Belgium resident + Micro SRL in Romania
- Thread starter iamyourboss61
- Start date
- Status
Where are those accountants you spoke to licensed? You probably spoke to Romanian accountants who will be happy to help you form the company? Or did a Belgian accountant actually tell you that your plans would work?
It has NOTHING to do with where your customers are. That is completely irrelevant. It also has NOTHING to do with whether it is an online or offline business. There are no separate tax laws for online companies.
Have you heard about this thing called corporate income tax? That it has NOTHING to do with whether you pay yourself from that company or not?
You are trying to run a company from Belgium without paying the Belgian corporate income tax. If your Belgian accountant really told you that's fine, then you better find yourself a new accountant.
What you are describing would work perfectly fine - if you owned a ROMANIAN company. Meaning you would need a local director who gets paid a regular salary. A local office. Maybe some other local employees. Electricity, a phone bill etc.
And you would have to be able to prove to the Belgian authorities that all decisions and effective management of the company was always in Romania.
They don't have to prove s**t to you. They don't need a court order. They will just say it's a Belgian company if you're the only director and you will have to prove the opposite.
And yes, it's indeed about being stupid. You just confirmed it again. You still seem to believe that you're smarter than everybody else. Common sense would tell you that it cannot be that easy, otherwise everybody would be doing it. No online business would be paying corporate income tax in Belgium. But you still seem to believe that the reason nobody else does it is just that they don't have such great ideas and smart accountants.
If you want to save taxes legally, you will have to physically MOVE out of Belgium. Now. Or create economic substance somewhere else. Or pay for a more complex structure, but then you will be paying much more for the structure, so it probably wouldn't make sense.
It has NOTHING to do with where your customers are. That is completely irrelevant. It also has NOTHING to do with whether it is an online or offline business. There are no separate tax laws for online companies.
Have you heard about this thing called corporate income tax? That it has NOTHING to do with whether you pay yourself from that company or not?
You are trying to run a company from Belgium without paying the Belgian corporate income tax. If your Belgian accountant really told you that's fine, then you better find yourself a new accountant.
What you are describing would work perfectly fine - if you owned a ROMANIAN company. Meaning you would need a local director who gets paid a regular salary. A local office. Maybe some other local employees. Electricity, a phone bill etc.
And you would have to be able to prove to the Belgian authorities that all decisions and effective management of the company was always in Romania.
They don't have to prove s**t to you. They don't need a court order. They will just say it's a Belgian company if you're the only director and you will have to prove the opposite.
And yes, it's indeed about being stupid. You just confirmed it again. You still seem to believe that you're smarter than everybody else. Common sense would tell you that it cannot be that easy, otherwise everybody would be doing it. No online business would be paying corporate income tax in Belgium. But you still seem to believe that the reason nobody else does it is just that they don't have such great ideas and smart accountants.
If you want to save taxes legally, you will have to physically MOVE out of Belgium. Now. Or create economic substance somewhere else. Or pay for a more complex structure, but then you will be paying much more for the structure, so it probably wouldn't make sense.
You should do some research on the following topics
and with 50-60k per year in revenue costs for substance e.g. a director´s salary and social security contributions might outnumber tax advantages easily.
- management and control
- economic substance
- cfc rules
- beps
- aeoi
and with 50-60k per year in revenue costs for substance e.g. a director´s salary and social security contributions might outnumber tax advantages easily.
Also just look at the tax treaty between Belgium and Romania/Estonia, specifically the articles about permanent establishment and corporate income tax.
And just be happy that someone told you it's not possible the way you're imagining this, instead of finding out when they visit you early in the morning without knocking.
And just be happy that someone told you it's not possible the way you're imagining this, instead of finding out when they visit you early in the morning without knocking.
Have a look into the Virtual Zone Georgia. As an IT and software company you benefit from zero CIT, an existing DTA with Belgium and low costs to establish real substance there.
Toggle signature
https://virtualzonegeorgia.com/
Toggle signature
https://virtualzonegeorgia.com/
My point of view....
Last edited: Apr 28, 2020
- as we all don't know the tax treaty Belgium/Romania, analyze it deeply instead of speculating. This is the base for your business and nothing else
- "usually" you have to create REAL structure (=office, phone, DSL, bank account, etc.. contracts) and at least officially move to Romania with all consequences (=rent real flat, etc.). You have to guard all invoices proving your REAL structure, movement and existence in Romania with at least 183 days/year there.
- All trials to escape from this can mean that you will loose much more than you expect (including fines, etc.)
