I guess I just find it weird as the only place I had previously heard of it happening is the US. As Brit I know my move to Sweden (I’ve been here over a decade now) was utterly transparent and the question never came up. And yes, the Inland Revenue knows that I am here
After what ruadh wrote in the next post I had a look around about Poland and found this:
Which is along the lines of what you are saying.
Reading about it does my head in, but it appears to all be based on how much of a resident you are in the UK. As a completely moved out, probably not coming back person I get off lightly. All of the Americans I’ve met here in Sweden (and I’ve actually met quite a lot, I used to socialise with a lot of people from a website for foreigners in Sweden that was mostly made up of Americans) seem to talk of a threshold where if you earn more than that then you get taxed no matter where you are.
I may be utterly wrong on that.
But yeah. It is clearly much more complex that I thought it was. Ignorance fought and all that. After looking for a bit online I am just glad that I live somewhere where it isn’t an issue at all. I don’t think I could deal with it otherwise. I’d go crazy.
Waht UDS explained, is indeed the basic approach, although for the German system, I would explain it as:
every German citizen, regardless of where the money comes from or where he lives, pays income tax to the German tax office
every person living in Germany, regardless of his nationality, pays income tax to the German tax office.
With most countries, we have double-tax agreements. So if I decide to move permanently to Austria, right across the border, and earn money there, the Austrian tax office would deduct it, and that would count toward my German tax owned.
The example we used in tax class was “What if you became a big star in Hollywood, would you have to pay taxes on that?” “Yes”. Since emigration from Germany somewhere else was not a common phenomenon back in the 90s, we didn’t use that example, and I haven’t looked over the up-to-date tax code, but I’m sure the basic principle hasn’t changed.
Details vary, of course. If somebody who lives on 2 000 Euro salary/month in Germany packs up and moves to Tahiti, opens a bar there and manages to get by without getting rich, and has completly forgotten about German tax laws, the German tax office might simply not have the manpower and resources to find him, or the equivalent of 2 000 Euros down there is worth ten times as much, but falls below the threshold here.
Yes yes and yes… there are many other companies that do this but Sovereign Group seems to have a good reputation for not ending up getting their clients on the wrong side of the very fine line between tax minimization (which is legal) and tax avoidance ( which is a jailable offense in most countries). They have a small army of lawyers and tax specialist accounts who are paid to know exactly whats legal and what’s not when it comes to off shoring.
There is no need to restrict your business to being EU based, unless you think it would cause a problem for clients to pay an invoice from a Grand Cayman or Turks and Caicos island based company.
I live and I was born in Bulgaria, I can provide the following information:
Bulgaria is one of the countries in EU which is popular with liberal tax policy and still lower taxes.
If you are thinking about starting business in Bulgaria ,the following information is important:
Bulgarian national currency is BGN(lev), fixed exchange currency – 1EUR = 1,95583 BGN
There is a possibility for exchange of goods and services within the EU countries without double taxation.
The minimum capital for registration of company is 1 EUR.
The process of registration of company is no longer than 10 days.
Corporate income tax is fixed and equal to 10%.
Value added tax is equal to 20%.
Dividend tax is equal to 5%.
The manager of the company is obligatory to be local or foreign individual and the owner of the capital could be local or/and foreign individual or legal person.
To start business in Bulgaria you need:
Unique name of the company
Real current address of the company on the territory of Bulgaria
Bank account in Bulgaria
Accountant or accounting company for the taxation
If the manager of the company is foreign individual, it is obligatory to have issued personal account of foreigner
In case of revenue flow by cash- it is obligatory to have cash register in the legal vendors.
To have company seal
Important information:
VAT - 20%
Corporate income tax -10% For legal entities
Dividend tax -5% Not applicable when dividends are distributed in favour of legal entity resident of another European Union Member State
Personal income tax - 10% The rate is charged on gross salary minus social contributions payable by the employee
Social security contributions for the employee - 12,9% Min chargeable amount is 420 BGN and maximum is 2 200 BGN.
Social security contributions for the employer -17,8 – 18.5% The rate may vary depending on the employer’s type of business. Min chargeable amount is 420 BGN and max is 2 200 BGN
Different company forms:
EOOD Sole-shareholder Limited Liability Company
OOD Limited Liability Company
ET Personal Unlimited Liability Company
AD Joint-stock Company
EAD Sole-owner Joint-stock Company
SD Unlimited Partnership
KD Commendam, Limited Partnership, Responsibility is according to Agreement
KDA Partnership Limited by Shares
If you have further questions or need additional information you can email me: dob.nikolova@gmail.com
Other those some of the Coalition of the Willing, I’m not aware of any countries that tax non-resident citizens. Canada, for example, will not tax citizens after the year of their departure, until the year of their return, provided they show they have “severed ties” with the home country. That is, you have truly moved your life out of the country. There’s a list of criteria - having furniture in storage, still owning a residence or an auto locally, etc. may show you have not really “left” the country.
The problem with FACTA was not so much the taxes - as mentioned, not necessary in most cases, since locally paid tax was deducted from US liability. The problem, especially with the revised law, was reporting requirements. You must declare assets over $100,000 which - ifyou count house or RRSP retirement account - many Canadian residents have. You must report spouse’s assets, bank acocunts, etc. even if their only connection with America is being married to a citizen who has not lived there since age 3. Canada is a big neighbour, but I imagine finding a Swiss, Danish, or UK accountant who understands joint USA-local tax intricacies is complex and expensive.
It is, however, in the European Economic Area, which is made up of the EU plus three additional countries (Liechtenstein, Iceland, Norway) that are linked to the EU by means of a special agreement. This means that the vast majority of EU law governing cross-border trade and free movement of people applies to it. For practical purposes, Liechtenstein is not very far away from EU membership.
Historically, the EEA was founded by the EU teaming up with the European Free Trade Area (EFTA), a smaller sister project. Most EFTA countries have since joined the EU (one of them, the UK, has joined and left again), so there are only four countries left in EFTA. But the fourth one, Switzerland, has decided against joining the EEA.
Slovenia has one of the highest tax rates in the EU. Keep in mind that progressive taxes means marginal tax rate and effective tax rate can be very different
Tax in the UK is often considered to be high, but my daughter works for an international financial company who have their European base in the South of England. She incidentally, mostly deals with the Scandinavian countries so is well acquainted with SEKs, DKKs, NOKs, ISKs and, of course Euros.
