Change of tax residence to reduce taxation is possible. Many countries in the European Union are experiencing surprising transformations that are redefining the landscape for investors and new entrepreneurs. Thus, presenting new growth opportunities in the sector.
Historically, Western Europe has always been the epitome of luxury, boasting the highest quality of life indices in Europe. However, the current scenario is changing. Increasing crime rates, the burden of high taxes, intensified international competition, in addition to high immigration rates and associated issues.
These factors are causing a notable shift. Consequently, reducing the appeal of these metropolises for major investors and conversely, increasing the attractiveness for entrepreneurs and small investors.
Stay with us and discover the new legislations that allow you, as a young digital nomad, or as a small investor, to grow in this 2024.
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Change of Tax Residence? New Changes Within European Legislation
One of the new proposals that represents an opportunity for small businesses, digital nomads, and small investors seeking to change tax residency is the integration of Bulgaria and Romania into the Schengen Area by April of this year, 2024. This provides free movement, both commercially and migratorily, to the 27 countries of the European Union member nations.
If you’re seeking more information on how to create a company in Romania and how to change tax residency, on our blog, we discuss in detail how to obtain your tax residency easily and quickly in Romania. Click here.
Another regulation that fosters opportunities for small investors and digital nomads in Cyprus is the implementation of policies in Cyprus that allow immigrants to obtain European Union citizenship in just 3 and a half years. The conditions to obtain such citizenship are quite accessible for any small investor who chooses Cyprus as their tax residence country.
If you’re seeking more information on how to create bank accounts without information exchange (CRS), Click here.
One of the main requirements to obtain citizenship in Cyprus is achieving at least an A2 level in the Greek language.
Considering that this nation is one of the countries with the most lenient tax laws in the entire European Union, and with a growing economy, choosing Cyprus as a country to change tax residency is a great opportunity for small investors who are looking for a chance to emerge in the European market.
If you’re looking for new growth opportunities in the European Union, we can put you in touch with a tax advisor in Madrid or a tax advisor in Barcelona, who can answer all your questions and prepare all the necessary documentation to start. If you need more information related to obtaining a fiscal address abroad for your company in Montenegro, Romania, or Cyprus, contact us.
Taxation in Croatia: A Great Option for Starting Your Company
Croatia is one of the countries with the lowest taxation in the area, where you can easily change tax residency. Among its major benefits, we can find the ease of business creation, whether you are a resident of this country or not. Registering a company in Croatia is a fairly simple process, generally taking around 2-3 weeks to complete the entire process of business creation and registration.
The costs of establishing a company are also quite low compared to other European countries. The registration cost of a company in Croatia generally amounts to around 1,500 euros. However, we also need to consider the cost of company accounting, which usually ranges from 300 to 500 euros per month in most cases.
It is important to note that the price for establishing companies in Croatia and the payment for professional fees related to business accounting usually vary depending on the type of company you wish to create. Small businesses or startups tend to have lower prices, but established companies with a large number of monthly transactions usually incur higher management costs.
In addition to this, we also need to take into consideration the company’s fiscal address, especially if the owners are non-residents in this country. Generally, in most European Union countries, due to international statutes on money laundering, establishing companies for non-residents can be a somewhat complex process where the most complicated step is changing tax residency. However, in Croatia, you can obtain and register a company with a real fiscal address by paying around an additional 1,000 euros at the time of its creation.
Regarding the appointed director or better known as the nominee director of the company, they must be employed or under a work contract if they reside in the country. However, if they live abroad, a work contract is not necessary. It is important to note that the minimum wage in Croatia is 840 euros gross per month.
If you are looking to establish a company in a low-tax country, at Normad Tax, we can assist you with a tax advisor in Madrid or a tax advisor in Barcelona, who can answer all your questions and prepare all the necessary documentation to start. If you need more information related to obtaining a fiscal address for a company in Montenegro, Romania, or Cyprus, contact us.
Setting Up Your Company in Montenegro and Enjoying Low Taxes
When comparing the taxation of Croatia with Montenegro, it’s clear that Montenegro is one of the most economically favorable countries in Europe, even more so than the previously mentioned Croatia.
If we evaluate the same parameters as the previous country, we can see that the corporate tax rate is 9% if the income is below 100,000 euros in Montenegro. If this figure is exceeded, the corporate tax usually hovers around 15%. Additionally, we must consider that the tax retention on dividends can reach 15%.
Creating a company in Montenegro is relatively straightforward, even for non-residents. The costs of establishment are also quite low. Registering a company in Montenegro usually costs around 1,000 euros. Accounting costs approximately range from 180 euros per month to 600 euros per month depending on the size of the company.
If our concern is changing tax residency, similar to Croatia, it usually comes with an additional cost. However, it tends to be much cheaper than in Croatia, usually around 500 euros per year in Montenegro.
Regarding the managing director or nominee director, similar to Croatia, the director must be employed or under some form of employment contract. However, one of the significant drawbacks of this country is that the salary in Montenegro is half that of Croatia, resulting in approximately 415 euros per month.
Where Do I Establish My Tax Structure? Croatia or Montenegro?
The most dynamic and straightforward way to compare these two countries is by assuming the creation of the same company as a non-resident in their territory, in order to evaluate which country truly offers a greater tax reduction.
Let’s start with an example in Croatia:
If you create a company and have income with this company of around 50,000 euros per year, you must pay 10% corporate income tax, which is approximately 5,000 euros. Additionally, if you wish to distribute it as dividends, the tax retention on dividends is 10%, meaning 4,500 euros. From this amount of 4,500 euros, you must pay a 18% surtax (in Zagreb), which is 810 euros. Thus, out of the initial 50,000 euros, only 39,960 euros remain.
However, if we carefully evaluate Montenegro, we can see that, starting from the same example, a company with annual income of 50,000 euros, the corporate tax is 9%, which would be 4,500 euros. If you want to distribute it as dividends, the tax retention on dividends is 15%, meaning 6,825 euros. From this amount of 6,825 euros, you must pay a 15% surtax (in Podgorica), which is 1,023.75 euros. Therefore, out of the 50,000 euros, you are left with 37,652 euros. But the general maintenance of the company annually is much more economical than in Croatia, as mentioned earlier.
In Conclusion
If you are looking to establish a company in a low-tax country like Croatia or Montenegro, at Normad Tax, we can assist you with an international tax advisor in Madrid or a tax advisor in Barcelona, who can address all your queries and prepare all the necessary documentation for you to start. If you need more information related to obtaining a fiscal address for a company in Montenegro, Romania, or Cyprus, contact us.
