Belgian Digital Nomad - Where to incorporate (EU)?

Tax and legal
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Hello

Really great community here and lots of useful information.
I haven’t yet found my particular use-case, so hoping for some clarity. :slight_smile:

I am a Belgian citizen, travelling fulltime in 2020 (and probably beyond) while running/starting a business.
Moving country to country, I will not have any domicile for at least a year.
For 2020, I will have a reference address in Belgium which will be valid for 1 year (note: it’s not a domicile; it’s just an address for mail).

I assume my personal tax for 2020 will have to be paid in Belgium as I will not settle anywhere else (and not planning to).
The Belgian government will claim since that I do not actively live anywhere else and still have ties to Belgium (reference address, bank accounts, etc.) I am a tax resident of Belgium; and that’s OK (for now).

However, the corporate landscape in Belgium is far from ideal, e.g. corporate tax around 30%, minimum wage of 45.000€ (excluding social tax), high social security payments, etc.

That’s why I’m considering incorporating a company in another EU State Member.
One of the possibilities is obviously e-Residency (Estonia).
My reasoning is as follows, and it would be nice if someone could confirm my claims:

  • Cost of setting up a company is quite low (e.g. 250 euro) compared to Belgium where it’s +1,000 euro (notary, accountant, etc.).
  • Profits are not taxed as long as they remain in the business. Distributed profits are taxed at 20%, lower than the Belgian’s 30%.
  • Wage requirements for company owners are far lower than Belgium. In Estonia, gross wages of 900-1000 euro are deemed accepted while in Belgium we are talking 45.000 per year (3.750 per month).
    If your yearly revenues are too low to give yourself such a wage, you need to pay 100% of the taxable profit as wage to yourself.
  • The wage burden of Belgian companies is one of the highest in the world. Gross wage of 3.750 costs the company at least 150% of it.
    In Estonia it will be far lower, around 130%.
  • Both rates above (130 and 150%) include social taxes.
    Am I free to choose to pay for Estonian social tax as opposed to Belgium?
    Even if all the work will be conducted outside Estonia and Belgium?
    What’s the difference? I read that social security in Europe is valid everywhere. How does this work?
  • Numerous service providers that will take care of the legal aspects for acceptable fees.
  • …

My business will sell non-physical products to clients residing in Belgium and The Netherlands ONLY.
Would Belgium accept an Estonian business and the tax logic above?

Thanks a lot!

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These are questions for your current Belgian Accountant since they would know your personal situation and your business situation in detail plus the local tax laws. If your accountant is very local you might need to pay a more international accountant for their advice also. In the US is it common that small business accountants have no idea about international tax law/rules but I think nearly all accountants in Europe would have at least a basic idea or could refer you to someone more international experience

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Hi,

I thought of doing the same thing, but I’m Italian. At the end, no matter how convenient is the taxation in Estonia, if your official residency is in Belgium they will tax the income coming from outside the country.
In my case I would have to pay all the taxes you need to pay in Estonia, plus the taxes I have to (because of the dividends) sinché I’m Italian. It was not worth it.

But I’ll follow this, maybe someone else experienced this and knows better.
Cheers and good luck.

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You should check with a local expert the Belgium specific rules. But generally if you start a company in Estonia (or other country outside Belgium) then the company will be resident in Belgium if managed from Belgium. But if you don’t live in Belgium anymore it wouldn’t be managed from Belgium, even if you are still tax resident in Belgium. So you could use an Estonian company to receive income that is not taxed in Estonia or Belgium as long as you don’t take a salary or dividends. You’d also not pay social taxes to Estonia when not resident there.
There is no requirement to take a salary from an Estonian company. You write about wage requirements. this sounds like Belgium company rules and shouldn’t be relevant for your Estonian company.

You could later when you’re no longer tax resident in Belgium take a salary that would not be taxed in Estonia as long as you are not present in Estonia. Note that you no longer need to take a board member salary (that would be taxed in Estonia), just a (non taxed) employee salary is ok.

There might be specific rules that says if you sell mainly to Belgium then your income might be taxable in Belgium, even as a foreign company.

