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Need suggestion (searching for a country with a reasonable tax system)
Thread poster: Angie Garbarino

Angie Garbarino  Identity Verified
Local time: 07:59
Member (2003)
French to Italian
+ ...
Jun 14, 2011

Dear All

I am seriously planning to leave Italy, can you suggest a country with a reasonable tax system?, I am under the impression that USA are but as Italian citizen I do not think I will be allowed to live there as a resident.

Would love France, but it seems it also has a high tax system, perhaps Germany?, Holland?, Spain?

Thanks for your opinions, suggestions, I don't care about climate, I just need a country in which to spend the last part of my life being able to work with peace of mind as in Italy it is not possible.

Thanks a lot again!

P.S. Edited the title because it seems it was not clear.

[Edited at 2011-06-14 11:58 GMT]


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David Wright  Identity Verified
Austria
Local time: 07:59
German to English
+ ...
most countries Jun 14, 2011

are tax friendly, in fact they really love receiving taxes.

What I guess you mean is low-tax countries. I'm sure that you can find plenty of low tax countries around the world, but whether you would be happy with the standard of social services, health service, public transport etc is a different question. While I admit that Italy is probably in that sense not exactly good value for money, you generally have to weigh up between paying low taxes and living in a pleasant environment. I pay a lot of taxes in Austria, but the result is a fairly safe environment, cleanish air, reasonable health care,relatively low unemployment, expectations of a good pension etc. I sometimes get annoyed at how much I pay, but life is after all not just a matter of grabbing all one can and giving nothing back.


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Angie Garbarino  Identity Verified
Local time: 07:59
Member (2003)
French to Italian
+ ...
TOPIC STARTER
Ok I am changing my title, thanks Jun 14, 2011

David Wright wrote:

are tax friendly, in fact they really love receiving taxes.

What I guess you mean is low-tax countries.


However, AFAIK, "tax friendly" does not mean low taxes, instead it means "reasonable tax system" (which is what I am searching for) while Italy is not.
I know nothing about Austria, so I cannot compare.

Thanks for taking the time to reply.

Kindest regards/

[Edited at 2011-06-14 09:00 GMT]


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Manuela Junghans  Identity Verified
United Kingdom
Local time: 06:59
Member (2004)
English to German
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The UK Jun 14, 2011

Hi Angie

As you said you wouldn´t mind the climate I would say the UK is fairly good value for money (but really only if you don´t mind something resembling winter all year round

As a freelance translator with an average income (or what I would consider average) you won´t have to pay more than 20%-30% in taxes. And the tax system is fairly easy to understand, so you don´t really need an accountant.
Also, you don´t have to register for VAT until you reach a threshold of about GBP 75,000.

Something a lot of UK residents consider as a bit of a downside is the NHS (National Health System). I´ve heard many people complain about it. I personally think that it´s not all that bad, and that the trend in many other European countries is going towards establishing something similar to the NHS. (I bet a lot of people will disagree with me on that).

That´s just my personal opinion. You will find more information about working as a freelancer in the UK on the HMRC website.

Manuela


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Kirsten Bodart  Identity Verified
United Kingdom
Local time: 07:59
Dutch to English
+ ...
Luxemburg! Jun 14, 2011

Forget anything apart from Liechtenstein (probably) or Monaco. No income tax over there, although you need to have a LOT of money to move there. Property prices are horrendous.

So, solution is Luxemburg. Live in Germany and have an office in Luxemburg. You can get time sharing offices for modest prices. I say live in Germany because property prices are modest - lower than in France or Belgium and places are better kept - but taxes are too high. Your Luxemburgish 'office' only needs to have the facility of a phone and internet connection. There does not even need to be anything there, apart from the facility. It can even be a spare desk you can sit at in your accountant's office, apparently (don't ask).

So, having an office in Luxemburg will entitle you to income tax from income gained all over the world. They tax your net income (gross - social security - any benfits - car & business costs (standard amount or made up by you) - costs for non-working spouse (= approx 10,000 EUR) - costs for living in non-working people (each 1000 EUR) - saving plans etc etc). If your net income is below 15,000 which you can reach easily, you pay nothing. If you do not reach 50,000 gross (can't remember the exact number it was something ridiculous), you are not sent a tax form and will have to pay nothing. Mind you, if your accountant thinks there is something to be got back from the tax office, he will gladly ask for one. This does not change for next however, you will still get no tax form.

