I like how you have these videos about structuring for citizens from many different countries. Very useful info. This is quite useful insight. There are many Bulgarians who are entrepreneurs, this could come very handy.
Nice introduction into BG tax system! Have luck with your business! I like to see foreigners when they are more familiar with BG taxes more than 95% of the population.
Very nice introduction!!! 1 sub from me!!! So basically there is not fear of BG to tax your foreign-owned company as a local company if the management, operation and etc are in BG like some other countries do! ( Italy, Spain, Greece, Au and many others)
Based on management and control, no. There are still permanent establishment rules and since this video was made CFC rules have been updated to be a little tougher.
Great informative videos from your channel! Been searching and finding various written answers to what the tax rate for capital gains (stocks) is in Bulgaria as a resident investing privately w. no LLC. Some (KPMG) say gains are tax exempt as long as it is Bulgarian and/or EU traded stocks. Is this correct/true? Thanks 🙂
Are dividends always deducted after taxation of the corporation? ie you can't pay yourself in dividends and thus reduce the amount taxed in the corporation. I seem to remember a solicitor also based in Bulgaria saying you could do that and so only pay 5% in tax if you payed it all in dividends.
is this 5% Story possible for everyone?. If you earn money only from internet? Our decision is Bulgaria after spending 6 month in montenegro and 5 month greece and 5 month italy.
The question is how does Bulgaria's CFC rules treat a Hong Kong company that is exempt from tax in Hong Kong because it is not managed and controlled in Hong Kong and has no operations there, and how does Bulgaria treat a Cypriot company that holds it's board meetings in Bulgaria whose sole owner is in Bulgaria, which likewise has no operations in Bulgaria, but also no permanent establishments in Cyprus or Bulgaria otherwise and what do they do with hybrids like a US LLC again managed in Bulgaria as far as "board meetings" go, but which likewise has no operations in Bulgaria and no operations in the US either. I'm thinking bout companies that do all of their operations other than board meetings through legitimate third-party independent agents. Website hosted via AWS, tech support done by a BPO in the Philippines, all of their software created by a company of developers in India, except for the work done by the company of developers in Romania and the small company of front end developers in the Ukraine. All of their digital media, ie videos sold on the site are licensed from third-party creators who are definitely independent agents a la TH-cam's creator pool, or maybe Patreon or Shopify. Heck they may even for something like POD merchandise, but they only produce it via independent print shops their company contracts and which their site is connected to via an API. It would be hard to say those companies have a permanent establishment anywhere. The tax residency rules make it appear like they are tax resident nowhere, so is the actual zero tax rate what applies for Bulgaria's CFC rules, or does the top line rate have to be zero? I mean a Florida LLC, a Hong Kong LTD, or a Cypriot LTD is looked at a lot more favorably than a BVI company.
Great talk. Please mention some benefits of Bulgaria over Montenegro? What about the vise versa. Do you see any advantage in Montenegro compared to Bulgaria? In general I mean, not just taxation.
Tax wise there's two sides of it starting with the fact that lots of people just don't file or pay in Montenegro. This being said Bulgaria has much better tax treaties. Bulgaria doesn't have management and control rules. Bulgaria offers much more in terms of infrastructure, staff, etc. Montenegro is a much smaller country and very poorly connected by air, whereas Bulgaria is pretty well connected.
Montenegro is much nicer country in my opinion. On the other hand it’s not well connected by air as Bulgaria, which is a shame. Also unfortunately it doesn’t offer much in terms of services yet. Another thing is that it’s completely dead and boring in the winter. And yeah most people just don’t pay taxes at all. 😂
I found conflicting information about dividends. If I have tax residency in Bulgaria and I receive dividends from a US public company (e.g.: Starbucks) then is it taxed at rate of 5%, 10% ? My understanding is the Bulgarian dividend tax is 5%, but it doesn't matter because this is controller by the double taxation treaty between the USA and Bulgaria. And according to some sources in this case the tax rate is 10% not 5%.
