Question Refusal of 70-90% Income Exclusive in Italy, What Netx?

[Anonymous1234]

JustAnotherNomad said:
So you will get a job on paper with a low salary, on which you will pay 24% tax and you will have some director for your company outside of Spain?
But if you do work from Spain, how can you be sure they won't say that your company has a PE in Spain?

The Portugal NHR setups work in just the same way, but you don't need a local job. You just have your company outside of Portugal with some substance and capital gains/dividends are exempt from tax in Portugal.

The risk seems quite comparable to me? The biggest difference of course being that, if you don't have to declare anything, it might raise fewer questions in Spain than in Portugal, where I think you have to declare capital gains, but they are not taxed.
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Even if I work from spain the company cannot have PE in spain because i am a minority shareholder and not involved in the day to day management of the business outside spain, the company will have proper substance outside spain. Another advantage is no need to declare anything in spain and thats where it wins against portugal hands down. I am thinking of having a holding company in either gibralter or cyprus and that holding company will own the IP plus the operating company in a third country, once my company is sold, the IP is transferred from the holding along with the operating company and the capital gained goes into personal swiss / singaporean or luxembourg account.

A1988 said:
Even if I work from spain the company cannot have PE in spain because i am a minority shareholder and not involved in the day to day management of the business outside spain, the company will have proper substance outside spain. Another advantage is no need to declare anything in spain and thats where it wins against portugal hands down. I am thinking of having a holding company in either gibralter or cyprus and that holding company will own the IP plus the operating company in a third country, once my company is sold, the IP is transferred from the holding along with the operating company and the capital gained goes into personal swiss / singaporean or luxembourg account.
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IF you are from the tax office of spain, what would make you go after me? Its all by the book.

 

[Marzio]

JustAnotherNomad said:
The Portugal NHR setups work in just the same way, but you don't need a local job. You just have your company outside of Portugal with some substance and capital gains/dividends are exempt from tax in Portugal.
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I thought exactly the same.

A1988 said:
Even if I work from spain the company cannot have PE in spain because i am a minority shareholder
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Being a minority shareholder doesn't mean that you can't create a PE, you can create a PE in another country even if you aren't a shareholder at all.

It's enough to be considered a dependent agent of the foreign company for the tax agency to claim that you created a PE.

That's why there are EOR services like remote.com that hire people on your behalf to avoid the risk of creating a PE.

 

[Anonymous1234]

Marzio said:
I thought exactly the same.



Being a minority shareholder doesn't mean that you can't create a PE, you can create a PE in another country even if you aren't a shareholder at all.

It's enough to be considered a dependent agent of the foreign company for the tax agency to claim that you created a PE.

That's why there are EOR services like remote.com that hire people on your behalf to avoid the risk of creating a PE.
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Ok, i think i need to spend more time on understanding the risks of beckham law and spain in general but still at the end of the day it looks very attractive, just needs a little bit of optimizing.

 

[JustAnotherNomad]

I think you will probably be fine - but then you would also be fine in Portugal. The risks seem very similar.
How many people use the Beckham Law? That might be a factor. If it's only a handful, the risk of an inspection and issues may be higher than in Portugal where there's a very large number of NHR residents, from what I've heard. Then again - with the Backham Law, at least you pay some tax, so maybe it's part of the deal that they'll leave you alone.

 

[saponaire]

Just a few notes, assuming that you want to save tax on cap gains on a company where you are involved in management:
1) Spain: Beckham law will work if you are employed in Spain - so if you own <25% of this company, then you can set up a subsidiary in spain and work from there - otherwise someone must employ you and it must look legit.
2) Portugal: It won't work, cap gains are still taxed in PT under NHR UNLESS the other country tax them (but there are very few countries that tax cap gains), unless you can liquidate these gains in the form of dividends (but that would require setup)

Overall from this conversation: do not risk it.. either pay taxes in Italy (which btw you can pay 14% due to the latest finance bill, talk to a good commercialista), or move to a country where you are guaranteed not to pay capital gains (Switzerland, Monaco, Liechtenstein, UK non-dom, Malta non-dom, Gibraltar, Greece non-dom)

 

[JustAnotherNomad]

saponaire said:
2) Portugal: It won't work, cap gains are still taxed in PT under NHR UNLESS the other country tax them (but there are very few countries that tax cap gains), unless you can liquidate these gains in the form of dividends (but that would require setup)
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Wouldn't you be able to avoid this with a holding company, e.g. in Cyprus?

