- December 2, 2023
- Posted by: legaleseblogger
- Category: Related News
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Seeking Advice on Potential Countries for Relocation
My wife, our two cats, and I recently fled Ukraine and are now looking for a new country to call home. Our preference is a warm climate due to our health, and with our freelance professions as a 2D artist/illustrator/designer and QA professional, we are able to work remotely. However, with the recent loss of a major client, our income has significantly decreased, and we are now relying on our savings.
We are starting our search for potential countries to relocate to by considering the tax implications. In Ukraine, we were operating under a self-employed simplified tax regime, which allowed for a low 5% income tax with a cap, along with a minimal amount for social contributions.
Although we understand that the tax rates in Europe are generally higher, the research we have conducted has left us feeling frustrated. It seems that we would be giving up a large portion of our income towards taxes and social contributions, leaving us with very little to cover our living expenses.
This is where the AI Legalese Decoder could be invaluable to us. By using this tool, we could gain clarity on the taxation systems of various countries, especially in relation to self-employed individuals. With most English-speaking sources focusing on corporate and individual taxes, we often find it challenging to locate specific details about self-employed taxation.
We would greatly appreciate any assistance in understanding the tax implications for self-employed individuals in your country. We are open to suggestions and advice on potential countries where our freelance professions and financial situation can be more favorable. Thank you for any help you can provide.
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****** just grabbed a
Bulgaria:
Tax: 10% fixed, no matter how big your income
Pension and health insurance: about 30% but it is calculated only on maximum income of 2000 euro per month (if you make more than that then only 10% tax is applied to the amount above 2000 euro).
Many freelancers in Bulgaria who work for foreign companies, open a company in Bulgaria (relatively easy process). And get payments through the company. Company also pays 10% tax. To get your money from the company there is additional 5% divident tax. But the benefit of the company is that you do not need to pay pension and health insurance on 2000 euro but on 400 euro. And also you can deduct from your income any expenses related to your work – like office rent (you can rent an appartment and live and work from it), any office equipment purchases, etc. But you will have to pay maybe 100 euro per month to accounting company to manage your interaction with the tax authorities.
If are a foreigner and you work for a foreign company then maybe you only need to pay 8% health insurance and 10% tax. Not sure about that.
Weather is warm and there are a lot of people from Ukraine here. Most of them live on the Black sea coast (Burgas, Varna). Bulgarian language would be relatively easy to learn for you as it a slavic language.
I generally hate taxes and I think EU countries are horrible at managing tax income – this said, paying 5% income tax is ridiculously low, you cannot expect to move in a foreign country and contribute close to zero nowadays, given you will have access to their services (free healthcare, unemployment schemes, pension scheme, etc)
Anyway to address your question, In the EU you have only a few options of countries where you pay low taxes:
– Malta: you can get non domiciled status and pay 0% tax as long as your income is not remitted to Malta (read: as long as income is generated and wealth is stored outside of Malta you donÔÇÖt pay taxes)
– Cyprus: similar scheme to Malta, you get a special non-dom status that lasts 18 years as long as you can prove your father is not from Cyprus
– Andorra: you pay 5% taxes on the first 40k of income and 10% on anything above that. However itÔÇÖs an expensive country.
– Portugal / Italy: you can claim a reduction of up to 70-90% of income tax. However the scheme is changing in both countries and in Italy now is only up to 50% discount for example.
Anyway if you have 0 earnings atm and your wife gets below 20k euros per year, in virtually no EU country you will pay much taxes. Surely not close to 60% but probably not even close to 30%. Usually you pay zero for the first 10-15k and then it goes slowly up starting in the teens %. Obviously it all depends on the country. I would consider Poland if I was you as cost of living is relatively low, language and culture are similar and taxes are not so high.
I can explain for France:
The equivalent would be an “entrepreneur individuel au r├®gime micro” (aka “micro-enterprise” or “autoentrepreneur”). You can be with this status if you make up to 77kÔé¼/year
In terms of tax you need to pay social contributions (which covers public healthcare, sick days and retirement), it’s 22% of your gross income.
You’ll also need to pay income tax for 66% of your gross income (combined with your other sources of revenue).
To give you some numbers: if you’re making 50kÔé¼/year of gross income and you’re single, you’ll keep about 35kÔé¼ after social contributions + income tax
Try Croatia. You can open a “pau┼íalni obrt” if your income is less than 300,000kn (~39,800Ôé¼) per year. As such a business is easy to open and you pay a flat rate per month. Also our seaside is relatively warm in winter in comparison to Europe.