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Problem is that in Belgium the regulation is complex and changes very often.

But there are a few things I figured out when I was researching stuff for myself:

  • The tax man considers everyone that’s registered at any town or city to be a tax resident by default, even if they did note in your file ‘temporary away’. With the by ‘default’, it means that you can still prove you’re not a tax resident, but you need to provide the proof, make a file for it, … and maybe they’ll accept it. Still, if you’re temporary away, they might easier accept the fact that you’re also a tax resident in a different country and that some revenues will be exempt from taxes in Belgium. But you’ll need to proof that the income has been taxed in a different country for which Belgium has a double tax treaty. If Belgium doesn’t have a double tax treaty, then they will still tax it if you’re a tax resident, even if it means double taxation.
  • This new € 45 000 limit is indeed quite high. But there are many exceptions to this rule, for example companies who don’t meet certain profit levels, companies that just started, … even if you don’t fall within these categories, you’re not obliged to pay € 45 000 in salary, but your company will not be able to apply for the lowered company taxes.
  • The general rule is to ask an accountant, but you’ve probably figured out already that most of them suck.
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Yes, but the point is if you don’t get any dividends or salary from the Estonia company then you won’t have any taxable income in Belgium.
Provided that you physically don’t live in Belgium and run the company from Belgium.

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Bonjour,

J’ai créé une société en Estonie et c’est je le pense le meilleur système pour un nomade, de plus l’avantage est la très grande simplicité et surtout la stabilité réglementaire et fiscale. Bien que français, j’ai vécu et dirigé une entreprise en Belgique et ce pays en rajoute toujours une couche sur la folie fiscale et réglementaire française. Enfin , une société en Estonie est parfaite pour une activité digitale ou freelance, quant à la résidence fiscale, il est indispensable en premier lieu (pour un français) de se déclarer au consulat le plus proche du pays d’expatriation, et celui-ci en avisera les services fiscaux en France…reste également à payer les impôts et taxes dus en cours et obtenir un quitus fiscal…

Tout ceci est légal. une entreprise européenne avec un numéro de TVA européen, et une résidence fiscale dans el pays de son choix…même si on ne met pas le pied dans le pays de résidence fiscale, il ne sert qu’à payer des taxes et impôts. en absence d’une autre résidence fiscale, c’est le pays d’origine…donc, exemple entreprise digitale et internationale en Estonie, résidence fiscale à Maurice, Portugal, etc…

Sinon dans le cas de résidence fiscale en France ou Belgique, on déclare les dividendes versés dans sa déclaration d’impôts…cela étant dit, la problématique reste la couverture sociale, si vous en résidez pas en Belgique et ne bénéficiez pas de la sécurité sociale belge, alors l’expatriation, et une assurance privée avec une assurance-assistance mondiale peut être la meilleure solution.

Bien à vous :slight_smile:

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For me it’s fine to pay personal tax in Belgium.
I will pay myself a low wage to live on.

But… What about the corporate tax?
Would it be fine to pay the taxes in Estonia, and Belgium wouldn’t care?

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Merci, Jean-Yves.
Donc, si je comprends bien vous avez payé taxes en Estonie grace à la l’accord préventive de la double imposition entre la France et Estonie? Même si les taux en Estonie sont plus bas que lesquelles en France, la gouvernement l’a accepté?

Deuxième question: Est-ce que vous avez des clients autour du monde ou seulement en France?

ENGLISH VERSION BELOW

Thank you, Jean-Yves.
If I understand it well you have payed taxes in Estonia thanks to the double taxation agreement between FR and Estonia? Even if the tax rate in Estonia is well below the French rates, it is accepted?

Second question: Do you have clients around the world or only in France?

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Je paie les 20 % de taxes en Estonie car la société est estonienne. Ensuite je déclare en France pour le moment, les revenus nets que je me verse à moi en tant que le propriétaire et je paie les impôts dessus au titre des revenus mobiliers…

Mes clients sont internationaux. mais même si mes clients étaient français, et moi nomade cela serait la meilleure solution afin d’échapper aux tracasseries réglementaires françaises alors que je peux être au bout du monde…

La société possède un numéro de TVA estonien et donc européen. Le système MOSS de reversement des TVA aux pays européens des clients est pris en charge par les plateformes de paiement comme Paypal, Stripe et Paddle.

