Why risk offshore? Just pay some taxes

[fshore]

Hello guys,

here the proper calculaton:

100,000 EUR
25,000 EUR (Corp Tax)
75,000 EUR into LTD Bank Account

A) IF Salary to myself as Director -> Progressive Taxes + Social Insurance
B) If Dividend to myself another 20% - 30% of 75,000 EUR Dividend Tax + Social Insurance

If you disregard vat yes. If the 100k income includes vat then you need to pay account for those first.

 

[fshore]

This is exactly what I mentioned is wrong in the calculation. OP wrote that he pays VAT as a consumer (see point #4) so your logic is wrong and your calculation is meaningless. OP pays (indirectly) VAT as a consumer of services and he uses his already taxed money for it. Do not write nonsense.

I must admit that it was a while ago I read op's post, but anyway if the company income is 1000 and that includes vat then the take home money will be 400, assuming 25% vat and 50% tax and social charges.

 

[GrumpyMess]

I find it ridiculous that people have these opinions about other countries (be it Panama, Belize, Brazil, Georgia) based on a rumour or a Wikipedia statistics. If you behave like a retard, you can get into trouble in Sweden as easily as in Panama. Why exactly would it be an unsafe country? Nothing is about "comfort" or "life balance", these are meaningless middle-class buzzwords. You shouldn't expect to just live in comfort and that's it. Yes, it is possible but will that be a life worth living?

There is a real-world numbeo statistics, which is gathered by ordinary people, if they are feeling unsafe walking alone during night or have worries being mugged or robbed they are simply indicating that. This is a fairly serious indicator that the country isn't that good even it has low taxes. "comfort" or "life balance" are subjective indicators and everyone must decide for himself.

Returning to the topic I also don't understand why people are using risky offshores if in the most countries you have to pay taxes for these offshores. I also don’t understand how you can feel comfortable living in a country like Panama long-term. Many here defend such countries, for example Georgia, a lot of people mentioned that they've been there, but nobody indicates that he lives there now, pays scanty taxes and enjoys his life. This is also an indicator. How can you protect the country if you were there only as a short-term tourist?

 

[fshore]

I must admit that it was a while ago I read op's post, but anyway if the company income is 1000 and that includes vat then the take home money will be 400, assuming 25% vat and 50% tax and social charges.

Or if the 1000 is salary income then need first to consider if employer paid social fees before the 1000 was paid out. Then 50% tax, leaving you with 500 (disregarding employers part of social fee) and then need to pay 25% vat in Denmark when using those 500, so you're still left with 400 and a total tax of 60%.

 

[void]

There is a real-world numbeo statistics, which is gathered by ordinary people, if they are feeling unsafe walking alone during night or have worries being mugged or robbed they are simply indicating that. This is a fairly serious indicator that the country isn't that good even it has low taxes. "comfort" or "life balance" are subjective indicators and everyone must decide for himself.

the thing is these statistics work for rather small and "homogenous" places like Hong Kong or Martinique and are telling almost nothing about places like Mexico or Indonesia - not saying it has no value, just be careful how you interpret it

 

[georgio]

Actually, dividend tax is taxed on the source (at least in UK, France). That means that if you take dividends from your company, you will have to pay dividend tax in the country where the company is based in (even if you live in another country). Can someone correct me if this is wrong?

 

[John Andrews]

Actually, dividend tax is taxed on the source (at least in UK, France). That means that if you take dividends from your company, you will have to pay dividend tax in the country where the company is based in (even if you live in another country). Can someone correct me if this is wrong?

dividend tax is not the same as corporate income tax. if you live in country X but own a company in country Y, company pays corporate tax and you pay tax on dividends, in your home country.

 

[georgio]

Here is my question to a certified UK accountant and his response (feel free to decrypt it):

Question: The director of a limited company, who is a resident in another country, is he subject to the dividend tax in the UK? (the dividend tax that is applied on dividends after the corporation tax)

Answer: The tax charge for non-residents on investment income arising in the UK is restricted to the amount of tax, if any, deducted at source. If the tax charge is limited in this way, personal allowances will not be given against other income. This restriction does not apply in any tax year when residence is split between resident and non-resident.

 

[fshore]

Here is my question to a certified UK accountant and his response (feel free to decrypt it):

Question: The director of a limited company, who is a resident in another country, is he subject to the dividend tax in the UK? (the dividend tax that is applied on dividends after the corporation tax)

Answer: The tax charge for non-residents on investment income arising in the UK is restricted to the amount of tax, if any, deducted at source. If the tax charge is limited in this way, personal allowances will not be given against other income. This restriction does not apply in any tax year when residence is split between resident and non-resident.

Hahaha only accountants can anwer so much without giving a clear answer.
I guess maybe because you didn't specify that he is also not resident in the UK.

No there are now withholding tax on dividends in the UK.

 

[traveller79]

You can maybe avoid paying VAT by using few companies and all of them would then stay under the VAT threshold. You have unique situation where you are selling to private individuals.. this might be something to concider. Each company could be in different countries - thus attract less attention.

 

[Tax Cow]

you cannot just add these percentages up.

Thanks for the math fixes. Brain glitch

 

[John Dee]

I will react only on this sentence :

I also don’t understand how you can feel comfortable living in a country like Panama long-term.

To maintain tax residency status in Panama, you don't need to live there long-time, to be honest, you need just show there for 1day every 2 years and that's fine for maintaining your tax residency. Panama is in the middle of continent and they are just building one new huge airport hub there, which will be fiished very soon. From there you can fly everywhere. So these 2-years stamp visits you can plan together with vacation of exploring central/south america countries.

 

[Spinat]

Sounds not to bad, maybe I should take some vacation and take the trip to Panama. Do you know what costs are involved to obtain panama tax residency?

 

[John Dee]

Sounds not to bad, maybe I should take some vacation and take the trip to Panama. Do you know what costs are involved to obtain panama tax residency?

You will pay more for flight ticket and hotel than for incorporation of local company (must have for residency) + fees + residency card + local lawyer, it's really cheap (all in all under 5k IIRC), but check if your citizenship is eligible for friendly nations visa ( Russia is not )

 

[void]

You will pay more for flight ticket and hotel than for incorporation of local company (must have for residency) + fees + residency card + local lawyer, it's really cheap (all in all under 5k IIRC)

maybe a dumb question (this is not my field) - what will I practically get for doing/paying this while spending a major part of the year somewhere else and being a tax resident there? pasport of Panama? how about my family? what benefits are there?

 

[John Dee]

maybe a dumb question (this is not my field) - what will I practically get for doing/paying this while spending a major part of the year somewhere else and being a tax resident there? pasport of Panama? how about my family? what benefits are there?

You'll get 0% Tax rate for your foreign source of income, that's the point.

 

[void]

You'll get 0% Tax rate for your foreign source of income, that's the point.

as I said, I'm a tax resident elsewhere and the country will consider this income taxable because the company would be controlled from outside Panama

 

[lavel]

as I said, I'm a tax resident elsewhere and the country will consider this income taxable because the company would be controlled from outside Panama

it does not change just because you are panama residency without living there or does it? sounds too easy for me.

 

[void]

it does not change just because you are panama residency without living there or does it? sounds too easy for me.

Exactly, that's why I ask what else it can bring me.
On the other hand if one can manage not to be a tax resident elsewhere it could be useful.

 

[CaLViN]

Noone would leave the country he is resident at just to get some tax advantages.You would only move in if you really want to live there.
Live in a country with low tax rate just to have some more money in your pocket ?
Come on,not everything is money here.
This is why offshore is chosen.