There's US withholding tax of 10% that's the US side then you need to look at how Bulgaria treats it which is typically giving you credit for the dividend paid. But no you'll never pay less than the treaty rate.
There are some areas of BG with specific tax incentives so it depends where and also if you're referring to selling the property or earning income off of it
@@OffshoreCitizen Do what the Bulgarians do, rent the land. You must access local lawyers? Found prices vary wildly between regions? And when mention want work carried out with a company the simplest of tasks can be in the eye of Mr average Bulgarian, expensive.
@@MichaelRosmer Agricultural land only. Rent the land and is the rental tax free? Just that your average Bulgarian doesn’t pay tax on these earnings when they be taxable?
No, dividends aren't subject to socials. A quick note though, a couple details about international planning have changed recently related to CFC rules so important to clarify those.
VAT rates are definitely worth considering but typically aren't part of an international structuring plan especially since they are designed mostly not to affect you but yes if you're selling they could be important to your clients or when buying might affect your cost of living.
@@MichaelRosmer thx for the fast reply. When doing b2c vat could be a mager tax bill. In Luxembourg some goods are 3% vat while 20% in bg. In such cases the lower corporate tax is actualy costing more... is there a way around this? Would love to hear about it. Thx
@@cryptoboom7761 you need to get into the details here because VAT (I should probably do a video on it) is very complex and depends on how the place of supply rules play out in that scenario. If you want to go extreme you could look at San Marino where you can end up with no VAT but you've got to be really careful with how you manage that or you could end up getting burned.
I like how you have these videos about structuring for citizens from many different countries. Very useful info.
This is quite useful insight. There are many Bulgarians who are entrepreneurs, this could come very handy.
Nice introduction into BG tax system! Have luck with your business! I like to see foreigners when they are more familiar with BG taxes more than 95% of the population.
Thanks! 😃
Very nice introduction!!! 1 sub from me!!!
So basically there is not fear of BG to tax your foreign-owned company as a local company if the management, operation and etc are in BG like some other countries do! ( Italy, Spain, Greece, Au and many others)
Based on management and control, no.
There are still permanent establishment rules and since this video was made CFC rules have been updated to be a little tougher.
I like those "bizarre" bulgarian CFC Rules. It's a welcome break from the not-fun-at-all tax rules in high tax countries.
Great informative videos from your channel!
Been searching and finding various written answers to what the tax rate for capital gains (stocks) is in Bulgaria as a resident investing privately w. no LLC.
Some (KPMG) say gains are tax exempt as long as it is Bulgarian and/or EU traded stocks. Is this correct/true?
Thanks 🙂
Are dividends always deducted after taxation of the corporation? ie you can't pay yourself in dividends and thus reduce the amount taxed in the corporation. I seem to remember a solicitor also based in Bulgaria saying you could do that and so only pay 5% in tax if you payed it all in dividends.
Dividends are always only paid out of after tax profits you can't use them as a write off.
is this 5% Story possible for everyone?. If you earn money only from internet? Our decision is Bulgaria after spending 6 month in montenegro and 5 month greece and 5 month italy.
The question is how does Bulgaria's CFC rules treat a Hong Kong company that is exempt from tax in Hong Kong because it is not managed and controlled in Hong Kong and has no operations there, and how does Bulgaria treat a Cypriot company that holds it's board meetings in Bulgaria whose sole owner is in Bulgaria, which likewise has no operations in Bulgaria, but also no permanent establishments in Cyprus or Bulgaria otherwise and what do they do with hybrids like a US LLC again managed in Bulgaria as far as "board meetings" go, but which likewise has no operations in Bulgaria and no operations in the US either. I'm thinking bout companies that do all of their operations other than board meetings through legitimate third-party independent agents. Website hosted via AWS, tech support done by a BPO in the Philippines, all of their software created by a company of developers in India, except for the work done by the company of developers in Romania and the small company of front end developers in the Ukraine. All of their digital media, ie videos sold on the site are licensed from third-party creators who are definitely independent agents a la TH-cam's creator pool, or maybe Patreon or Shopify.
