1%-3% Tax Companies in Europe - Here's How

welcome back everyone michael here with offshore citizen today we're going to discuss a little known eu european tax haven for certain people i did a video not too long ago about slovenia and how you could potentially pay four percent tax there well we're going to talk about how you can pay potentially one to three percent tax and you know it's maybe a little bit more flexible for certain people there's some pros and cons etc so you know you can stick around with that but i'm going to explain to you where to go how to do it what the pros are what the cons are where you would want to do it where you wouldn't want to do it because it's definitely not for everybody but for some people it can be pretty uh pretty attractive so before i get into that subject though if you have not already please i would really appreciate if you would subscribe really appreciate it and nail the notification bell so you make sure you don't miss out on any videos i try to produce great content every day so you know hopefully share something with you if you have something you'd like to see please let me know and if you are interested at all in these subjects how to pay the lowest legal amount of tax possible how to uh set up an international corporate structure how to protect your assets how to form offshore companies help offshore farming offshore companies help opening international bank accounts payment processing uh getting other residencies second citizenships passports official unofficial programs etcetera reach out to us you can book a call with me query.michael rosmer there's a link below or you can reach out to us officer citizen.net offshorecapitalist.com okay so what is the company country the country is romania okay so this is a very particular regime it's called the micro business regime in romania romania normally has a corporate tax rate of 16 so not that attractive certainly within kind of the normal for eastern europe right you have as you go west you know kind of northwest etcetera you're talking about 20 plus percent typically eastern europe typically has lower you know kind of 10 to 15 ish range depending on the country uh so romania at 16 is not especially good i mean it's not terrible either but not especially great and uh but you can kind of do much better with this micro business now the thing about this micro business if i contrast it to the slovenian one or look at a bunch of the other options there's a few things we need to be aware of so there's a few types of people that this works really well for and there's some that it doesn't work well for so let's start with the limitation this is a million euro revenue per year okay so important to note that it's revenue all right if you exceed a million euro and actually what they do is they calculate quarterly i believe it's based on 65 000 euros per month is like what they're kind of assessing around there's uh six anyway there's an assessment they do it quarterly okay so that's the first thing now the second thing you need to know about this so how does the tax work well the tax is you get one percent or three percent this is pretty good right one percent tax i can pay that all day long three percent hey like i get that in labuan great uh but it's not quite as good as that okay so it sounds a little bit better than it is and the reason is that is on revenue not on profit so we see this a little bit in certain parts of the world for instance in brazil they have a system where you can get tax based on your revenue or you can get taxed based on the industry or you can get tax based on your profit belize has something similar people are mostly used to belize ibcs but domestically belize companies you can have this revenue-based attacks okay and that was i mean sort of what you get in uh in some of these other places as well right so uh where does that make this bad well let's say that i was doing an e-commerce drop shipping business okay so i'm probably running some ads to get people to my website i've probably got some cost of goods sold i've probably got some staff right so first of all a million is not a really high threshold in terms of my revenue before i'm out of this this thing right second of all let's see like say that i'm paying well let's use the three percent i'm gonna explain to you in a minute what the difference is between the three percent and the one percent same in the three percent tax bracket okay so let's say that for instance i maxed that out right i'm at a million uh a million euros in revenue okay so i paid 30 000 euros in tax okay so you say oh that's three percent well you know normally you would get to deduct right so here you don't get all these deductions so maybe my ad spend is i don't know say i'm spending a quarter of my revenue on ad spend right so i'm getting real ass of like four right so i spent 250 000 euros on that then i had some cost of goods sold maybe that cost me another 250 grand let's just say okay so that's 500 grand then on top of that i ended up having to pay my staff and you know i don't know how exactly that work maybe i'm paying 100 grand right so i've ended up spending 600 grand let's just for easy numbers to make this an easier calculation in my head say i spent 700 grand by the time i spend out on everything right my tech my you know payment processing fees my all these different things right you've got probably three percent in payment processing fees maybe more right so so what i'm really left with is 300 000 euros and i just paid 30 000 euros in tax well that was really a 10 tax rate not a three percent tax rate right because normally i'd get to write all that stuff off anyway now this is still better than 16 that's pretty good but it's not you know totally fantastic right now on the flip side if i'm in a situation where my margins are really good right so say i'm i don't have all these ad costs maybe i'm like a