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Starting a company in bulgaria - paying myself in dividends?

Discussion in 'Business & Tax Advice' started by fheaky, Mar 29, 2015.

  1. fheaky

    fheaky Regular Member

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    Hello,

    I recently started earning more than I expected ($500+ daily, still growing) and since I live in the Netherlands where the income tax is 52% in the highest bracket I am looking for a way to legally lower the tax burden. I've done some looking around on the internet and something that struck my interest was the idea of incorporating in a country with low corporate tax (bulgaria for example, 10% corporate tax) and then paying myself in dividends. However, everything is really confusing to me since I do not really know a lot about taxes, I know that I should probably hire a financial adviser of some sort, but I thought I'd ask on Blackhatworld first.

    Also, if I live in the Netherlands and my company is located in Bulgaria and I pay myself dividends would I pay the Dutch dividend tax (15%) or the Bulgarian dividend tax (5%)? I do believe the Netherlands has a tax treaty with Bulgaria.

    If anyone has some experience with a similar structure or has some information regarding the feasibility of this structure I would highly appreciate your input. Other ideas on how I can legally lower my tax are also welcome. I'm also open to becoming a resident in a different country (Malta for example) if what I have in mind is not possible.

    Thanks for reading and I hope to read some good ideas. :)
     
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  2. Shadeofblack

    Shadeofblack Jr. VIP Jr. VIP

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    Do what google does and set up in Ireland
     
  3. Capo Dei Capi

    Capo Dei Capi BANNED BANNED

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    Its actually 25% you would be paying to the Netherlands(you pay where you reside) since you would own more than 5% of the shares of the company.

    http://www.expatica.com/nl/finance/Understanding-the-Dutch-income-tax-system_103981.html
     
  4. Capo Dei Capi

    Capo Dei Capi BANNED BANNED

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    That strategy wouldn't help OP, since he is looking to get the money back to himself personally.
     
  5. fheaky

    fheaky Regular Member

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    The company wouldn't pay 52%, no, but if I pay the money to myself in the form of a salary from a Dutch company (you have to pay yourself a mandatory salary of like $50,000 a year) I would have to pay income tax on that on top of the corporate tax and if I pay the rest in dividends I would have to pay and additional 15% dividend tax on that on top of the corporate tax.
     
  6. Automated

    Automated Regular Member

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    Can't really help you... but congrats on the nice earnings.
     
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  7. Haspel

    Haspel Power Member

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    Both Bulgaria and Netherlands are in the EU so you wont have to worry about double taxation on corporate tax.If your company is registered in Bulgaira you have to pay the 10% corporate tax on your profit and 5% dividend tax on the money you withdraw. I'm 99% sure that the same rules apply for the dividend tax and you wont have to pay one in Netherlands but you better check with a local accountant just in case.
     
  8. Capo Dei Capi

    Capo Dei Capi BANNED BANNED

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    The dividend tax rate a person pays is 25% for those that own more than 5% of the shares of a company.
     
  9. SEOking222

    SEOking222 Jr. VIP Jr. VIP

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  10. tonybao

    tonybao Power Member Premium Member

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    Great earning, I love your number .

    Good luck!