Malta or Bulgaria?

[Cabbage500]

Hello, currently we have a Seychelles IBC, but are thinking of moving to EU as banking is getting harder, and having an IBAN is important.

I am thinking Malta or Bulgaria.

I need, accountant, company formation agent, and help to open bank account.

The business is Software design and rental, we issue around 2000 invoices per year.

I like the sound of Malta with 5% tax... but in reality is it difficult to achieve that? would Bulgaria be better? What sort of accounting costs should we expect?

Who can advise this stuff?

thanks

 

[IAmNotTheTaxman]

I have clients that are in the field of software development, licensing etc. If you can get an eligible IP (intellectual property) tax exemption declaration in Cyprus - you'd effectively only pay ~2% tax there. Cyprus is one of the best EU countries for IP tax regimes etc, however they are changing their IP regime in the coming year or so, so maybe have an accountant comment on that. Can't say much re: Malta or Bulgaria though, however you'll run into accounting, legal and corporate fees no matter the country you incorporate in if EU.

 

[JohnLocke]

You will need to have a budget at least at €4000 for accounting and tax filing including audited accounts each year! This may not differ much regardless of Bulgaria, Cyprus or Malta.

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[LisaSimpson]

I must mention that in Bulgaria, since you have 2000 transactions, it will cost a significant amount of money in accounting because 1/ every invoice has to be translated in bulgarian 2/ invoices has to be converted in BGN. You will not set up the BGN currency on your website for sure.


Thats the local bulgarian law.

 

[negon]

LisaSimpson said:
1/ every invoice has to be translated in bulgarian
Click to expand...

is that true? WOW so what are International companies doing in Bulgaria? do they move their business out of this country?

 

[LisaSimpson]

Back in 2016 it was the cast @auric here is forum thread discussing the issue
Invoices in different languages | Invoice Ninja

 

[Martin Everson]

Cabbage500 said:
I like the sound of Malta with 5% tax... but in reality is it difficult to achieve that?
Click to expand...

If you are not going to live in Malta then forget Malta. You will end up paying 35% corporate tax rate and will not get the tax refund eek¤%&. Tax refund requires having a local Malta iban to get it. Plus to open a corporate account you really need to be resident in Malta. All Malta banks are closing the doors to non-residents so if your not a resident of Malta then forget it long term. Satabank was last hope among the international banks in Malta but has compliance issues. So does the other bank I don't want to mention that has issues with U.S also.

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[LisaSimpson]

Martin Everson said:
If you are not going to live in Malta then forget Malta. You will end up paying 35% corporate tax rate and will not get the tax refund eek¤%&. Tax refund requires having a local Malta iban to get it. Plus to open a corporate account you really need to be resident in Malta. All Malta banks are closing the doors to non-residents so if your not a resident of Malta then forget it long term. Satabank was last hope among the international banks in Malta but has compliance issues. So does the other bank I don't want to mention that has issues with U.S also.
Click to expand...

I d like to second Marin Everson, the setup that I heard about Malta was about people who decided to move to Malta and be resident there in order to get the Tax refund. I know for sure that the administrative process for Malta is much more complicated than in Cyprus.

 

[Cabbage500]

Ok thanks for advice on Malta, maybe now will look elsewhere. Bulgaria too will be expensive with so many invoices.... mmmm Maybe Cyprus is better at 12.5% corporate tax, even with no IP declaration.

 

[skoffs]

what about romania ? they have 3% turnover tax - which is really good for owning IP as you dont really have any expenses.

also hungary is having 9% tax and 4.5% for IP but they are little bit strict with what they consider IP.

Also i strongly suggest paying some local guy to find you local accountants. Anything you find in english in these countries is terrible. I got quoted 150eur/mo for one invoice a month accounting in romania which is ridiculous. When you have proper accounting company, you dont even need to have invoices, just give them csv in format they can import into their accounting software and you are sorted.

 

[1nomad]

Martin Everson said:
If you are not going to live in Malta then forget Malta. You will end up paying 35% corporate tax rate and will not get the tax refund eek¤%&. Tax refund requires having a local Malta iban to get it. Plus to open a corporate account you really need to be resident in Malta. All Malta banks are closing the doors to non-residents so if your not a resident of Malta then forget it long term. Satabank was last hope among the international banks in Malta but has compliance issues. So does the other bank I don't want to mention that has issues with U.S also.
Click to expand...

