an apartment as an foreigner in Portugal or Romania for instant ?

Just as easy as anywhere in the world. If you have money, you can rent.

 

[fatcat]

If you sell VAT-products to EU-consumers, you should pay VAT to the tax man. It's fairly easy to catch you if you don't.

So either non-VAT products to EU-consumers, or VAT products to non-EU-consumers.

 

[ElBotellon]

thank you.

do you confirm that:
- individuals non resident have 0%WHT;
- resident companies have 0%WHT (is the 1year holding period required?).

is it feasible in your opinion to have a non-resident shareholder individual receiving dividends WHT 0% and paying taxes in his residence country (e.g. cyprus or georgia at 0%)?

many thanks

hey guys the discussion went to other directions but I still have the doubt:

a NON-RESIDENT individual shareholder of micro-company in Romania gets dividends with 0% witholding tax? in practice Mr. Red (individual - non resident ) tax resident in cyprus and receiving 10K of dividends will not receive any taxation from romania?

 

[johndunham]

hey guys the discussion went to other directions but I still have the doubt:

a NON-RESIDENT individual shareholder of micro-company in Romania gets dividends with 0% witholding tax? in practice Mr. Red (individual - non resident ) tax resident in cyprus and receiving 10K of dividends will not receive any taxation from romania?

I think you are correct, but my knowledge is not sufficient to give you an answer with certainty. I am however curious to know this for certain as well. Have you learned anything more since your last reply to this thread?

 

[MarkusM]

Taxable income does not include dividends paid by Estonian or foreign companies.

What would be the point to have an Estonian Holding company, if you can take the dividents out from company as an individual,
without withholding tax and with no tax on them as an estonian resident?

thanks.

In order to simplify the scheme one could simply use a Romanian company as holding and one as subsidiary.

Let's say RO-H (holding) and RO-T (trade).

RO-H has 100% of RO-T.
RO-T is a micro-company.

With a local structure things should be easier, substance also is there without big issues (the holding and the operative company can co-exist in the same spece/environment, not requiring travelling to take decisions). Clearly dividends from RO-T to RO-H should be distributed not before 1 year of holding, if I correctly understood. After one year also a capital gain Participation exemption applies, which is an additional plus.

You said “in order to simplify…”, but what is the point to have both, a holding and an operating company in Ro, when you could achieve what you want throught just the operating company?

 

[Marzio]

What would be the point to have an Estonian Holding company, if you can take the dividents out from company as an individual,
without withholding tax and with no tax on them as an estonian resident?

1. Asset protection
2. Residency itself if you are not EU national

 

[MarkusM]

For EU residency, that yes, it’s explicabile to form an estonian company.
Regarding point 2. , what level of Asset protection could you get throught the holding company? I see protection only against creditors from the RO operating company. Maybe i am wrong….

 

[Marzio]

what level of Asset protection could you get throught the holding company? I see protection only against creditors from the RO operating company.

That’s correct it is always a good idea to have a layer or protection but then again it really depends on the type of business you have in Romania.

If you have a low risk business and you are an EU national you could certainly do without a holding company.

Nevertheless an Estonian holding could be useful to have since it distributes tax free dividends from other business in which you could hold shares or access to treaties company specific.

 

[Don]

That’s correct it is always a good idea to have a layer or protection but then again it really depends on the type of business you have in Romania.

If you have a low risk business and you are an EU national you could certainly do without a holding company.

Nevertheless an Estonian holding could be useful to have since it distributes tax free dividends from other business in which you could hold shares or access to treaties company specific.

I would like to add that for holdings less than 10% you are allowed to credit foreign income tax against your Estonian income tax liability if certain conditions are met. For example, receiving dividends from US entities. The withholding tax is 15% according to the treaty. The tax amount paid will work as a tax credit against the corporate tax charge payable in Estonia when the Estonian company distributes the same dividend to its shareholder.

 

[Marzio]

I would like to add that for holdings less than 10% you are allowed to credit foreign income tax against your Estonian income tax liability if certain conditions are met. For example, receiving dividends from US entities. The withholding tax is 15% according to the treaty. The tax amount paid will work as a tax credit against the corporate tax charge payable in Estonia when the Estonian company distributes the same dividend to its shareholder.

I didn’t know that, can you point me to a resourse where i can read more about the topic?

 

[Don]

I didn’t know that, can you point me to a resourse where i can read more about the topic?

Foreign income tax is taken into account to the extent that it is in accordance with laws and the conventions for avoidance of double taxation entered into between states.

https://www.riigiteataja.ee/en/eli/530012014003/consolide