Suggestion for Tax free Jurisdiction for Software company....Dubai Freezone Alternative

[Marzio]

Estonia would not work as they have a "subject to tax" rule similar to what Singapore has. Dividends paid out from the Estonian holding would be subject to 20% tax.

Estonia "could" work if instead of using a Virtual Zone company you use an International Company which is taxed at 5%

is this true?

No.

https://tpsolution.ge/virtual-zone-persons-to-enjoy-corporate-income-tax-exemption-in-georgia/

20% CIT only applicable to dividends

22% from 2024

https://news.err.ee/1608941543/sides-to-incoming-government-unveil-coalition-agreement

the same web site says this

Stop reading websites and start reading double tax treaties

https://mof.ge/en/5128

 

[Martin Everson]

@Martin Everson Do you have a bit more info about Kazakhstan?

See the below.

https://digitalresident.kz

 

[JustAnotherNomad]

@Martin Everson Seems like Kazakhstan has 5-15% withholding tax though?

 

[JackAlabama]

@Martin Everson Seems like Kazakhstan has 5-15% withholding tax though?

The great migration to Kazakhstan starting?

 

[Marzio]

Kazakhstan has 5-15% withholding tax though?

Yes, the only way to take out dividends from Kazakhstan tax free is through either a NL or CH holding AND the holding company owns at least 50% of the capital of the paying company AND has made an investment in the company paying the dividends of at least USD 1 million.

 

[Martin Everson]

@Martin Everson Seems like Kazakhstan has 5-15% withholding tax though?

Sorry I thought we were discussing alternative places than Dubai to live and run a company? Maybe I got the topic wrong. If you live in Kazakhstan and are an resident employee of a legal entity in the Astana Hub then that income is exempt from personal income tax is my understanding. I have only started looking into Kazakhstan since someone mentioned it in MentorGroup so I could be wrong.

https://astanahub.com/en/blog/preferentsii-po-individualnomu-podokhodnomu-nalogu
https://aifc.kz/en/tax-regime
P.S The AIFC tax regime has also been approved by OECD last year .

https://aifc.kz/en/news/organisatio...ies-with-global-standards-of-tax-transparency

 

[JustAnotherNomad]

If you live in Kazakhstan and are an resident employee of a legal entity in the Astana Hub then that income is exempt from personal income tax is my understanding.

Oh, that's definitely very nice if true... I'll probably go there this year anyway, need to check the place out.

 

[JackAlabama]

Oh, that's definitely very nice if true... I'll probably go there this year anyway, need to check the place out.

Kazakhstan is also good for crypto. Maybe the great migration into KZ starting soon

 

[jafo]

Example: a company established in Georgia buying goods from China and selling them to Poland. Taxation: exemption from corporate income tax in Georgia.

This is EXACTLY what I do! Substitute Poland with Latin America.

Feel free to reach out if you want to get started in Georgia.

Interested! How? email, phone, telegram???

 

[Don]

This is EXACTLY what I do! Substitute Poland with Latin America.

Interested! How? email, phone, telegram???

PM!

Its worth noting the vast benefit of Georgia is that you pay CIT on the profits that you distribute only (Estonian style tax system). For many businesses that brings the effective tax rate on earned profits further down, as you can reinvest tax free, etc.
Combined with a company in Georgia:
1) Cyprus can be great option for personal tax residency but if you want a sound setup you need to stay there 6+ months a year for tax residence.
2) Estonia on the other hand can offer 5% total tax setup with more flexible ability to travel and do business around Schengen, as you don't have minimum stay requirements for tax residency.
Again, its 5% of what you pay yourself meaning you still have opportunities to live tax free if all your income is coming from tax exempt sources, you also can benefit from foreign tax relief, etc.
Living proof of this is a Georgian billionaire Lomtadze who is a top dividend payer in Estonia

 

[JustAnotherNomad]

Estonia on the other hand can offer 5% total tax setup

How does this work? Isn't the minimum tax 7-10% or something in Estonia?

 

[Don]

How does this work? Isn't the minimum tax 7-10% or something in Estonia?

No, The income tax in Estonia is not charged on dividends if:
1) the resident company paying the dividend has derived the dividend which is the basis for the payment from a company of a foreign state and at least 10 per cent of such company’s shares or votes belonged to the company at the time of deriving the dividend, and income tax has been withheld from the dividend or income tax has been charged on the share of profit which is the basis thereof;
2) the dividend is paid out of the profit attributed to foreign permanent establishment of a resident company and income tax has been charged on such profit;

 

[Marzio]

the resident company paying the dividend has derived the dividend which is the basis for the payment from a company of a foreign state

Don, in your experience will dividends be tax exempt even if the derived dividends was from a company resident in a tax free jurisdiction?

 

[JustAnotherNomad]

Exactly, but there is a minimum / low tax countries are excluded. I believe anything less than 7-10% (don't remember exactly) is considered as "no tax paid" and then up to 20% Estonian tax is charged.

 

[FixieHartmann]

What kind of substance would be required for Cyprus personal tax residency with Georgia company tax residency?

 

[Marzio]

It has to be subject to tax but looks like there's no minum tax

 

[Don]

It has to be subject to tax but looks like there's no minum tax

Yes you already answered and that is correct. Overall there are nine different exemptions coming from domestic law.
Its worth noting that in general at times you can get away with applying the domestic treatment which can be lower than treaty rate. No tax authority will ofcourse tell you that.

What kind of substance would be required for Cyprus personal tax residency with Georgia company tax residency?

I recommend consulting this with an international tax advisor, but from Georgian perspective having a home only in Cyprus could be enough + staying there 60 days a year for the tax residency certificate.
For other jurisdictions like the country of your citizenship you might need to stay longer in Cyprus to be totally safe.

 

[bru1234]

ok so basiically it is easy to avoid corporate tax in Georgia.
However, is there a way to avoid local tax in Europe when you get some dividend? Like if i get dividend from georgia and live in belgium, i still have to pay a huge 30% dividend tax...

 

[Don]

ok so basiically it is easy to avoid corporate tax in Georgia.
However, is there a way to avoid local tax in Europe when you get some dividend? Like if i get dividend from georgia and live in belgium, i still have to pay a huge 30% dividend tax...

Yes, you need to move your tax residence to a jurisdiction that offers lower overall rate.

 

[JustAnotherNomad]

ok so basiically it is easy to avoid corporate tax in Georgia.
However, is there a way to avoid local tax in Europe when you get some dividend? Like if i get dividend from georgia and live in belgium, i still have to pay a huge 30% dividend tax...

If you live in Belgium, your Georgian company most likely will be subject to Belgian tax, even if you don't pay out anything.