The only downside is that you will have to pay approximately 500 EUR in social security every month out of +/- 2000, BUT health insurance, invalidity, pension,... is included in it. Minimum pension is about 1500 EUR so you can't complain. You will be guaranteed this pension after 10 years of paying. And so, no private pensions necessary.

Health insurance in Germany you need not pay as you already pay in Luxemburg and the one in Germany you have to register at, will claim it back from the Luxemburgish one.

If you do not get an office in Luxemburg due to cost, you will be taxed on your income gained in Luxemburg alone. So, I believe you will be taxed on your income from Luxemburgish companies. However, there are lots and lots of people who may try to evade taxes in their home country by getting their bills paid in Luxemburg and not where they live. The Luxemburgish tax office namely does not care as it comes from outside the country, and the rest doesn't know about it. But that's maybe not the way to go as maybe in the future, things will be more open regarding that...

That said, technically you could stay in Italy and have an office in Luxemburg, but some countries are not receptive when it comes to the fact that you do not have to pay tax in their country.

And there are of course companies who will, for a fee, sort it all out for you.

[Edited at 2011-06-14 10:14 GMT]


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Madeleine MacRae Klintebo  Identity Verified
United Kingdom
Local time: 06:59
Swedish to English
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NI = tax in all but name Jun 14, 2011

Manuela Junghans wrote:

As a freelance translator with an average income (or what I would consider average) you won´t have to pay more than 20%-30% in taxes.


I think you're forgetting about National Insurance which is a tax in all but name and adds 11%+ to the tax bill.

From HMRC's website:

Class 2 National Insurance contributions are paid at a flat rate of £2.50 a week

Class 4 National Insurance contributions are paid as a percentage of your annual taxable profits - 9 per cent on profits between £7,225 and £42,475, and a further 2 per cent on profits over that amount


In the UK also really need to pay in to a separate pension as the state provision is inadequate. I'm not sure if they have made stakeholder pensions a requirement yet, but that is the intention so expect to pay about 3-5% for that.


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Williamson  Identity Verified
United Kingdom
Local time: 06:59
Flemish to English
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The tricks of the trade: Sunny places. Jun 14, 2011

Somebody (the Italian taxpayer) has to pay for those bunga-bungaparties

Two links:
http://www.worldwide-tax.com/
http://taxhavenco.com/

You do not have to pay taxes where you live if you have a ltd./sprl... (a legal entity).
The entity has one employee: You. You pay yourself the minimum salary.
The rest stays in your company.
On that salary, you do not pay taxes, because it is too low.

In Luxembourg, there are enough fidicaires, who take care of everything: incorporation, invoicing, accounting, credit-collection, payment of a low salary to you (you are the only employee of your own corporation) and payment of your social-security. Skype S.A. is a famous example of a legal person based in Luxembourg. With the money paid for this company, its owners can live in the Carribbean.

One of your collegues, also an Italian lives +181 days in Bermuda and the rest of the year in Italy.
Registered address of her company: Bermuda.

If you do not want to pay taxes at all, there are the Cayman Islands: 0% tax-rate.

Cyprus has the lowest taxes in the entire E.U.
In Cyprus, you have the equivalent of fidicaires, which enable you to create an off-shore (google : off-shore).

Lots of sunshine there too, but unfortunately real-estate is pretty expensive there.

However, there is such a thing as cohousing i.e. shared buying of a property where everybody has his/her own room/appartment, but where bills are shared.
I am also in the last quarter of my life and would like to end it on a sunny low-taxed island.

Should you be (or any other translator) be interested in some form of cohousing (or cooperation), send me an email.

In the United Arab Emirates, you pay 0% taxes. A bit hot in summer.

The UK is entrepreneurial-friendly and taxes are moderate in comparison to countries like say Belgium, which ranks on the third place of the tax-misery index. France has been the champion for years.
Which is why some Belgian colleagues set up a translation cooperative in the Dominican Republic.

Closer to Italy, there is Switzerland.
Not a tax-paradise, but a country with reasonable taxes and rates.



[Edited at 2011-06-14 16:49 GMT]


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Manuela Junghans  Identity Verified
United Kingdom
Local time: 06:59
Member (2004)
English to German
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Hi Madeleine Jun 14, 2011

Yes, you´re right, NI is to be paid on top of your taxes. But all in all it wouldn´t add up to much more than 30% or maybe 35% (as a rather generous estimate), which I think is still modest, in comparison with most other European countries.

