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I run a small company in Latvia (low tax, low income). I live in Belgium (tax world champion, high income). I am _extremely_ careful to play by the rules. That
by markvdb 12y ago
I run a small company in Latvia (low tax, low income). I live in Belgium (tax world champion, high income). I am _extremely_ careful to play by the rules. That means things like:
* no company bank account or phone number in Belgium
* no meetings with my staff in Belgium
* no (tax deduction for) office space in Belgium
* fly to my company's country often
* a Latvian phone number for myself
* a _real_ _physical_ office in Latvia
* ...
On top of taking care of this, I also make sure I do not "awaken sleeping dogs":
* every single bit of fiscal administration both here and there is perfectly in order
* even if 100% legal and in order, I avoid creating visible links between myself and my company (bank accounts, ownership declaration, ...). (I make a small exception here, but I'm usually not very keen on it...)
You will find a lot more information on this subject area in the double taxation treaties between individual EU member states.
The general principle is very simple: the fiscal residence of your company is where your company's main and real activities are, as evidenced by facts. Unless you are a big multinational of course, in which case all these rules go overboard by using the tax avoidance loopholes and custom fiscal rulings.
- jkot 12y agoCompany in foreign country does not really mean lower taxes. You still tax your income in country of residence. But it often means lower administration.
- markvdb 12y agoYou write three things: 1) "Company in foreign country does not really mean lower taxes." It does in my case, and in plenty of others. 15% instead of 33.99% corporate income tax for example. Legally. 2) "You still tax your income in country of residence." One's personal income is indeed taxed in one's country of fiscal residence (except for the exotic regime US citizens are subject to). My company's income is taxed in its country of residence. 3) "But it often means lower administration." Not always. Luckily true in my case.
- Luc 12y agoMay I ask how you decided on this way of organising your business? Did you research it all yourself or did you get some expert help?
- markvdb 12y ago* I consulted my accountant in .be (not connected to this project). * I took advice from a trusted Latvian accountant. Trusted, as in doing the books for the company of a close friend since years. * I attentively read the double taxation treaties myself. * Close friends advised me on practical arrangements: where to get an office, ...
- Luc 12y agoThanks, that seems very sensible.