Tax: what are the best options for a nomadic Dutch freelancer?

#1

Originally, I am from the Netherlands. Since january 2016, I have been working remotely all around the world. But even though I haven’t been in the Netherlands this year, I am still paying taxes there. I’m still registered as a citizen.

I have to unregister in the Netherlands as a citizen. But if I don’t register somewhere else, or have a freelance status or company somewhere else, I would still have to pay 50%+ taxes. This is, of course, not fun at all.

So I decided to move my business elsewhere. Either get freelancer status in another country, or create a business there to send invoices from. Which brings me to my question:

What is the best country tax-wise for a Dutch freelancer?

As of now, I found two solutions:

  • Have an agency set up a company in Bulgaria. It will kost 3000 euro a year, once 3300 euros and extra money if I want residency. And then of course 10% income tax on my earnings.
  • Have an agency set up a company in Dubai. It will cost around 2000 euro annually and 5000 euro once. No income tax.

Wether residency in an other country is required for the Dutch tax authority to not tax your world income, seems to be a grey area. However, if I unregister in Holland and send invoices from a company in a whole other country, it should be fine.

I have little or no experience. People with know-how: would you be so kind to comment on these options?

Are there alternatives I should consider?

I don’t really like to hire an agency. I’d rather just fly to a country, fill out paperwork, incorporate there and from then on invoice from that company. If it’s too bureaucratic, I wouldn’t mind hiring a local lawyer or accountant to do it for me.

Do you know a country where there is no or a low income tax and this process is relatively easy and suitable for Dutch freelancers?

#2

Hi Maarten,

Another solution for your freelance company is Estonia. It has 20% tax on dividends but maintenance costs are very reasonable 600-1200 euros per year if you use a service like LeapIN (disclaimer, I work for LeapIN). We have Digital Nomads from over 60 countries and I’m sure our people can help you with the setup and tax related questions.

The setup costs are about 100 euros for the e-Residency (which I suggest you apply for asap) and then 190 euros for state fee for company registration. After that, LeapIN has packages from 50-100 euros/month depending on the type of business you are running and we provide a turn-key service on everything from accounting, legal compliances and taxes. You currently need to come to Estonia for opening up a bank account, but from January it should not be necessary anymore and everything can be done remotely.

I hope that helps and sorry for that promotion of one company :slight_smile:
Gustav

Gustav

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#3

Hi Maarten,

I’m dutch myself and have been in your situation. You should definitely unregister yourself as soon as possible if you dont live in NL. Are you incorporated in a B.V.?

I recommend you consult with a dutch tax professional and dont take anyone’s advice for granted (including mine).

I don’t see any value in the e-residency or incorporating in Estonia in your situation offered here.
E-residency is just a card and has nothing to do with residency and Estonian taxes are not the lowest so no reason at all to incorporate there unless you have regional ties.

If you want an EU company Bulgaria incorporation is a better option: 5% dividend tax and I believe no minimum salary for the director like in the Netherlands (you’ll have to check). You should only pay a couple of hunderd euro max for everything including residency. 3000 euro is not a normal price at all.

If you unregister and live outside the Netherlands you should not be liable for taxes in the netherlands unless it’s from property you own or a you generate local profits from a bar or something. For taxation purposes the place where you do business matters(‘plaats van feitelijke leiding’ in dutch).
However if you just unregister and come live again and register again in the netherlands within a short time(grey area, some say 10 year years to be safe) the tax man can argue that you never intended to really leave the netherlands and are liable for the taxes for the whole period.

About residency:

I have chosen to get residency in Panama because:
It’s easy to get permanent residency(friendly nations visa) ,has a territorial tax system (tax haven) and annual company fees are low and I only have to visit once every year to remain resident. On top of that a panama foundation offers optimal asset protection.
However banking can be a hassle and panamian banks are not known for their customer service.

I did not go for UAE because of the yearly costs, the residency requirements( 1 visit every 180 days) ,they dont issue permanent residency only 2 year extensions. However, banking deposits are guaranteed by the state and the country still is in good standing with the OECD as compared and not classified as a tax haven. I was quoted around 15k euro for the UAE residency(including company) by a few companies.

There are of course many other options for other low tax and zero tax countries but these I’ve done some research into personally.

For incorporating in UAE there is also difference between emirates for example: Ajman has no reporting requirements.

Pim

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#4

Hi Pim,

Thanks for your reply.
A tax lawyer told me that if you pay taxes somewhere, even if it’s very little, the Dutch taxman is more likely to leave you alone in case of a return. That’s why I’m considering Bulgaria.
Due to some very helpful fellow nomads, I am in contact with two accounting firms who offer around 600 euros start-up cost and then a monthly fee of about 100-150. I’m still looking at other options, but this seems the safest one thus far. (although you are never sure in these matters)
I’m very glad you responded and I hope other Dutch nationals do as well, so I can get an idea of what’s the right approach.
Maybe Panama can be good as well, but I found online it takes a background check from your country of origin’s police force. Did you have to submit this too? And what were the costs you were looking at for the whole process?

#5

Since you are a dutch if you have a BV and decide to be non dutch resident, they will withdraw 15% from your dividends and give you back 60% of it, if you live in a EU country after 1 year. I live in France and this is how it works for me. For sure, i also pay french income tax.

