Why aren't many taking advantage of the lower tax EU nations?

Pretty frequently the topic about reducing taxes comes up in the Business section, and a lot of the time it's someone from one of the High Tax rate EU nations. Sometimes there's talks about elaborate schemes that are outdated and have been considered tax evasion for years. Yet there's a very simple solution that saves a lot of taxes, and that is to move to one of the EU nations with the low tax rates(Romania and Bulgaria). Compared to people in the U.S. fleeing California and New York to escape state income taxes, the savings for someone in the EU start at a much lower income level.

In Ireland for example for every €1 over 35.300 you pay the government €0.40, however in Romania as well as Bulgaria you pay the government €0,10, that is in addition to the €7.060 vs €3.530 for incomes up to €35.300. That isn't even taking into account the savings from the social taxes.

This is just a example at 4.5% gain a year.

Resistance to change maybe? Not sure.

But one thing I know is that I will always recommend the partners I work with to incorporate or outsource in my country and/or even live here. First, you'll pay much less taxes, life is much cheaper and in overall more laid back. There's great internet so you can run the business online with ease, if it can be run online of course - and they'll be closer so I can meet them more often to discuss important stuff etc. It's a whole different thing meeting live than virtually. Etc. etc.....

Because there is lots of corruption in Eastern European countries and their economy is really not well. I know some guys who actually incorporated there and they got threats, had to deal with a lot of corrupted people and so on. Its like incorporating in Thailand, Mexico or Phillippines. They have their own way of law and order.

Nothing against them or their country, but if they see there are some guys from Germany, Netherlands, Sweden or wherever they come from setting up a company, they are going to take advantage of them. Personally, I wouldn't waste a single thought about incorporating there.

Cyprus seems OK. But even then: The whole construct of the European Union and especially the Euro as a currency is not going to work out in the long run.

ExperimentalSEO said:

Pretty frequently the topic about reducing taxes comes up in the Business section, and a lot of the time it's someone from one of the High Tax rate EU nations. Sometimes there's talks about elaborate schemes that are outdated and have been considered tax evasion for years. Yet there's a very simple solution that saves a lot of taxes, and that is to move to one of the EU nations with the low tax rates(Romania and Bulgaria). Compared to people in the U.S. fleeing California and New York to escape state income taxes, the savings for someone in the EU start at a much lower income level.

In Ireland for example for every €1 over 35.300 you pay the government €0.40, however in Romania as well as Bulgaria you pay the government €0,10, that is in addition to the €7.060 vs €3.530 for incomes up to €35.300. That isn't even taking into account the savings from the social taxes.

This is just a example at 4.5% gain a year.

Income​	5 years​	10 Years​	15 Years​	20 Years​	25 Years​
€36.300​	€20.952,82	€47.063,84	€79.602,93	€120.152,55	€170.684,75
€45.300​	€35.723,73	€80.242,01	€135.719,87	€204.855,39	€291.010,82
€135.300​	€183.432,90	€412.023,66	€696.889,34	€1.051.883,81	€1.494.271,50

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Here the shocking reason why:

- People complain about taxes and such and want to pay 0 ideally. However, they love taking advantage of universal healthcare, free education etc. etc.

So they want all this free stuff but do not want to pay taxes for it. So if they move to any of these countries they would not have all the stuff they have been used to.

Now, you can argue these other countries have the same, but that of course may or mostly may not be true. They are looking for an easy way to simply establish a company abroad and not change anything but as you pointed out that is just tax evasion (unless you truly leave the profits in the company).

nakamura said:

Because there is lots of corruption in Eastern European countries and their economy is really not well. I know some guys who actually incorporated there and they got threats, had to deal with a lot of corrupted people and so on. Its like incorporating in Thailand, Mexico or Phillippines. They have their own way of law and order.

Nothing against them or their country, but if they see there are some guys from Germany, Netherlands, Sweden or wherever they come from setting up a company, they are going to take advantage of them. Personally, I wouldn't waste a single thought about incorporating there.

Cyprus seems OK. But even then: The whole construct of the European Union and especially the Euro as a currency is not going to work out in the long run.

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If you are an independent app developer, youtuber, own websites etc. the local economy doesn't have an impact on you. Also Eastern Europe is full of highly developed countries. The homicide rates are very low in those countries 1.25 per 100,000 in Romania and 1.5 in Bulgaria, like every where else that includes domestic abuse situations, and self caused homicides by either getting into fights or being a criminal. It's not a violent society where people are being targeted for no reason.

Will you lose some kind of benefits if it's where your company is based, legally speaking?

I live in one of those countries and it's comfy as hell. You can live like a king with 2k euros a month. Creating a company here is a headache though. There's a lot of stupid bureaucracy. But there are some simple solutions for micro companies.

ExperimentalSEO said:

If you are an independent app developer, youtuber, own websites etc. the local economy doesn't have an impact on you. Also Eastern Europe is full of highly developed countries. The homicide rates are very low in those countries 1.25 per 100,000 in Romania and 1.5 in Bulgaria, like every where else that includes domestic abuse situations, and self caused homicides by either getting into fights or being a criminal. It's not a violent society where people are being targeted for no reason.

