Company in Bulgaria or Estonia: what are the downsides ?
- Thread starter Oumerty
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But it is not mandatory to pay a salary if you︂ open a company in Estonia, right? I can use the company to invoice clients in︃ the EU, for example, and then from there I make a service invoice to my︄ LLC in the USA. From this LLC, I can use it for my expenses as︅ salary.
Yes, many people use US LLC and Estonian company together.
Very good would be also to have a branch of Estonian company in Bulgaria since youll benefit from the reduced withholding tax. Profits repatriated by a branch to its head office abroad are not subject to WHT, and you can redistribute such profits to yourself tax free paying︀ 10% effective tax.
Very good would be also to have a branch of Estonian company in Bulgaria since youll benefit from the reduced withholding tax. Profits repatriated by a branch to its head office abroad are not subject to WHT, and you can redistribute such profits to yourself tax free paying︀ 10% effective tax.
It is possible to have an OU in Estonia, get the European VAT to avoid processing︂ VAT, for example, with clients from Spain. You use the company as a means of︃ billing, but you do not have to submit VAT reports, because there is none. You︄ pay suppliers and use the company as a money store. You don't pay any salary,︅ because the owner of it is me, a resident of Spain, and if I'm interested,︆ I would bring it to me sometime as a dividend, which I wouldn't do. Therefore,︇ it only remains to avoid the double taxation treaty, for example by having one or︈ several foreign partners. Also, to spend freely, I can invoice services from my LLC in︉ the USA, and spend that money instead of withdrawing dividends or paying myself a salary.︊ Is that so?
Less costs, and safer. Easier to setup also and much better for banking. Bulgaria is one of the worst countries I could think of for finding nominees, but with branch setup nominees/substance could be arranged in a safe way.
And by safer I mean that nobody will run away with your money, and not kill you (the latter I have been threatened to in Bulgaria).
And by safer I mean that nobody will run away with your money, and not kill you (the latter I have been threatened to in Bulgaria).
From what I understand as a natural person when WHT you pay in Estonia 20%. You recommend Bulgaria, because the WHT would be 10% in your branch. But after that Bulgarian branch the natural person is tax free? When︀ you open a branch in Bulgaria, must you be linked to Estonia as a subsidiary?︁ or is it not necessary?
No, there is no WHT in Estonia. For Estonian tax resident natural persons dividends are not taxed in such case. The setup works best if you become Estonia or UAE tax resident, which is easy to do.
Yes there is corporate︀ tax 20% that you pay only on distributions, but in case of foreign profits that︁ were taxed already it doesn't apply. You pay just 10% tax in BG and these︂ profits can be redistributed to the owner tax free so 10% will be your total︃ tax, and if you keep profits in the Estonian company without distribution the tax is︄ 0%.
Btw Bulgaria will be in Schengen possibly already this year which makes it even︅ better.
Yes there is corporate︀ tax 20% that you pay only on distributions, but in case of foreign profits that︁ were taxed already it doesn't apply. You pay just 10% tax in BG and these︂ profits can be redistributed to the owner tax free so 10% will be your total︃ tax, and if you keep profits in the Estonian company without distribution the tax is︄ 0%.
Btw Bulgaria will be in Schengen possibly already this year which makes it even︅ better.
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