Heck they may even for something like POD merchandise, but they only produce it via independent print shops their company contracts and which their site is connected to via an API.
It would be hard to say those companies have a permanent establishment anywhere.
The tax residency rules make it appear like they are tax resident nowhere, so is the actual zero tax rate what applies for Bulgaria's CFC rules, or does the top line rate have to be zero?
I mean a Florida LLC, a Hong Kong LTD, or a Cypriot LTD is looked at a lot more favorably than a BVI company.
Great talk.
Please mention some benefits of Bulgaria over Montenegro?
What about the vise versa. Do you see any advantage in Montenegro compared to Bulgaria? In general I mean, not just taxation.
Tax wise there's two sides of it starting with the fact that lots of people just don't file or pay in Montenegro.
This being said Bulgaria has much better tax treaties.
Bulgaria doesn't have management and control rules.
Bulgaria offers much more in terms of infrastructure, staff, etc. Montenegro is a much smaller country and very poorly connected by air, whereas Bulgaria is pretty well connected.
Montenegro is much nicer country in my opinion. On the other hand it’s not well connected by air as Bulgaria, which is a shame. Also unfortunately it doesn’t offer much in terms of services yet. Another thing is that it’s completely dead and boring in the winter. And yeah most people just don’t pay taxes at all. 😂
@@MichaelRosmer Great points. Thank you. 🙏
@@tw9419 Thanks
I found conflicting information about dividends. If I have tax residency in Bulgaria and I receive dividends from a US public company (e.g.: Starbucks) then is it taxed at rate of 5%, 10% ? My understanding is the Bulgarian dividend tax is 5%, but it doesn't matter because this is controller by the double taxation treaty between the USA and Bulgaria. And according to some sources in this case the tax rate is 10% not 5%.
There's US withholding tax of 10% that's the US side then you need to look at how Bulgaria treats it which is typically giving you credit for the dividend paid.
But no you'll never pay less than the treaty rate.
Really done your homework. What about farmland when owed by a physical person based in Bg, that tax free income?
There are some areas of BG with specific tax incentives so it depends where and also if you're referring to selling the property or earning income off of it
@@OffshoreCitizen Do what the Bulgarians do, rent the land. You must access local lawyers? Found prices vary wildly between regions? And when mention want work carried out with a company the simplest of tasks can be in the eye of Mr average Bulgarian, expensive.
@@e-bikerbulgaria what do you mean rent the land with respect to tax incentives?
@@MichaelRosmer Agricultural land only. Rent the land and is the rental tax free? Just that your average Bulgarian doesn’t pay tax on these earnings when they be taxable?
@@e-bikerbulgaria ah ok I was thinking about free zone exemptions
Do you need to pay social security if you just get paid with dividends?
No, dividends aren't subject to socials.
A quick note though, a couple details about international planning have changed recently related to CFC rules so important to clarify those.
How crypto friendly is Bulgaria? Would you trade as a company to benefit from the 5% dividend rule?
It's pretty crypto friendly but no dividends here don't help
You do need to mention the vat rates in bg which are 20%. Cumpaire that to Lux
VAT rates are definitely worth considering but typically aren't part of an international structuring plan especially since they are designed mostly not to affect you but yes if you're selling they could be important to your clients or when buying might affect your cost of living.
@@MichaelRosmer thx for the fast reply. When doing b2c vat could be a mager tax bill. In Luxembourg some goods are 3% vat while 20% in bg. In such cases the lower corporate tax is actualy costing more... is there a way around this? Would love to hear about it. Thx
@@cryptoboom7761 you need to get into the details here because VAT (I should probably do a video on it) is very complex and depends on how the place of supply rules play out in that scenario.
If you want to go extreme you could look at San Marino where you can end up with no VAT but you've got to be really careful with how you manage that or you could end up getting burned.
@@MichaelRosmer indeed, very tidious subject. Please make a video about it. Thx
How is Bulgaria for crypto taxes??
Bulgaria has a flat tax 10%