I am surprised you talk about Bulgaria. In Bulgaria, the invoices have to be in Bulgarian and in BGN, so i hope you don’t have many of them otherwise, it costs significant amount of money for accounting services. For instance, if you have micropayments and stuff like that.

Why don’t you consider to incorporate in Ireland? Everything is in English. If you decide to live in a EU country or in a country where there is a tax treaty with ireland, you pay 12,5% of corporate tax and nothing on dividends. Then, you can live in bulgaria where the income tax is 10% but not costa rica because costa rica has no tax treaty with Ireland and Ireland would withdraw 20% of withholding tax if you would live in Panama or Costa Rica.

Nevertheless, in all cases, you have to move your websites from where you sell from netherlands to the place where your company is incorporated to be sure that the Belastibgdiesnt will not come to you and ask you for paying taxes saying you have a permanent establishment in the Nethertax because of web server.

#6

I agree with nouk that Bulgarian accounting can be a hassle.
A friend of mine has recently gotten residency in Bulgaria and incorporated there and he told me has to file monthly tax statements and invoices also have to contain the amount in BGN.

If you get residency somewhere it’s also important to establish some substance in that country so that it can be seen as the center of your life: spent some time, rent an apartment, get a phone subscription.
I was also advised to sell my house in the netherlands or permanently rent it. Get rid of your NL insurances, phone subscription.

For Panama the cost are 6000 usd to deposit in a local bank account for the friendly nations visa (still yours to show you have money. For the incorporating and assistance with the friendly nations visa around 5000$.
It will require multiple trips to Panama: first to open a bank account, second to get your temporarily visa and a few months later your permanent visa.
I’m still waiting for my permanent residency, after that you can also get your local cedula issued which is your local ID card.

For the police report you can request a ‘Verklaring Omtrent Gedrag’ for the purpose of emigration. They will issue this within a few days.

I’m not familiar with Ireland but I can’t imagine it to be any easier or cheaper then a local company in Bulgaria if you have residency there and have that as your base of operation. You would probably have to register the Irish company in Bulgaria as well if that is your where you want to be liable for taxes. Not sure about this though.

Unless you maybe own physical servers somewhere in a datacenter having a website hosted in The Netherlands will not be much of an issue. Most important is: where you work and where you live.

For most digital nomads this will somewhat remain a grey area because of the moving around. Therefore just make sure you have most substance in the country of your residency. My friend who moved to Bulgaria told me about staying >6 months for the year to make sure he was a tax resident there.

#7

Bulgaria:
About Bulgarian bookkeeping requirements, i have asked a chartered accountant in Bulgaria and she told me that since i issued invoices in english & in Euro, a copy should be issued in Bulgaria & in BGN. I forgot to say that the invoices have to be kept in Bulgaria. In other words, you have to fully hand your accounting to a Bulgarian accounting company.

Estonia:
The real tax rate in Estonia on distributed profit is 25%

I understand some people here are paid by Estonia or work for registered agents in Estonia and broadcast their propaganda. They want to fish rich western European people. But the French, Dutch, British, German people are not stupid, unfortunately for them.

#8

Something that no one mentioned, but in my opinion should be thought off, and researched before making a decision is “health insurance”. @levelsio mentions on this topic that he pays NL taxes, because if for example he gets cancer the treatment would be paid by the government. I think you would want to avoid situations like with USA where you spend a couple of days in the hospital for some generic checkup, and get an invoice you would be paying for your whole life. I would suggest to research what securities you would receive to the country you will be moving to, or of any alternatives for those situations.

#9

@ifdattic I have private insurance ready to go. There’s a Dutch private insurer which caters to Dutchies outside the border. Their coverage is very similar to the Dutch health care system, only pre-existing conditions are excluded.

#10

Thank you Pim, that sounds pretty interesting. If I can get the “verklaring van goed gedrag” semi-remotely, maybe Panama is a good option. How long did it take for you to incorporate there?

#11

Professional advice is key here, but I’ll give you my thoughts on what you should do. Setup an offshore entity that you use to run your business. Which “offshore” jurisdiction is up to you - the topic has been discussed at length in other threads on this site, so I’d rather not “flog a dead horse”. This entity can be the center of your professional universe. It receives payment for services rendered.

When you do find somewhere that you wish to establish residency in, setup an onshore entity in your new country. This can be what pays you (and it in turn invoices your offshore entity). There’s a few other things to consider here, such as transfer pricing, but overall this is a fairly simple structure.

If you ever get sick of the place then you can dump your onshore entity and move on. Your offshore entity continues to function and receive payments.

Hope that helps.

#12

I checked and the ‘Verklaring omtrent Gedrag’ can be done remotely after you unregister:
https://www.justis.nl/producten/vog/vog-aanvragen/aanvragen-via-justis.aspx

Incorporating in Panama is very easy and can be done remotely and will take 1-2 days after submitting documents to your agent.

Getting a (corporate) bank account is another story and involves some paperwork and can take weeks. Personal and corporate bank accounts both need to be opened in person. So plan for multiple visits to panama if you go for panama residency.

another thing to consider:

I dont know how your business is currently structured and your turnover but something to consider is that if you want to bank in Panama and (do a lot of transactions) is the wire transfer costs compared to Bulgaria which has Iban.