How to set up business in Czech Rep, Bulgaria, or ?

[FSB]

Hi Guys,

I wanted to know your experience with setting up business in Czech Rep or Bulgaria.

- What's the best business model to settle affiliate earnings in such jurisdictions
- What's the cost of setting up a limited company (SRO, LLC) + monthly fees/annual fees + other ad-hoc fees (any accounting firm to be recommended?)
- How to invoice affiliate earnings from affiliate programmes? (need any particular agreements with each casino/sportsbook/etc?)
- How to take as much money as possible from "the company" for private use (salary? dividends? other?)
- How do you "present" your website in the company books?
- Any other info welcome

Thanks!

[Sherlock]

I am originally from CZ and I would definitely not recommend it. My friend is doing readymade s.r.o., he is also a lawyer, so he can give you an advice if you want https://www.readymadenaklic.cz/ (but even his opinion is that doing online business from CZ is a bit overkill).

[FSB]

@Sherlock thanks for your comments. What do you mean by that? tax burden? bureaucracy? unfriendly business climate?

Any other ideas where to set up business in EU (except Malta), preferably South-East part of the continent?

Btw, I know that the best solution would be set up bizz in UK as PLC and Offshore to transfer incomes and enjoy 1% real taxation on dividends. But, it seems to be more complicated and requires more admin stuff, that's why Im looking for some alternatives.

[Sherlock]

Yes bureaucracy and unfriendly business climate. The VAT things are a mess. The Czech IRS is a ****, they do whatever they want or like. I mean quite likely especially if you are in Prague, you will see no problems. But if you do, prepare for nightmare. It is not wise to depend on survivorship bias.

I can "tax" directly offshore so I have no experience with the UK shell company but I believe it must be simpler than having the Czech company. Bulgaria must be a better option. But this is really hard, I am no expert as well. I am just sure that tax system in any developed country is absolute mess and Czechs on top are just even more unfriendly Germans. Combine it with state servants and you find a den of Vogons. Czech state bureaucrats really can be rude for no reasons, few times I was at the brink of physical confrontation (last time middle aged woman at passport office started to pull my old passport from my hand, because "I must return it to the state", even when in my other hand was clear message from department of foreign affairs that "citizens can hold the expired passport if they wish"... argument that I need that passport to prove for tax reasons that I do not live in that country was not even heard or understood -> R U ready for that?)

As Enzoo or someone like that stated, most likely you will see no problems because they will be happy for some money, but really who knows. Tax officers are not rational, and the last thing they care about is the income for state. Recently the tax authorities completely killed many big companies only because the bureaucrats are incompetent. VAT frauds are a big thing in CZ and you might be suspicious just because you are weird. Everyone with cross border payments is in VAT so that makes everything more complicated (but that is everywhere in EU).

[FSB]

Well... I will have to re-think the Czech option once again.

I can consider direct Offshore as an option, but I have no idea on how to deal with such a business model. All about reducing costs, admins, taxes and legal risk.

[Sherlock]

Direct offshore is very easy, you just have to reside outside Or at least you have to prove it. Otherwise it is quite hard. Not because of the tax authorities (you do not have to prove to state you are resident outside until you are being asked; and you should never be asked because if you go offshore, you should just disappear in the system), but because the work is outsourced to banks and other private entities (and even private banks and companies in charge of offshore nowadays want you to prove residency out of EU [or at least this is my experience]).

All people in post Soviet bloc are just rude. Incredibly rude and insecure from inside. The level of rudeness is incomparable to the West, to Americas and to Asia. As a tourist you might not see it. Once you start going deeper, you will feel the despair. This was the major reason why I did not want to live there and to have children there. Kafka was from Prague.

[FSB]

Direct offshore is very easy, you just have to reside outside Or at least you have to prove it. Otherwise it is quite hard. Not because of the tax authorities (you do not have to prove to state you are resident outside until you are being asked; and you should never be asked because if you go offshore, you should just disappear in the system), but because the work is outsourced to banks and other private entities (and even private banks and companies in charge of offshore nowadays want you to prove residency out of EU [or at least this is my experience]).

All people in post Soviet bloc are just rude. Incredibly rude and insecure from inside. The level of rudeness is incomparable to the West, to Americas and to Asia. As a tourist you might not see it. Once you start going deeper, you will feel the despair. This was the major reason why I did not want to live there and to have children there. Kafka was from Prague.