 

[Anonymous1234]

JustAnotherNomad said:
I think you will probably be fine - but then you would also be fine in Portugal. The risks seem very similar.
How many people use the Beckham Law? That might be a factor. If it's only a handful, the risk of an inspection and issues may be higher than in Portugal where there's a very large number of NHR residents, from what I've heard. Then again - with the Backham Law, at least you pay some tax, so maybe it's part of the deal that they'll leave you alone.
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The idea of not declaring any worldwide income or assets just makes it way more attractive

saponaire said:
Just a few notes, assuming that you want to save tax on cap gains on a company where you are involved in management:
1) Spain: Beckham law will work if you are employed in Spain - so if you own <25% of this company, then you can set up a subsidiary in spain and work from there - otherwise someone must employ you and it must look legit.
2) Portugal: It won't work, cap gains are still taxed in PT under NHR UNLESS the other country tax them (but there are very few countries that tax cap gains), unless you can liquidate these gains in the form of dividends (but that would require setup)

Overall from this conversation: do not risk it.. either pay taxes in Italy (which btw you can pay 14% due to the latest finance bill, talk to a good commercialista), or move to a country where you are guaranteed not to pay capital gains (Switzerland, Monaco, Liechtenstein, UK non-dom, Malta non-dom, Gibraltar, Greece non-dom)
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I think spain looks way more attractive than portugal not only for taxes but also from a lifestyle perspective

JustAnotherNomad said:
Wouldn't you be able to avoid this with a holding company, e.g. in Cyprus?
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Im thinking of cyprus or gibralter holding company which would hold the patents.

 

[uncreative]

There a lot of changes since 2023 for beckham law. P.E you can set up your own active SL ( 100% shares ) and work as a director to apply for beckham law. Here is good summary of the changes:

https://parakar.eu/knowledge/sp/2023-changes-to-the-beckham-law-in-spain-what-you-need-to-know-2/

 

[Marzio]

@A1988 i see Gibraltar monkeys in your future 🙂

 

[Anonymous1234]

uncreative said:
There a lot of changes since 2023 for beckham law. P.E you can set up your own active SL ( 100% shares ) and work as a director to apply for beckham law. Here is good summary of the changes:

https://parakar.eu/knowledge/sp/2023-changes-to-the-beckham-law-in-spain-what-you-need-to-know-2/
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Amazing resource, thankyou, so basically only modulo 151 and not 720 that means they dont care what you own outside spain and how much money you make? I can maybe qualify under entrepreneurial activity inside spain? I will mostly manage my company thru telecommunication so that is totally exempt from any taxes in spain? I think its even better than non dom regime of uk, ireland, malta and cyprus.

A1988 said:
Amazing resource, thankyou, so basically only modulo 151 and not 720 that means they dont care what you own outside spain and how much money you make? I can maybe qualify under entrepreneurial activity inside spain? I will mostly manage my company thru telecommunication so that is totally exempt from any taxes in spain? I think its even better than non dom regime of uk, ireland, malta and cyprus.
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Because you can bring the money inside spain tax free unlike non dom regime where its taxed at normal rates if you bring the money inside for personal use.

Marzio said:

@A1988 i see Gibraltar monkeys in your future 🙂
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Haha not yet, working out if it can workout for me.

JustAnotherNomad said:
Wouldn't you be able to avoid this with a holding company, e.g. in Cyprus?
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Maybe yes but when i sell the company i cannot take the money as dividends its capital gains and the patents are transferred in public domain. So portugal can be dangerous.

Last edited: Jul 14, 2023

 

[JustAnotherNomad]

A1988 said:
Maybe yes but when i sell the company i cannot take the money as dividends its capital gains and the patents are transferred in public domain. So portugal can be dangerous.
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No, you sell/gift your company to your holding company now. When there is an exit, then it's your holding company, not you, who has capital gains.

 

[Anonymous1234]

JustAnotherNomad said:
No, you sell/gift your company to your holding company now. When there is an exit, then it's your holding company, not you, who has capital gains.
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Ok, we did it differently last time with the dutch sandwich, now its no longer available. But, gibralter or cyprus looks great at the moment with personal tax residency in spain. But you seem to like portugal more than spain?

A1988 said:
Ok, we did it differently last time with the dutch sandwich, now its no longer available. But, gibralter or cyprus looks great at the moment with personal tax residency in spain. But you seem to like portugal more than spain?
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I think portugal fits well for someone under 2mil euros wealth or assets. For anyone above that I think spains beckham law is great considering assets and income is generated outside spain. Marbella is a lovely place to live and spend time, is there an equivalent of marbella in portugal? Not that im going to move but just out of curiosity

 

[JustAnotherNomad]

I know almost nothing about the Beckham law. I only mentioned Portugal as an alternative.
I understand you prefer Spain and I would, too, from a lifestyle perspective. Just make sure you check things like accidental creation of a PE in Spain.

