Never cash out before moving

[jscargo]

Imagine there is a citizen of an EU country living in a country called Spain or Italy.
The citizen runs online business. He has relative control as of to where the funds he earns are directed.
Let's imagine that this citizen opens a company in a country in the Balkans, and is the sole shareholder of the same.
He then directs 80% of his income to this company, and 20% of his income he receives directly as a self-employed in his country of residence.
He never cashes out from this company, neither in dividends nor in salaries.

After he accumulates a certain amount of capital in this company and invests in stocks and real estate only as a company some 5-7 years pass.
He then moves out of Spain/Italy to this country in the Balkans, dissolves the company and finally cashes out for himself. He then pays whatever income tax is needed in the Balkan country.
He doesn't go back to Italy/Spain ever, or at least not for 5-10 years.

Could this work? Am I missing something?

 

[JohnLocke]

You really want to speak with a local tax advisor, it make good sense to‌ plan your next step before doing it. In certain cases you will risk too much‍ if you don't seek advise.

 

[Golden Fleece]

It depends on the tax laws in Spain or Italy, so you must consult a‌ professional tax advisor familiar with the tax laws of those countries. It may also depend‍ on the tax laws of the Balkan country.

I can tell you that, by analogy,⁠ that would not work by moving to Puerto Rico (which is a tax haven for⁤ Americans and others), because Puerto Rico law does not allow it. You only save on⁣ capital gains accrued after you moved to Puerto Rico.

 

[NicolasMaduro]

sounds like money laundering or tax evasion to me..
I guess you already know that‌ if you divert 80% of the income/sales for Company A in Spain to Company B‍ in unknown country
then you are doing something illegal in this step, but hard to⁠ find out I guess unless a friend or family member rats on you.

"Moving from⁤ Spain to XXX" well now you have to pay exit tax on your stocks etc.⁣

 

[Sols]

You can't just "direct" money from one company to another. You will need to explain‌ that transaction and need to mindful of VAT, BEPS, and whether the Balkan company is‍ in fact tax resident in Spain/Italy if you control it.

 

[jscargo]

Thank you for the answers.

one critical clarification I explained poorly. The split of the‌ income is from different activities. 80% would be from one activity(send to the company abroad)‍ and the 20% from another, different activity(would use this income cover my daily expenses). It⁠ is not that I would be doing the same thing and sending a part of⁤ the money to the company abroad.
If they were the same activity I also believe⁣ it would be actually problematic.

@NicolasMaduro I am aware about the exit tax situation, it⁢ is a good point though. But most of the money would be in the company︀ abroad, not my personal funds.

 

[Dandyline]

Yes, many people do it like this. The only issue is CFC laws,︅ so you need to make sure that the company in "Balkans" have some kind of︆ substance, example a small office with some cheap employees and a real website and so︇ on. Your role is just a passive shareholder.

Your home country will probably never find︈ out about it anyway, but its always good to be on the safe side. For︉ extra safety, you could fix a UAE company + Residence to avoid CRS and then︊ just store the money there without the possibility for your home country ever to know︋ about it, and then when you have enough capital, you can just move out and︌ use the money freely.