Incorporate A Limited in Western Union -> Move to Portugal & Slovakia

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Financelady45

Financelady45

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Feb 3, 2019
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Hi,

I was wondering if anyone has considered to incorporate a limited company in Western Europe, pay between 9% (Poland) - 30% (Germany) Corporate Taxes, live legally in the country and then after a few years, move yourself (As solo Director) to a place like Slovakia and Portugal and cash out the dividends.

In case of Portugal 0% On dividends and no social contribution and no withholding taxes
In case of Slovakia, it depends on the DBA but usually 10% Witholding Tax and 7% Credit from Slovakia Dividend Taxes.

For example:

Netherlands 25% Corporate Taxes -> Dividends To Slovakia another 10%
Netherlands 25% Corporate Taxes -> Dividends To Portugal another 0% (with resident regime but need to check details)

In the first case it will be a 25% + 10% = 35% Tax which is still lower than the average 25% + 30% Dividend taxes + Social Contribution on dividend.

In this way everything is perfectly legal.
 
I did this with my UAE FZE company. After I invoiced all projects needed, I changed my residency back to Slovakia and paid 7% on dividends from the UAE company. It was ok. However, I do not know how would the Dutch tax office look at this.
 
Sounds rather expensive... if you're already willing to move why not just move to a 0% tax jurisdiction anyway and save yourself the hassle.
 
momordica said:
momordica said:
I did this with my UAE FZE company. After I invoiced all projects needed, I changed my residency back to Slovakia and paid 7% on dividends from the UAE company. It was ok. However, I do not know how would the Dutch tax office look at this.
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Nice! How long did you have to stay in SK? Did you also pay social contributions? Any problem with your home country to get funds back to your place?
 
Financelady45 said:
Financelady45 said:
OK Got it. So you did it when SK was allowing offshore companies, right? Did you pay any social contribution on the dividend?
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There is no social contribution on dividends (was a few years back tho), so I did not pay. From 2004 to 2012 there was no dividend tax. From 2012 to 2017 you had to pay 14% health insurance from dividends. From 2017 onwards is health insurance contribution abolished, replaced with 7% tax. There is a proposal to completely abolish dividends tax again, very likely there will be no dividend tax from 2021.
SK has "Western Europe type" of CFC rules only for companies, not for private individuals (however there are rules about effective control and management, determining the tax residency), so "offshore" companies are still "allowed". SK has DTT with UAE... Everything was/is OK.
 
Netherlands 25% Corporate Taxes -> Dividends To Slovakia another (10% Withholding Tax - 7% SK Dividend) if the Director moves to SK.

According to this schema it should work like this, the 3% will not be refundable but at least no social security.

What do you think?
 
To me, it seems legit. Quite the same thing I did, but I can't guarantee how the Dutch tax office will look at this. The logic is saying, the company is a separate legal entity and the beneficial owner has become a tax resident in another country. In what stage is this your idea? Do you have a Dutch company with profits already?
 
Hi, I remember one Accountant from Slovakia told me that tihs is possible as long as the Director move for 183 days to SK. The only concern he as arising was related to the social contribution because at that stage the Director will be Director of the Dutch Limited AND Self employed in SK. So There is still a "link" with Dutch.
 
You won't have to pay any social levies on dividends in Slovakia.
I would setup sk ltd controlling Dutch ltd where you do business and when you get sk tax residency, just pay dividend from Dutch to SK company and then to yourself, it should be only 7% in total (No 10% wht from Dutch).
On SK side will be no problem.
Dutch side I don't know, but another layer of SK ltd entity could help. the problem could arise if you decide to regain your Dutch residency after, the Dutch tax office may dig into in imo, so it depends on your plans and stage of your project.
 
There is also Estonia. Estonia has no personal income tax on dividends, provided that corporate income tax of at least 5 or 10% or so has been paid (if you pay yourself dividends from a UAE company, Estonia will still tax you 20% or so).
So if you have a German company for example, then you can move to Estonia and cash out the profits.
But I'm not sure about German exit tax etc. - would assume that it's not an issue though since you're still within the EU.
 
JustAnotherNomad said:
JustAnotherNomad said:
There is also Estonia. Estonia has no personal income tax on dividends, provided that corporate income tax of at least 5 or 10% or so has been paid (if you pay yourself dividends from a UAE company, Estonia will still tax you 20% or so).
So if you have a German company for example, then you can move to Estonia and cash out the profits.
But I'm not sure about German exit tax etc. - would assume that it's not an issue though since you're still within the EU.
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Hi

Yes this is point. Exit Tax? How to call this? Is it legal to have it in the EU?

I mean, the structure can be like:

NL or DE Limited -> 100% Owned by SK Limited

What can be an Exit Tax on this?
 
I have been considering some similar setup some time ago, but for personal reasons abandoned it.
Anyway, I consulted with a top notch int'l tax lawyer in Bratislava, and he told me that Slovakia isn't going to easily issue a tax certificate for a foreigner not being under a SK work contract.
So if you do this, you might want to check on this and collect proof of really being there.
 
robertcold said:
robertcold said:
I have been considering some similar setup some time ago, but for personal reasons abandoned it.
Anyway, I consulted with a top notch int'l tax lawyer in Bratislava, and he told me that Slovakia isn't going to easily issue a tax certificate for a foreigner not being under a SK work contract.
So if you do this, you might want to check on this and collect proof of really being there.
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Hi

As long as the foreigner live in SK for more than 6 months I do not see any reason why they should not issue a certificate. Can you please tell me more?
 
Hello everyone. Its an interesting question. They should issue a tax certificate. I relocated to Slovakia as well and they issued one on personal dividend basis. However, the question to me is if the Slovak finance ministry likes to see dividends from low tax countries and plans not to put through CFC rules. Does anyone have any experience on that?
 
There is also the obvious risk of permanent establishment in Slovakia. You would probably have to be able to prove you don't work for the company in Slovakia.
 
ok, how about a company outside Slovakia and then receiving dividends in Slovakia on a personal level.
 
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