Enfin, il est fondamental de recourir à un provider pour les opérations en Estonie, au final c’est plusieurs fois plus économique que de payer un comptable en France ou en Belgique…

Si vos clients sont belges, vous pouvez être freelance avec ce système mais si vous résidez en Belgique cela va devenir rapidement compliqué. la Belgique par exemple ne permet pas le portage salarial…

Regardez le provider Xolo qui a deux offres pour les nomades.

Enfin, ce système est totalement légal et visible par les autorités. N’envisagez pas de concevoir quoique ce soit d’offshore avec…de toute manière ces temps sont révolus.

la seule solution outre la société à l’extérieur est d’envisager l’expatriation, sinon c’est l’esclavage à vie et aujourd’hui il n’y a aucune autre possibilité…

I pay the 20% tax in Estonia because Estonian society is Estonian. Then I declare in France for the moment, the net income that I pay myself as the owner and I pay the taxes on it as income from movable property…

My customers are international. but even if my customers were French, and I nomadic that would be the best solution to avoid French regulatory hassles when I can be at the end of the world…

The company has an Estonian and therefore a European VAT number. The MOSS system for paying VAT to customers’ European countries is supported by payment platforms such as Paypal, Stripe and Paddle.

Finally, it is essential to use a provider for operations in Estonia, in the end it is several times more economical than paying an accountant in France or Belgium…

If your customers are Belgian, you can be freelance with this system but if you live in Belgium it will quickly become complicated. Belgium for example does not allow wage portage…

Look at the provider Xolo who has two offers for nomads.

Finally, this system is totally legal and visible to the authorities. Don’t consider designing anything offshore with…anyway these days are over.

the only solution besides the society outside is to consider expatriation, otherwise it is slavery for life and today there is no other possibility…

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je me méfie des systèmes de double imposition, car au final votre inspecteur des impôts pourrait à tout moment en tenir compte ou simplement en pas l’accepter, et même si l’accord est assimilable à un traité il faut en passer par des requêtes en justice, payer les amendes et taxes exigées avant d’espérer une hypothétique décision favorable de la justice, bref des délais à perpétuité …je le redis, si on ne veut plus se faire pomper son énergie en France ou en Belgique ce qui est équivalent, il faut envisager l’expatriation…c’est sans issue et ces deux pays sont en route vers la faillite budgétaire, donc à court-moyen et long terme aucune amélioration ne peut être envisagée…donc je déclare les revenus en France en attendant de vivre ailleurs …il faut juste comprendre que le taux pour loi en France de fiscalité est juste en 2019, de 2,5 fois celui que mon père payait dans les années soixante sous la présidence du Général De Gaulle …

I am suspicious of double taxation systems, because in the end your tax inspector could at any time take them into account or simply not accept them, and even if the agreement is similar to a treaty, you have to go through legal proceedings, pay the fines and taxes required before hoping for a hypothetical favourable decision by the courts, short deadlines in perpetuity… I repeat, if you no longer want to get your energy sucked out in France or Belgium what is equivalent, it is necessary to consider expatriation… it is a dead end and these two countries are on the way to budgetary bankruptcy, so in the short-medium and long term no improvement can be envisaged… so I declare the income in France while waiting to live elsewhere… it is just necessary to understand that the rate for tax law in France is just in 2019, 2.5 times that which my father paid in the sixties under the presidency of General De Gaulle…

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@Jean-Yves_Mesnil and @jbossuyt can you please keep the conversation in English? It would be great if you translated the messages you already posted or I might just go ahead and do it with Google Translate.

Thanks!

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Hi see the messages I used deeply.com and you can read the English version. Thanks

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done!

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You only pay corporate taxes in Estonia if you take a dividend. If you are tax resident in Belgium then you’d also have to pay tax on the dividend received in Belgium.