Only foreign shareholders are eligible for a 30% tax refund

 

[Martin Everson]

1nomad said:
Only foreign shareholders are eligible for a 30% tax refund
Click to expand...

That's WRONG information and I must correct you.

Anyone that is not a resident and anyone that is resident in Malta but is not Maltese can claim the 6/7 full imputation refund. This is done by a resident setting up a Maltese company with a foreign company as shareholder to reclaim the tax paid.

P.s Knowledge is power 😉

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[1nomad]

Martin Everson said:
... foreign company as shareholder to reclaim the tax paid.
Click to expand...

That's it. Not you, but your foreign company as a shareholder is eligible for a tax refund. You can be a resident anywhere, including Malta

 

[blockchain4ever]

LisaSimpson said:
I must mention that in Bulgaria, since you have 2000 transactions, it will cost a significant amount of money in accounting because 1/ every invoice has to be translated in bulgarian 2/ invoices has to be converted in BGN. You will not set up the BGN currency on your website for sure.


Thats the local bulgarian law.
Click to expand...

Is this a problem though? My accounting program does all of that automatically, and I'm not even in Bulgaria. I mean, accounting systems download fx data, and the items have an English and local name. Problem solved? This seems made out to be a bigger problem than it should be.

What I do like about Bulgaria is that accounting services seems to be pretty cheap.

 

[blockchain4ever]

IAmNotTheTaxman said:
I have clients that are in the field of software development, licensing etc. If you can get an eligible IP (intellectual property) tax exemption declaration in Cyprus - you'd effectively only pay ~2% tax there. Cyprus is one of the best EU countries for IP tax regimes etc, however they are changing their IP regime in the coming year or so, so maybe have an accountant comment on that. Can't say much re: Malta or Bulgaria though, however you'll run into accounting, legal and corporate fees no matter the country you incorporate in if EU.
Click to expand...

I forgot about this in Cyprus! What does the paperwork look like for this option? Any experience on the process you can share?

Though, in Bulgaria it's easy to get the money paid out - 14.4% total tax and then you have access to the money - not in your company but in your private bank account.

 

[IAmNotTheTaxman]

blockchain4ever said:
I forgot about this in Cyprus! What does the paperwork look like for this option? Any experience on the process you can share?

Though, in Bulgaria it's easy to get the money paid out - 14.4% total tax and then you have access to the money - not in your company but in your private bank account.
Click to expand...

I'm unsure what the paperwork looks like and what the process exactly was for applying for an IP exemption in Cyprus, that was before my time with this particular company. By the sounds of it though, with help of a local lawyer and accounting firm (one of the big 4), we were able to get the proper IP status, and are now currently enjoying the tax break. Can't comment re: Bulgaria either, never worked there. Currently in the process of incorporating in Malta though (holding company purposes).

 

[c4labs]

for Bulgarian invoices, I never had this issue. I even sent invoices in german/french to my accountants and never heard back from the governement.
if you want to incroporate a company in BG, it will cost around 500-700€ for a full set-up (company, bank, etc.) without nominees.

Taxes:
10% on profit
10% on salary
then special % for dividends (more expensive if outside EU or without double threaty)

 

[JohnLocke]

IAmNotTheTaxman said:
I'm unsure what the paperwork looks like and what the process exactly was for applying for an IP exemption in Cyprus, that was before my time with this particular company. By the sounds of it though, with help of a local lawyer and accounting firm (one of the big 4), we were able to get the proper IP status, and are now currently enjoying the tax break. Can't comment re: Bulgaria either, never worked there. Currently in the process of incorporating in Malta though (holding company purposes).
Click to expand...

Congrats with the good result. It must have cost you are fortune to get this done by these professionals?

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[Martin Everson]

@c4labs Who did you use to get this setup and do they speak English? I am interested.

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[Dubsize]

c4labs said:
for Bulgarian invoices, I never had this issue. I even sent invoices in german/french to my accountants and never heard back from the governement.
if you want to incroporate a company in BG, it will cost around 500-700€ for a full set-up (company, bank, etc.) without nominees.

Taxes:
10% on profit
10% on salary
then special % for dividends (more expensive if outside EU or without double threaty)
Click to expand...

Yes same here. Never had any issue with Bulgaria.
regarding Dividends, as far as I know, it's 5%