Reside outside? What If I'm residing in EU as a shareholder of an Offshore company. eg. Cyprus. This way I could take money from the company as the only employee (monthly salary) and the only shareholder (annual dividend) - taxed in accordance with local tax rules (personal income tax).

[FSB]

Also, I have learnt that income from the performance of the duties of a member of the management board of a company domiciled in Bulgaria (for instance), and some other, will be subject to tax in both countries, i.e. both in Holland and Bulgaria.


At the same time, in order to avoid double taxation of such income, the so-called exclusion method with progression apply. According to this method, if a taxpayer who is a Dutch tax resident obtains income or owns property which, according to the provisions of this agreement, may be taxed in Bulgaria, then Holland will exempt such income or assets from taxation.

In conclusion, If I'm only a member of the Management Board of my company registered in Bulgaria, I can enjoy 10% taxation on my income (salary).

[Triple7]

In general, you'll have to pay tax on the place where it's earned. Hence, the place where you're running your websites, doing your administration, paying your invoices, running your company, etc. In this case, the Netherlands.

It's perhaps an option to create enough substance in another country than the country you're living. Within the EU data are exchanged, so it needs to be well organized, otherwise, the Dutch tax authority will consider your Bulgarian company as a Dutch one. Anyway, you will need to find a way to cash your money out.

Countries like Bulgaria are happy to get some tax income, Western European countries want each and every buck. Most Eastern European countries are bureaucratic. I do not think Bulgaria is an exception to that.

Offshore then. To organize it well, you'll need to move to over there or create enough substance there. Otherwise, it will be difficult too to open a bank account within the EU and to get your money inside the EU.

I would ask advice to a good Dutch tax advisor specialized in offshore things. Not those guys that are just trying to sell you ltd's or Antillean companies. First questions most likely will be about what amount of money we're talking and if you're wanting to emigrate.

Affiliate programs can be invoiced from your company. Wherever it might be located. With all those ever-stricter KYC crap, something obviously poor organized could lead to problems even with affiliate programs. And wherever you'll be opening a company or a bank account, I'd not talk too much about gambling.

[Sherlock]

Reside outside? What If I'm residing in EU as a shareholder of an Offshore company. eg. Cyprus. This way I could take money from the company as the only employee (monthly salary) and the only shareholder (annual dividend) - taxed in accordance with local tax rules (personal income tax).

Sorry, I mean offshore like really offshore. Cyprus is still EU.

Personal income tax is always derived from the state where you spend 6 months+ a year or something like that. If you are not at Cyprus, you live in some other country, your personal tax is derived from that country. I guess if you are the sole employee, hen you are foreign employee. This looks like quite a complicated structure.

[FSB]

For the time being, let assume that I'm OK with paying income tax in NL as an employee/director (100% shares) in my Bulgarian/Cypriot limited company.

The idea is to buy 'ready-made' shelf company with all features (virtual address, bank account, VAT-UE reg, admin services, etc)

Eg. https://www.companyinbulgaria.net/se...made-companies

My question is: Is there any risk for me when I have such company abroad (100% shares - director & employment contract) and live in NL or other EU country where online gambling (playing & promoting) is illegal?
In my opinion, from the legal point of view, I'm only a shareholder and employee of a company that operates in EU in accordance with local regulations (in this case: Bulgarian/Cypriot). Thus, I cannot be taken as a person that performs illegal activities (all the activities are done under the name of the shelf company in country where promoting online gambling is allowed).

[Sherlock]

The framework given by law for life and even more for economic activities is never 100% clear. The more money is involved the more is everything hazy. If someone with money wants to make an example from you, you might get always into troubles. It is just how much you want to be risk averse, as always. Since you have no 9 to 5 job, you take some risks.

So I guess you should be ok. But you know more how institutions and businesses work in NL. I do not know how NL works. You know better into which extent is the law bent.

What I do not understand is why you need to be your own employee. Is there a reason for that?

[FSB]

What I do not understand is why you need to be your own employee. Is there a reason for that?

Yes, I would like to have a good track record as an employee as well. Also, it can be another way to take money out from the company (remuneration for being a director + salary from employment contract).

[Triple7]

If you "buy" a ready-made Bulgarian company with yourself as director and shareholder, the Dutch tax authority will the company consider as being Dutch as the company is running from the Netherlands. You will be considered a Dutch tax citizen and pay tax there.

