Before I share my situation, let me start by wishing you all a very happy new year and lots of tax avoidance
I’m from Belgium and looking to start my adventure somewhere in 2019. My source of income is a webshop with CBD products which serves Belgian and Dutch customers. Shipping is handled through fulfilment. I’m in my first months, but when I gain a little more confidence and monthly profits exceed 2000€, I would like to leave. That is, if I can decide on a strategy.
My goal is to travel a lot, but I also need a place to call home. I need a place to put my green egg, some cast iron skillets and a good pair of speakers, a hideout where I can relax for half of the year and invite some friends or family.
Since I plan to leave on a budget, I need a place with low cost of living and cheap travel options to my home country and the places I want to visit. I really enjoy Czech Republic and Poland and would also like to explore The Ukraine and Russia. Prague or Budapest would be ideal as they have both 25€ Ryanair flights or 20€ Flixbus rides to Belgium all year round, but Czech Republic or Hungary are not really known for their good tax regimes.
I’m looking to spend no more than 10% on all taxes (income tax, corporate tax, dividend tax, social security contributions) in total. This is very important to me. I’m not looking to make these drastic changes and still end up paying 20%, my structure has to be very efficient.
After reading on digital nomad / PT websites for weeks, it all boils down to two options. Those options are Portugal and Cyprus. Malta is not an option for me since I don’t want to spend 183 days a year there. Also CBD products are not legal in Malta and this is a problem when I need to resupply my shipper, since I do the packaging and labeling at home.
Portugal is definitely my favorite. It’s not really close to the places I want to visit, BUT both Porto and Lisbon have 25€ flights to Belgium (family) or Budapest (ideal starting point for travelling) all year round. Also I really love Portugal and would be very happy if I could live there. If I would decide on Portugal, it would be as an NHR or non-habitual resident, paying myself dividends from a company in for example Bulgaria. This way I would pay zero tax and only social security contributions on the minimum wage (about 2500€ a year). Too bad there’s also downsides: living close to those 2 cities is pretty expensive (400-500 range, not that much cheaper as an appartment in Belgium) and CBD products are also not legal in Portugal. This means I’d have to resupply from another country and travel there every month or two months. It’s an obstacle I’m willing to take (although I might misjudge and regret this in the future) since Portugal is very liberal in its drug policies and this will probably change very soon. But there’s another problem that might be more difficult to overcome: to avoid paying tax in Portugal, the majority of managers of my foreign company should live outside of Portugal. This means I would have to assign two managers (this could probably be friends in Belgium, no problem so far) on a contract and probably pay them (this would be a problem)?
Cyprus on the other hand would be A LOT easier to set up. If I register as self-employed (without setting up a company) I’d invoice 8500€ that way each year to pay the minimum social security contributions required (about 1250€ a year) while I get the rest tax free in dividends from my company in for example Bulgaria. Another plus is CBD products are legal in Cyprus, so I could resupply my shipper from there. HOWEVER, and this a big however, Cyprus is EU but not a Schengen country so I’m not sure if my products will be stopped by customs or not. I can’t find a clear answer on it either. I’d say within Europe packages don’t get opened by customs, but I experienced a lot of problems with shipments from Switzerland. Then again Switzerland is a special one, it’s Schengen but technically it’s not Europe although they do have a lot of bilateral agreements. If anyone can provide a clear answer on the (free) movement of goods from (south) Cyprus to Belgium, I’d really appreciate it! One downside about Cyprus is that I’m not really excited about it. I do like Greece but I never visited Cyprus or bothered to look it up. Also, it’s an island and I might feel ‘trapped’ there, since flights are very expensive (±200€) and I wouldn’t have the budget for that every month. Technically I wouldn’t have to spend more than 2 months in Cyprus each year, but my budget does’t really allow to rent one empty place there just to register as self-employed and another one in a country where I actually want to live.
Phew, I think I said it all The reason I went in such detail is because I’m looking for general advice. I might be overthinking some things or taking others too lightly. Experienced nomads / travellers can probably point out a thing or two and I’d be very happy to hear as much advice/opinions as you can throw my way.