Hi everyone.
Would love to get feedback on the setup I planned.
My wife and I are EU citizens, just moved to Spain (Andalucia) from another EU country. My wife works full-time and is eligible for the Beckham Law exemption. We have kids at school here ”“ can't do nomad. We know Spain is not the best option in terms of tax but we already moved here (for lifestyle). If the business keeps growing we might consider moving somewhere more tax-friendly in the future.
I have an online business (under an Irish LLC) with about 200k euros annual profit. I must close the Irish entity before the end of the year and need to open a new entity somewhere else. I spoke to a couple of tax lawyers in Spain and in Ireland and so far it seems Cyprus might be a good option.
The planned setup:
Open a company in Cyprus with a nominated director, split shares 50/50 my wife and myself. Pay ourselves a mix of dividends (taxed at 19-26%) and salary with a personal effective tax rate of approximately 27% and corporate tax of 12.5%. This brings the combined effective tax rate (from company profits to my personal bank account) to about 36%.
Is it likely the Spanish tax office would assume this corporation is controlled from Spain and must pay taxes in Spain? Do I need to work on building substance?
Any other potential issues with this setup?
There's also a new Startup act and digital nomad visa coming out most likely in Jan 2023, which might also be an option (I will be talking to a local lawyer next week), which the main benefit for me is a 15% corporate tax rate during the first 4 years of operation, and seemingly the same dividend tax. So if I understand this new law correctly, it will allow for a combined effective tax rate of about 40% but will make the whole setup simpler.
Any thoughts, or feedback will be highly appreciated!
Would love to get feedback on the setup I planned.
My wife and I are EU citizens, just moved to Spain (Andalucia) from another EU country. My wife works full-time and is eligible for the Beckham Law exemption. We have kids at school here ”“ can't do nomad. We know Spain is not the best option in terms of tax but we already moved here (for lifestyle). If the business keeps growing we might consider moving somewhere more tax-friendly in the future.
I have an online business (under an Irish LLC) with about 200k euros annual profit. I must close the Irish entity before the end of the year and need to open a new entity somewhere else. I spoke to a couple of tax lawyers in Spain and in Ireland and so far it seems Cyprus might be a good option.
The planned setup:
Open a company in Cyprus with a nominated director, split shares 50/50 my wife and myself. Pay ourselves a mix of dividends (taxed at 19-26%) and salary with a personal effective tax rate of approximately 27% and corporate tax of 12.5%. This brings the combined effective tax rate (from company profits to my personal bank account) to about 36%.
Is it likely the Spanish tax office would assume this corporation is controlled from Spain and must pay taxes in Spain? Do I need to work on building substance?
Any other potential issues with this setup?
There's also a new Startup act and digital nomad visa coming out most likely in Jan 2023, which might also be an option (I will be talking to a local lawyer next week), which the main benefit for me is a 15% corporate tax rate during the first 4 years of operation, and seemingly the same dividend tax. So if I understand this new law correctly, it will allow for a combined effective tax rate of about 40% but will make the whole setup simpler.
Any thoughts, or feedback will be highly appreciated!
