Software developer from Austria to operate from Cyprus for low tax
- Thread starter soberman
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You could pay yourself the bare minimum to live comfortably in Austria and leave the rest in the company so that if you decide to move later to say Cyprus those dividends would be tax free. That would be one reason, the other more obvious reason is that if you take out every penny from the company you would not be able to reinvest in the company.
There is no point and nowhere to reinvest that revenue since I am going to be simply a software developer and offering my services to other companies. I don't need marketing - there's LinkedIn for that. I don't need staff, since there is nothing to do for them, technically.
Sure, it's just basic math (if the assumption that the setup is compliant is correct). Austrian corporate tax rate is 25%, going down to 23% by 2024. The Liechtenstein tax rate is 12.50%. So it's 12.50% going down to 10.50% saving. Then there are the payroll and other such taxes to sort out. But if those savings are greater than the cost of setting up and maintaining a company in Liechtenstein and if soberman is OK with driving to Liechtenstein every day, it makes sense.
The DTA doesn't apply to soberman personally since there is︃ no reasonable claim for soberman being a Liechtenstein tax resident. Anything that goes into his︄ pocket is taxable under Austrian tax code.
The dividends are paid to an Austrian tax resident and taxes must︉ be paid by the Austrian tax resident at 27.50%.
The DTA doesn't apply to soberman personally since there is︃ no reasonable claim for soberman being a Liechtenstein tax resident. Anything that goes into his︄ pocket is taxable under Austrian tax code.
The dividends are paid to an Austrian tax resident and taxes must︉ be paid by the Austrian tax resident at 27.50%.
It doesn't unless I move, since I currently reside in Vienna, which is an 8-hour drive to Lichtenstein.
It seems that the only way to take advantage of those lower tax rates of other countries is to actually move living to those countries. At minimum for at least more than half a year every year.
If I am getting it correctly, there is no other way, is there?
It seems that the only way to take advantage of those lower tax rates of other countries is to actually move living to those countries. At minimum for at least more than half a year every year.
If I am getting it correctly, there is no other way, is there?
He doesn't have to claim to be Liectheinstain tax resident.
Under DTA article 10: https://www.gesetze.li/konso/pdf/1970037000?version=3
1) Dividends paid by a company resident in a Contracting State to a resident of the other Contracting State may pay in the other be taxed by the state.
2) However, these dividends may also be paid in the Contracting State in which the the dividend-paying company is resident under the laws of this be taxed by the state; however, if the beneficial owner of︀ the dividends is a resident of the other Contracting State, the tax may not exceed:︁
a) 0 per cent of the gross amount of the dividends if the beneficial owner︂ is a company (but not a partnership) which at the time the dividends accrue, for︃ an uninterrupted period of at least 12 months holds at least 10 percent of the︄ capital of the company paying the dividends;
b) 15 per cent of the gross amount︅ of the dividends in all others cases.
But it's one hour drive to︇ Hungary or Slovakia and Austria has double tax treaties valid with both. Hungary CIT is︈ 9% (the lowest of EU) but you need to consult double tax treaties with both︉ countries.
Also all 3 countries are in Schengen meaning noboby will know if you really︊ went in the office or not.
Since you are a developer you could organize yourself︋ to go one day a week in your office.
Under DTA article 10: https://www.gesetze.li/konso/pdf/1970037000?version=3
1) Dividends paid by a company resident in a Contracting State to a resident of the other Contracting State may pay in the other be taxed by the state.
2) However, these dividends may also be paid in the Contracting State in which the the dividend-paying company is resident under the laws of this be taxed by the state; however, if the beneficial owner of︀ the dividends is a resident of the other Contracting State, the tax may not exceed:︁
a) 0 per cent of the gross amount of the dividends if the beneficial owner︂ is a company (but not a partnership) which at the time the dividends accrue, for︃ an uninterrupted period of at least 12 months holds at least 10 percent of the︄ capital of the company paying the dividends;
b) 15 per cent of the gross amount︅ of the dividends in all others cases.
But it's one hour drive to︇ Hungary or Slovakia and Austria has double tax treaties valid with both. Hungary CIT is︈ 9% (the lowest of EU) but you need to consult double tax treaties with both︉ countries.
Also all 3 countries are in Schengen meaning noboby will know if you really︊ went in the office or not.
Since you are a developer you could organize yourself︋ to go one day a week in your office.
That is a very interesting observation, thank you! However, this won't resolve the problem of me actually living in Austria, being married to an Austrian, and having a house in Austria - Austria might say that I am still taxable︀ there even though I "work" in Hungary/Slovakia, no?
That's exactly what a double tax treaty does in cases when income could be taxable by two countries at the same time.
You could commute to Hungary for example to work from there and the hungarian company would pay 9% corporate taxes on your income VS 23% or whatever is Austrian tax rate right now.
Here you could find Austrian tax treaties: Österreichische Doppelbesteuerungsabkommen
I can't translate from german so i don't know how are salaries taxed for commuters.
You could commute to Hungary for example to work from there and the hungarian company would pay 9% corporate taxes on your income VS 23% or whatever is Austrian tax rate right now.
Here you could find Austrian tax treaties: Österreichische Doppelbesteuerungsabkommen
I can't translate from german so i don't know how are salaries taxed for commuters.
I doubt it is possible to pay little tax while living in Austria. I think about:
Vienna is close to cheap cities in a different jurisdiction: Brno in Czech Republic, Bratislava in Slovakia, Maribor in Slovenia, Gyor in Hungary.
- Compulsory social contribution
- Local taxes
- Consumer prices
Vienna is close to cheap cities in a different jurisdiction: Brno in Czech Republic, Bratislava in Slovakia, Maribor in Slovenia, Gyor in Hungary.
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