Here’s a good article about Obrt in English: https://www.google.com/amp/s/www.expatincroatia.com/open-close-obrt-croatia/amp/
In Croatia, there is a simplified business entity if you earn less than (I think) Ôé¼40,000 a year, with flat tax brackets, but approximately I think about 12% tax, plus a monthly social services contribution (also flat). Not sure how much it sums up to, it depends on your income. Freelancers use it, but they had cracked down on freelancers who only have 1 client who behaves like employer, as this is then considered “employment” and not freelancing.
This is maybe a little out of date, based on when I was looking into it some years ago.
At your income levels, taxes donÔÇÖt really matter. Taxes will be on the lower end everywhere. Your living expenses will matter much more. For example, you could move to Dubai, thereÔÇÖs no tax and itÔÇÖs warm, but you wouldnÔÇÖt have a great life on such an income.
I would recommend you to first look at the kinds of countries you find interesting, check the cost of living and only then start comparing tax rates.
Have you considered South America or Southeast Asia? Or do you want to stay in Europe?
My heart really goes out to you, I work a lot with Ukrainians. Hope you will win this stupid war soon. Ukraine is a wonderful country.
Hi, I don’t think I can help much I’m afraid.
I’ve heard that here in Spain self employed people complain a lot about taxes, but many foreigners do it so it can’t be that hard. Also many Ukrainians.
Maybe check out Barcelona (huge diversity), Valencia (less crowded) and the canary islands (much cheaper).
But I can’t compare to other countries
For not only ask for help, but to provide as well, here is what I found.
Please be aware that this might not be completely accurate, since most of my research was in English and I was rarely able to comprehensively read goverments` sites (they often were down, lol) to confirm english sources.
Not a warm country, but it was recommended by some friends – Czechia (Czech Republic)
Has a flat tax regime with about 3012 euro/year per person, no matter the income, unless it is lower than 48k (? not sure?) euro per year.
Or a “normal” taxes with minimum mandatory contributions in social and medical for a total of around 2758 eur per year per person. And with our income, it looks like we will be excluded from income tax, or it will be a negligible amount if I understand correctly.
In Bosnia the tax rate is flat 10% for registered sole proprietorships, plus around 500 euros for mandatory healthcare and retirement, but with a possibility to get a tax deductions for kids or health costs. There is no upper limit on how much you can earn like this.
But you can go unregistered for some time, in which case you don’t need to pay for the social contributions, just tax, but of course you also don’t have access to them. But if you’re going to receive money like this long-term, you are expected to register.
For the netherlands freelancing taxes recently been set to increase. Before around 1/3 would go taxes. We have mkb vrijstelling used to be 14% of your income wasn’t taxed but it reduced to 12,7%. Also the reductions is going to be reduced from around 5 thousand euros to just 900 euros.
Being self employed also doesn’t build any pension, doesn’t include healtcare(neither does regular employment)
All I will say about my country is if you want low taxes and warm winters, Norway is not for you.
I’m self-employed and pay just under 40% in taxes overall. The marginal rate (what I would pay on an extra krone in income) is 49%.
Uk income tax:
Personal Allowance Up to £12,570 0%
Basic rate £12,571 to £50,270 20%
Higher rate £50,271 to £125,140 40%
Additional rate over £125,140 45%
You will have to set up a limited company and submit annual paperwork. You will also need to pay national insurance both as an employee and another 10% as an employer.
Very few people pay more than 40% tax.
I can only really speak to Germany. It’s a relatively high-tax country and being self-employed is particularly difficult.
You can play around with [this tax calculator](https://www.brutto-netto-rechner.info/gehalt/gross_net_calculator_germany.php), *but* social costs work quite differently for freelancers. [This page](https://www.expatica.com/de/living/gov-law-admin/social-security-in-germany-100923/#freelancers) seems to have a reasonable overview. The big bits are:
* Everyone *must* have health insurance. When employed, the employer pays half the costs, the employee the other – freelancers get to pay both halves. That said, as a freelancer you can opt for private health insurance which could be a lot cheaper, especially if you don’t intend to retire here.
* You’re not required to pay unemployment insurance (but I believe that means you can’t benefit from it)
* You can opt out of the state pension system. I’m not sure if you can *completely* opt out of paying for a pension, or if it’s more like health insurance, where you need *something*.
Another option, as you’re both freelance artists, is that you’d potentially qualify to join the “K├╝nstlerkasse” which would cover the employers portion of the social insurances.
Things also change slightly as you’re married, as it’s possible to effectively “merge” into a single person but with the tax brackets doubled. Probably not massively relevant to you given your income levels, but worth looking to see if that’s a thing in other countries as well.