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"full of highly developed countries" oh mate, I was making a road trip from Germany to Turkey a few years ago. I was driving through Bulgaria, Romania, Slovenia and several other countries. I can tell you: They are not "highly" developed. The capitals are developed, yes, but I was also driving through areas, where people would ride on donkeys (no kidding) and they didn't have proper streets. I saw a lot of poverty and this kinda poverty is definitely not normal for a developed country in Europe and especially within the European Union.

But lets say you are right and they are highly developed and the taxes are low. Every entrepreneur, developer, etc. would move there, but they are not moving there. What is the reason? I told you what I think is the reason.

I am talking to many entrepreneurs in Germany and we also talk about this kinda topics. Most of them told me they would never trust someone in there. Why? Because the salary and economical gap is too huge. There is a big gap between what germans earn and what they earn. Sometimes it is more than 10x less. This plays a big role in the corruption. And there is a lot of corruption. Especially coming from police and people who have a position of power. They want their piece of the cake.

People have immediate and extended families, in which they would rather pay tons of taxes than moving away for saving money.
You only live once and to go live in a country you never lived in before, uproot yourself again at age over 30 is a no no no.
you have to learn a new language, very hard to make friends... it’s not easy and it’s not all about money.

No need to relocate to Bulgaria or Romania. In my opinion, as of now, the best option is for the company owner to reside in Portugal, while the company would be based in Malta.

With this option, the company taxation would be an effective 5% due to Malta’s 6/7 tax rebates, while the owner resident in Portugal would pay 0% tax on received dividends from the company for the ten years following establishment of his residency there under the Non-Habitual Resident scheme. In Malta, the setup would usually consist of one or more trading companies, together with a holding company.

Another good choice would be Andorra. Companies there pay a nominal rate of 10% on corporate revenues. As for individuals, they pay a 10% rate. There is also an exemption on the first €3.000 of savings income. There is no wealth tax, inheritance tax, donation tax or property tax. Plus you're only required to actually live there for three months.

nakamura said:

"full of highly developed countries" oh mate, I was making a road trip from Germany to Turkey a few years ago. I was driving through Bulgaria, Romania, Slovenia and several other countries. I can tell you: They are not "highly" developed. The capitals are developed, yes, but I was also driving through areas, where people would ride on donkeys (no kidding) and they didn't have proper streets. I saw a lot of poverty and this kinda poverty is definitely not normal for a developed country in Europe and especially within the European Union.

But lets say you are right and they are highly developed and the taxes are low. Every entrepreneur, developer, etc. would move there, but they are not moving there. What is the reason? I told you what I think is the reason.

I am talking to many entrepreneurs in Germany and we also talk about this kinda topics. Most of them told me they would never trust someone in there. Why? Because the salary and economical gap is too huge. There is a big gap between what germans earn and what they earn. Sometimes it is more than 10x less. This plays a big role in the corruption. And there is a lot of corruption. Especially coming from police and people who have a position of power. They want their piece of the cake.

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The UN considers Bulgaria,Romania and Poland to be highly developed nations. If people want to live a rural life in a rural setting, they should be allowed to without people coming in and forcing them to drive vehicles, cut down trees, pave over land, and force them to seek a new career. I've driven through very poor areas of the united states where there is extreme poverty and many streets are not paved. Yet no one is going to dispute the UN's claim that the U.S. is in the highly developed category.


Their "piece of the cake" doesn't exist other than the little taxes that you pay in those countries,

AAW said:

People have immediate and extended families, in which they would rather pay tons of taxes than moving away for saving money.
You only live once and to go live in a country you never lived in before, uproot yourself again at age over 30 is a no no no.
you have to learn a new language, very hard to make friends... it’s not easy and it’s not all about money.

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Besides immediate family(spouse and kids), you aren't going to be with your extended family that often anyway. You are working, they are working; they have their own interests and hobbies as well as you.

Moving to another country after 30 isn't difficult at all. Plenty of British expats have moved to places like Spain and Thailand in their retirement age. There's also careers where those in it may be moving around pretty often at 30+.

Making friends isn't that difficult if you are social and outgoing. If you part of an organization with international branches, just join the local branch. If you are into martial arts for example, join a local dojo. If you went to university, maybe your university has an alumni association. Join a site like meetup.com and look for groups that interest you in your new city.

Learning a new language isn't really a problem, and you get to become more culturally enriched and knowing another language helps to keep your mind sharp.

BluesTradition said:

No need to relocate to Bulgaria or Romania. In my opinion, as of now, the best option is for the company owner to reside in Portugal, while the company would be based in Malta.

With this option, the company taxation would be an effective 5% due to Malta’s 6/7 tax rebates, while the owner resident in Portugal would pay 0% tax on received dividends from the company for the ten years following establishment of his residency there under the Non-Habitual Resident scheme. In Malta, the setup would usually consist of one or more trading companies, together with a holding company.

Another good choice would be Andorra. Companies there pay a nominal rate of 10% on corporate revenues. As for individuals, they pay a 10% rate. There is also an exemption on the first €3.000 of savings income. There is no wealth tax, inheritance tax, donation tax or property tax. Plus you're only required to actually live there for three months.

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It wouldn't work unless the company was 100% Malta based, since it would be operating out of Portugal and subject to registration and paying taxes there. Andorra is other option as well, but I'm not sure how easy it is for those with EU citizenship to move there, that's why I didn't include it in the original post.