service based business right so let's say that what am i doing i'm like all right i've got uh i'm providing some sort of services to people abroad they're paying me for those services they're covering the expenses it's pretty much all pure profit maybe i outsource to a couple people you know so great well now that's a really low tax rate that's super compelling like i'm going to sign up for that all day long it's more attractive than bulgaria it's more attractive than hungary it's more attractive than you know cyprus maybe malta certainly etc okay so it's not that expensive to form a company in uh in romania fairly easy to maintain one etc so now let's talk about the three versus the one percent basically three percent is if you're a one-man show okay one woman show i guess could be as well so one person in the business three percent if you have just one employee you pay one percent why is this kind of useful well romania happens to be actually a really great place to hire people in certain respects some there's kind of this joke that romanian is the second official language of microsoft it's a pretty large population wages are low you've got you know some pretty capable people there i have some friends who have commented they've hired developers in romania and it's the best developers they ever hired right so as a place to hire people it works out pretty well right you could hire somebody for relatively little right depending on the skill set that they're they have i've looked at some pr people there etc at one point in time a number of years back so like that's good you've got a good talent pool this this kind of makes sense now you wouldn't want to be hiring a whole army there right because then you kind of again you have this well you get to write off those people and you know so does this make any sense however what we often suggest in these cases is you can sometimes operate between two companies right there's sometimes no need to have a single company so maybe you have an international company that you run a bunch of stuff through you run a bunch of your expenses through you write that off you don't end up paying much tax on that because there's not much profit there and then you run a bunch of your revenue through this micro business and you know i mean it's a decent amount of profit if you can get let's say that let's just say you had a hundred thousand in expenses on a million in revenue right well you're talking about 900 grand in profit pretty pretty decent and you're only paying one percent tax on that so you're paying nine grand in tax i mean it's pretty attractive so uh what would i say about that well it's not that difficult to set up companies in romania banking is not great but not terrible it's certainly more flexible than in some places today when you know banking can be a real challenge like i said it's pretty easy to hire people if we compare to slovenia you definitely have a better situation in that in slovenia your threshold is much lower so if you're somebody who you know they're working online they're kind of a digital nomad they have a service based business they have a digital product they have high margins etc romania might be a really good place for you especially if you're somebody who like i talked to a lot of people that okay you know there's some who are making you know millions of dollars a year in profit fair enough but a lot of people are not a lot of people you know if they're making 300 500 600 grand a year you know this is pretty good for them that's what they're planning on they're happy with that wonderful you know this could be really attractive for you so anyway that is a brief little overview of the romanian micro business tax regime which is like i said it's good for people who especially if they want to hire somebody in romania because it knocks down that other two percent like if you think about this on a million in revenue you know basically by having that deduction of two percent that's likely going to pay for that one employee if you have to put someone in there so you know it's really kind of a good kind of a brilliant system in that respect if you're you know if you're going to stay under that threshold if you want to hire someone in romania and if you have my high margins this could be good now the last thing that i want to caveat for you that is really important hopefully you stayed around this long because you know could have missed it otherwise is i you need to be aware of dividend withholding taxes so if you're a foreigner who owns a company in romania you know you have this dividend withholding tax consequence that could be that could be an issue for you right that changes your tax regime uh quite a bit so be aware of that you can of course reinvest locally and there's some other ways that you can work around that if you're interested reach out to us we can explain to you you know how to flow money so that it doesn't end up being a big problem for you but anyway i hope that helps again if you haven't already smash the subscribe button hit the notification bell make sure you don't miss out on any of our future videos if you liked the video please give it a thumbs up if you have any comments you have feedback for me please put them below very much appreciated if you have anything you'd like me to see me produce put it in the link below if you're at all interested in help with international tax planning how to pay the less legal amount of tax possible asset protection company formation bank accounts residencies citizenships payment processing et cetera reach out to me courteous michael rosner there's a link below you can book a call or visit our website officecitizen.net officecapitalist.com i'm going to see you guys on the next video

Channel: Offshore Citizen

Views: 4,104

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Id: pTtM8Jjhrx8

Length: 10min 59sec (659 seconds)

Published: Wed Jan 06 2021