I don't think there's a need for any sandwich. Just use a holding company from a suitable country (e.g. in Cyprus), done.
However, you'll want to check that Italy will accept the substance of the CY company. Also, there's this new Unshell thing where the EU tries to fight holding companies.
The Dutch sandwich was, as far as I know, only relevant for profit shifting to non-EU tax havens. With capital gains, it should be much simpler if you structure it through a holding. The holding would be able to distribute dividends to you.

 

[Anonymous1234]

JustAnotherNomad said:
I know almost nothing about the Beckham law. I only mentioned Portugal as an alternative.
I understand you prefer Spain and I would, too, from a lifestyle perspective. Just make sure you check things like accidental creation of a PE in Spain.

I don't think there's a need for any sandwich. Just use a holding company from a suitable country (e.g. in Cyprus), done.
However, you'll want to check that Italy will accept the substance of the CY company. Also, there's this new Unshell thing where the EU tries to fight holding companies.
The Dutch sandwich was, as far as I know, only relevant for profit shifting to non-EU tax havens. With capital gains, it should be much simpler if you structure it through a holding. The holding would be able to distribute dividends to you.
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Thanks a lot for your input, it has helped me a lot to get more clarity, really appreciate it, will post my updates and how things pan out.

saponaire said:
Just a few notes, assuming that you want to save tax on cap gains on a company where you are involved in management:
1) Spain: Beckham law will work if you are employed in Spain - so if you own <25% of this company, then you can set up a subsidiary in spain and work from there - otherwise someone must employ you and it must look legit.
2) Portugal: It won't work, cap gains are still taxed in PT under NHR UNLESS the other country tax them (but there are very few countries that tax cap gains), unless you can liquidate these gains in the form of dividends (but that would require setup)

Overall from this conversation: do not risk it.. either pay taxes in Italy (which btw you can pay 14% due to the latest finance bill, talk to a good commercialista), or move to a country where you are guaranteed not to pay capital gains (Switzerland, Monaco, Liechtenstein, UK non-dom, Malta non-dom, Gibraltar, Greece non-dom)
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Can you share any link for 14% in italy with the new finance bill?

 

[saponaire]

JustAnotherNomad said:
Wouldn't you be able to avoid this with a holding company, e.g. in Cyprus?
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If your company has already increase it's valuation, moving assets in the cyprus company will trigger cap gains in Italy for you..

Exactly what I meant with "unless you can liquidate these gains in the form of dividends (but that would require setup)"

A1988 said:
Can you share any link for 14% in italy with the new finance bill?
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It's 16%, my bad: Rivalutazione partecipazioni 2023: costa il 16%

 

[Anonymous1234]

Currently in barcelona with my family, meeting with a tax attorney tomorrow. Lets see, apparently lots of new changes in the beckham law to accomodate more entrepreneurs.

 

[Steven Lewis]

@JohnnyDoe i sadly agree with you , In Europe, it might be difficult to move and select a nice life for yourself and your family or children, and I predict that it will get even harder in the near future.

 

[wellington]

JohnnyDoe said:
Can you see what is happening to Europe? Or are you suffering from the boiling frog syndrome?
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Had a friend who'd lived in Asia for 20+ years, cock sure heading back to Europe recently, he was back there a month and is already returning to Asia.

Expensive holiday for him (hazard its cost hime 50,000 Euro's so far lol)

 

[marioIT]

A1988 said:
Currently in barcelona with my family, meeting with a tax attorney tomorrow. Lets see, apparently lots of new changes in the beckham law to accomodate more entrepreneurs.
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yeah but socialists and the even more left wing ones are still too strong to be a safe country for my wallet long term... I don't trust the place at all.
have you seen the elections?

 

[Anonymous1234]

wellington said:
Had a friend who'd lived in Asia for 20+ years, cock sure heading back to Europe recently, he was back there a month and is already returning to Asia.

Expensive holiday for him (hazard its cost hime 50,000 Euro's so far lol)
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Lol, where in asia? Asia doesnt have a single country with a strong democratic system, all are corrupt, political system is weak, fragile and opposition parties are put behind bars without trial, law and order is a mess, zero personal freedom and liberty. If you are a poor moron with less than 1 mil euros in wealth then go to asia, anyone with little bit of money wouldnt risk it unless they are totally out of their mind. Europe is still a very balanced place all things considered. Not perfect but you can fight it out in the courts and still have a chance of justice, in asia sadly you wont.

marioIT said:
yeah but socialists and the even more left wing ones are still too strong to be a safe country for my wallet long term... I don't trust the place at all.
have you seen the elections?

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Im using the beckham law, not moving as a normal resident. I will get the tax ruling first.