The company needs to have some substance in Bulgaria. Even with just a Bulgarian director who formally is running the company, it would be tricky. There should be some operations in Bulgaria. Enough examples of people that ran into problems with this kind of constructions.

You would need a way to transfer the money out of the Netherlands to another country and get it somehow legally back in a way that is not heavily taxed. Outsource SEO and receive it back as royalties or something. And it should be something acceptable for the tax authority. That will cost way more than 1,8k and even then it will be tricky. I'd spend those 1,8k (will be more anyway) in decent tax advice.

If you desperately want to avoid tax in the Netherlands? Why not leave there and live 6+ months a year in Bulgaria. You will pay 10-10-10/5 (company tax - income tax - dividend) there, life's cheaper there, etc Complex offshore structures are for companies like Starbucks.

A Bulgarian company has to comply with the laws of each and every country where it's operating. Services might be legal in Bulgaria, but not in other countries. the fact that you're operating on behalf of a company doesn't mean you're immune.

That website you're mentioning is vague. Who are they? Why they do not just put their details on the website? About what bank with e-banking they're talking?

My advice remains: talk with a specialized Dutch tax advisor / lawyer, not with some vague LTD farm from the net.

[yeahfree]

My question is: Is there any risk for me when I have such company abroad (100% shares - director & employment contract) and live in NL or other EU country where online gambling (playing & promoting) is illegal?
In my opinion, from the legal point of view, I'm only a shareholder and employee of a company that operates in EU in accordance with local regulations (in this case: Bulgarian/Cypriot). Thus, I cannot be taken as a person that performs illegal activities (all the activities are done under the name of the shelf company in country where promoting online gambling is allowed).

i can not give you any advise on these kind of constructions, but i do think you mix things that make no sense for the purpose of being legal or not.

in case online gambling (playing & promoting) is illegal in NL ,it should be no issue if you live in the netherlands and for instance target legal markets like the UK.

in case online gambling (playing & promoting) is illegal in NL, it can still be an issue if you target the NL market. no matter where your 'company' might be.

[Matevzus]

In terms of taxes, I think the best solution is to talk with a good and reputable tax advisor. Legality is another issue ...

in case online gambling (playing & promoting) is illegal in NL, it can still be an issue if you target the NL market. no matter where your 'company' might be.

I am not from NL but this is exact problem I am facing. The fine for promoting gambling is around 60k for companies and 5-10k for an individual. I talked to a local lawyer who estimates that it will be legal in around 5 years or so ...

I am thinking to open a company with my friend who is running an online marketing agency and mix revenues.

What is the best way to protect myself so that authorities can't connect me with the website I am running?

[FreeSpins]

For example, in Poland and Slovakia, you can neither play nor promote online gambling. The only solution is to relocate or set up a foreign company in a country where is a good climate for such kind of activity. Also, you can work from your country provided that your company is located in a "good" jurisdiction. If you don't earn over 100,000 EUR per month, don't worry, there's is a less chance you will be under the inspection of local tax authorities.

What is the best way to protect myself so that authorities can't connect me with the website I am running?

Set a privacy protection for your domain + use cloude service + relocate your domain and hosting abroad.

[Sherlock]

What is the best way to protect myself so that authorities can't connect me with the website I am running?

Never talk about your website ever unless it is necessary.
Pay hosting and domains in cash or btc.
Even at affiliate programs use address of another country if it is possible and you can get somehow proof of address.
Use ewallet/bitcoins for incoming payments or at least bank in another country (that is more gambling friendly). Resend the money there to your bank, revolut etc.
But best really is to avoid paying taxes at all. No income=no taxes=no problems.

[Sherlock]

Set a privacy protection for your domain + use cloude service + relocate your domain and hosting abroad.

Problem is whois privacy. Better is to change domain and redirect if it was already revealed to public. Fake whois is not a problem so far. Domain privacy is not perfect, registries can always change some rules, domain registrar CS are low paid idiots who tell everything to everybody.

First hand experience form domain registrar and hosting: if police asks them about information, they tell them whatever they want to know. In fact they should wait for court request, but they never do that.

[PROFRBcom]

Combine it with state servants and you find a den of Vogons.

I spit out some water I was drinking. A+ Vogon reference Sherlock!

In terms of taxes, I think the best solution is to talk with a good and reputable tax advisor. Legality is another issue ...

This is always the issue I run into. Finding someone "reputable" and "good". Very difficult to discern this as a layman with no expertise in the field/country one is researching.