- A Romanian SRL with at least 1 employee (can be you) is taxed with 1% of turnover (if <1 Mio. EUR), which is European benchmark.
- Divdends are taxed with 5%. This means totally 6% effectice tax, which is almost European benchmark. After costs, I would say it's European benchmark.
- The decision to move to Romania is a strategical one and not only taxes should be considered 🙂
Last edited: Apr 28, 2020
Thanks for bringing it up to my attention (no sarcasm).
It seems like you are tired of repeating yourself and hearing people thinking that they can so easily avoid taxes, by just simply opening a company abroad.
Beacuse of your frustration the way you reply creates a feeling that instead of trying to help, you just critisize. This makes people defensive and making it harder to acceept your point of view.
Based on the discussion here, I am going to challenge the sources that told me this and see what they have to say about this.
Thanks!
1. I will check try to google it deeper. I was talking to who i thought specialists and that was based from what they told me. I am not saying that they are right or wrong, but based on this was my initial assumption.
2. If that's the case with Belgium/Romania then it will not work now indeed.
4. Can you please explain the term "European Benchmark"? Google gives me something irrelevant, I think 🙂
1. Download it and analyze it directly in the document. Don't stay on google-level...You can normally scip the first chapters in the treaty. Comparing it with the so called German DBA's, the relevant stuff begins in chapter III.
2. If it doesn't work with Romania it will not work anywhere. 50k/60k turnover is critical costwhise.
3. There are other locations like Malta and Cyprus which are taxwhise nominally sometimes below Romania (after dividends). But the structural costs (one-time and ongoing) are normally higher.
One thing you can consider is to neither do business in Romania nor in Belgium. If your business is registered in Romania and you live in Belgium but you do your business in a 3rd country, then you can prove to the tax office in Belgium that you are not running the business from Belgium.
This requires not being in any 3rd country for more than 183 days per year.
As an example, if you work in Germany, France, or in the Netherlands for your Romanian company, stay for a limited time in those countries, and do not run your Romanian business while in Belgium, then I think you can get away with it.
This requires not being in any 3rd country for more than 183 days per year.
As an example, if you work in Germany, France, or in the Netherlands for your Romanian company, stay for a limited time in those countries, and do not run your Romanian business while in Belgium, then I think you can get away with it.
Then there would probably be a PE in that 3rd country.
What could work is renting an apartment in Romania, staying less than 183 days in Belgium and not working from Belgium, and ideally not having customers in Belgium.
Then you might be able to say your home in Belgium is just a vacation home, your center of life is in Romania. But I think Belgium has pretty strict residency laws and they can declare you a non-resident if you spend less than 183 days in your Belgian home. Not sure if that would be good or bad in this case.
What could work is renting an apartment in Romania, staying less than 183 days in Belgium and not working from Belgium, and ideally not having customers in Belgium.
Then you might be able to say your home in Belgium is just a vacation home, your center of life is in Romania. But I think Belgium has pretty strict residency laws and they can declare you a non-resident if you spend less than 183 days in your Belgian home. Not sure if that would be good or bad in this case.
I think a PE in the 3rd country would be highly unlikely in that situation, given that there is not a single person permanently working there. Just don't make it too permanent.
OECD's DTA article 5 defines this, so we can look at the commentary:
Page 53, http://www.oecd.org/dataoecd/15/51/43324465.pdf
Also OECD's DTA article 15 means you can work up to 183 days in a country without getting taxed for your personal income from that work. In the commentary for article 15 a PE can or cannot be present, so it clearly must be possible to work 183 days in a country without that creating a PE.
OECD's DTA article 5 defines this, so we can look at the commentary:
Page 53, http://www.oecd.org/dataoecd/15/51/43324465.pdf
Also OECD's DTA article 15 means you can work up to 183 days in a country without getting taxed for your personal income from that work. In the commentary for article 15 a PE can or cannot be present, so it clearly must be possible to work 183 days in a country without that creating a PE.
Well, how much time would you want to spend there?
You register a company in Romania, you live in Belgium, but you only work for the company one day per month, from the Netherlands? The rest of the time, the company runs itself?
You register a company in Romania, you live in Belgium, but you only work for the company one day per month, from the Netherlands? The rest of the time, the company runs itself?
Actually, that brought me an idea:
What if I don't receive a payment from my customer on a monthly basis, but on a half a year basis (my customer is flexible about that).
I go for a month to Romania, I do the work from there for that customer and receive the payment for the whole half a year in the Romanian company.
Would that make sense?
- Status