As long as the Estonian company is not tax resident in Belgium (managed and run from Belgium) then the Estonia company doesn’t pay taxes to Belgium.
But you should still check Belgium cfc rules, some countries have cfc rules within EU if the company doesn’t have an actual office in the other country. Cfc is for you personally, and not for the company.

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Hey @jbossuyt

Did you eventually go with this setup?

I am in a very similar situation. Also with a reference address in Belgium and starting a freelancing business.
I will be spending about half the year in Belgium though.

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Similar situation here.
I’ve been researching for 2 days now, my eyes are starting to bleed.
Every time I run into a good thread it ends with the thread author not coming back with the final results.

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@stormwatcher, @petervdeynde

I will only decide in February on the final set-up.
Unfortunately I haven’t found a lot of help from accountants at this point.
I am considering professional tax advice but still looking into the tax savings vs. hourly rates that they charge. :wink:

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@jbossuyt
same here - a bit reluctant to cough up 170eu/hour rates for legal advice … altho - getting a tax lawyer in Germany (my current location) was the best thing I ever did with/for my money.
Please keep this thread up to date

(Currently investigating Cyprus)

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Ok thank you @jbossuyt,

Please keep us updated on what you decide to do.

I find this website micropreneur.life has some really good information about the subject. This guy runs a company called ‘Your Company In Estonia’ (https://yourcompanyinestonia.com) which helps e-residents with Estonian OÜ do their accountancy and compliance.

On his website I’ve read some interesting comments:

It’s important to understand that your company and you are separate entities. You can live as a person (resident) in Spain, but your company is in Estonia. It’s registered there, and let me assure you that your company pays taxes in Estonia.
Then there are your personal taxes. If you live in Spain -and run your company from there-, you are a Spanish resident and, as such, you pay your taxes there, of course.
I can affirm this with confidence, because I have had my company while being resident and living more than 6 months a year both in Spain, and my company has still paid taxes in Estonia, as it should.
If you don’t have permanent premises in your home country and try not to spend the whole year there, you should be fine.

when asking some accountants specialized in European legislation and taxation, they all agree that the requisite still applies. The tax residence needs to be generally speaking proved with a permanent residency, office or something that ties your business to a country on a permanent basis.

First of all, you need to understand what CFC rules are. CFC rules are there to prevent people from avoiding taxes by establishing companies in tax heavens. However, CFC rules are not there to forbid the establishment of companies abroad. In fact, no country can prevent a person -regardless of nationality/residence- from setting up a company in another country.
Thus, the second thing you need to understand is that Estonia is no tax heaven. It’s a reputable European country. It’s not Seychelles or the Cayman Islands, it’s not even Luxemburg or Andorra. However, it’s certainly an “entrepreneurship heaven” due to its entrepreneur friendly system, digital administration, and fair, transparent tax system.
That means that Estonia is not the target of CFC rules, on the contrary, Estonia has its own CFC rules to prevent its citizens from opening off-shore companies in tax heavens.
The tax on corporate earnings on Estonia is 20% gross (that’s 20/80 = 25%) income tax plus 33% social tax. That’s far from tax heaven. If you actually take some time to read about CFC rules in Spain, you will know that they apply if the foreign country assesses for tax at less than 75% of the sum demanded in Spain.
So, in your case, as you can see, unless taxes in Spain get A LOT higher (that might be the case soon, who knows ;), I doubt any Spanish e-Resident needs to worry about it.
The same applies to other European countries. Perhaps you need to be more careful in Germany, but then again, they need to prove that your company is generating all its value in Germany, which is not the case if you don’t have permanent premises and your services are digital/online. I know quite a bunch of German e-Residents that operate their companies without any problem.

About Belgian CFC legislation I found the following: Belgian CFC legislation will apply if the foreign company or PE is “lowly taxed”. That is the case if the foreign company’s effective local corporate tax liability is less than 50% than the amount of Belgian corporate tax that would be due if the foreign company or PE would have been subject to Belgian corporate tax.

Offcourse one can’t make decisions based on internet comments, but still could be used as guidelines