You also need to watch out for Church Tax as I’ve heard stories of people being hit with years worth of tax when someone found a record of them being baptised (hearsay, no sources, can’t guarantee it’s true) – if you’re worried about it, it’s better to say you’re religious and leave ASAP.
The final point is that, in certain circumstances, Germany will return your (state-only?) pension contributions to you if you leave the country. It’ll take a couple of years, but it’s possible.
It’s complex, being unable to speak German will make this even harder, and if you expect to be able to return home in a couple of years it’s unlikely to be worth the pain.
Portugal is a great candidate. Affordable and has a great tax scheme on foreign sourced income. You need to apply this year though: [https://www.globalcitizensolutions.com/nhr-portugal-tax-regime/](https://www.globalcitizensolutions.com/nhr-portugal-tax-regime/)
Few more options on this list: [https://www.atlys.com/post/5-tax-friendly-countries-in-europe-for-digital-nomads](https://www.atlys.com/post/5-tax-friendly-countries-in-europe-for-digital-nomads)
~~And lastly, SpainÔÇÖs Beckham tax law:~~ [~~https://globaltax.services/insights/beckham-law-spain-special-tax-regime-expats/#What_is_the_Beckham_Law~~](https://globaltax.services/insights/beckham-law-spain-special-tax-regime-expats/#What_is_the_Beckham_Law)
Ukrainian moved to Malta here. I responded to the top comment about Malta and its nuances, but feel free to DM me if you need more details.
When you come to an european country (coming from UA) you probably get shelter (&money) without immediate need to work.
That is where i would first look into
For LU:
https://ukrainians.lu/ukrainian-center/useful-information-for-ukrainians/
I know from several UA people in BE.
I am originally from NL and now living in LU.
Taxwise LU is way better then the surrounding countries, but housing is extremely expensive.
When you not plan to return to UA in future (when possible hopefully earlier then later) i would keep LU on the radar.
With a decent income in LU you pay around 20% in tax and social premiums. (Although top tax brackets are much higher) from this 20%, 8% goes for pension.
https://www.calculatrice.lu/calculator
LU has a high minimum wage, which give the opportunity to do basic work as a plan-b and still earn ok.
When you could do freelance work from home (even for clients abroad) i would also look into schemas available in southern countries like italy or Portugal) although administrations in these countries are like a nightmare.
Even when born & living in an EU country it is extremely difficult to find all the in & outs of tax and social rules of countries and to compare them. Some things like pension schemes you do not immediate see.
For general taxinfo on countries the taxsummaries from PWC can be helpfull.
Udachi !
I wish I understood my country’s taxation lol
Dont come to Austria, around 50% taxes after 6K income. What the Guck
How about Lithuania? Climate is not that good, winters might be cold. But other than that:
– There are lots of Ukrainians here
– Older people still speak Russian (if thatÔÇÖs important)
– Language is, unfortunately, though to learn
– As for taxes – you can go self employed, which means that you would pay approximately 18% in total for income taxes and social contributions
– If you get more than 45000 euros per year from clients in Lithuania or more than 12000 euros from EU clients – you would need to register for VAT
– The only tax you have to pay on a monthly basis is health insurance- approximately 60 euros per month
– If income is higher, you can always go with MB (private small company) or UAB (private limited company).
Serbia also has a self-employed scheme where youÔÇÖd pay $300-$400 per month fixed and you can earn up to ~50.000Ôé¼ per year. The $300-$400 includes healthcare, contributions and taxes. You can also add your family to the healthcare plan at no additional cost, I believe. You shouldnÔÇÖt expect much from the Serbian healthcare thoughÔǪ
Check out pausal.rs they can take care of the registration and setup for you and you can manage everything from their online app.
Cyprus and other countries are generally expensive for setup. YouÔÇÖll most likely want to hire locals to help you set things up and youÔÇÖd go through your savings rather quickly.
Bosnia and Herzegovina is also a good choice, maybe a small place like Trebinje? 30mins to get to Dubrovnik, Croatia and ~60-90mins to get to Herceg Novi, Montenegro. So youÔÇÖll be close to the sea, but it can get cold in Trebinje in the winter.
The Croatian program sounds good as well and perhaps North Macedonia also has something similar.
I would dig deeper into Serbia, BiH, Croatia and North Macedonia, I think the cost of living and taxes are the best.
/u/interuse you should consider Romania, Bulgaria or Cyprus (setup costs). They have relatively low taxes and cost levels.
I think Portugal works good for you, their digital nomad visa is great and you won’t pay much in taxes (around 20 percent) and it’s cheap and warm, Lisbon is a bit pricy but still affordable.