And don´t you have to pay into a private pension scheme in other countries as well. I don´t know about all of the European countries, but for example in Germany or in Spain you wouldn´t be able to live off the state pension either.

Manuela


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Sandra B.  Identity Verified
Portugal
Local time: 06:59
Member (2005)
English to Portuguese
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Go to a developing country Jun 14, 2011

If you don't mind to live in a developing country, if I were you, I would just move to one. If I had the opportunity to move to one, I would do it TODAY. I have lived before in these countries (and I regret that I left). Yes, conditions are not the best, but if you live in an expats compound, you get everything you have in a first world country. And living there can be lots of fun. Plus, living costs are also lower.

We are just over taxed in Europe. And if in some countries people get some value for the taxes they pay, like countries in north Europe, in some, we get almost nothing...
In Portugal, I pay 35% of income tax, plus social security, which is mandatory, and the minimum you can pay is 186 euros/month. Of course that if you pay only that, you won't get a good pension state and you can not live with it when you retire, so, you can always have also a private pension plan or pay more to the State, which is always a risk in Portugal, as we are bankrupt so you never know if you will actually get something when you reach 65....

But we have nice weather


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Marie-Hélène Hayles  Identity Verified
Local time: 07:59
Italian to English
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I'd second Luxembourg Jun 14, 2011

It's got a lot going for it as well as the low taxes: lovely countryside, stunning city with cosmopolitan residents from all over Europe, masses of things to do and ways to make friends, really good restaurants.

It's true that house costs are high around Luxembourg city - don't know if they're any cheaper in the north. It's well worth checking out, anyway. If it weren't for the climate I'd happily live in Luxembourg again, it's a great place.


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Angie Garbarino  Identity Verified
Local time: 07:59
Member (2003)
French to Italian
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TOPIC STARTER
Sounds familiar... Jun 14, 2011

.Sandra wrote:
We are just over taxed in Europe. And if in some countries people get some value for the taxes they pay, like countries in north Europe, in some, we get almost nothing...
In Portugal, I pay 35% of income tax, plus social security, which is mandatory, and the minimum you can pay is 186 euros/month. Of course that if you pay only that, you won't get a good pension state and you can not live with it when you retire, so, you can always have also a private pension plan or pay more to the State, which is always a risk in Portugal, as we are bankrupt so you never know if you will actually get something when you reach 65....

But we have nice weather



Very familiar... we pay for healh insurance but in case of serious disease we have to pay a lot of money for specialist doctors, not to mention all the rest already discussed ad nauseam in the fora.

Thanks for your advice.


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Christine Schmit  Identity Verified
Luxembourg
German to French
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Luxembourg Jun 14, 2011

Kirsten Bodart wrote:

If you do not reach 50,000 gross (can't remember the exact number it was something ridiculous), you are not sent a tax form and will have to pay nothing.


Where did you get that from? There are tax exceptions in Luxembourg if you only earn a minimal income, but there is certainly no tax exception for an income of 50,000 euros.

Whatever country you decide to go to, I would strongly advise you to consult a qualified tax advisor who has experience in working with freelancers.
I'd also be careful with living in one country and being registered for tax purposes in another, as most countries require you to pay taxes where you actually live.


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Sergei Tumanov  Identity Verified
Local time: 08:59
English to Russian
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Estonia Jun 14, 2011

is a good option as far as taxes are concerned

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Angie Garbarino  Identity Verified
Local time: 07:59
Member (2003)
French to Italian
+ ...
TOPIC STARTER
Sure, sure Jun 14, 2011

Whatever country you decide to go to, I would strongly advise you to consult a qualified tax advisor who has experience in working with freelancers.
I'd also be careful with living in one country and being registered for tax purposes in another, as most countries require you to pay taxes where you actually live.


This is impossible for Italians (at least in my knowledge).


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Kirsten Bodart  Identity Verified
United Kingdom
Local time: 07:59
Dutch to English
+ ...
That came out wrong Jun 14, 2011

There is a complicated system for families and single people, but the threshold you start receiving a tax declaration form at is about that. However, it needs to be mentioned that the average salary of a qualified person working full-time, which is probably the largest amount of people, is about that. All the people earning below that are really small fish they do not want to catch. The net-threshold is about 9,000 to 11,000 and that is net, so deducting even your SS payments, children, living in partner etc. And then, on that, you only pay 8%.

Also, usually tax is withheld based on the amount of living in non-working people. But failing that or because of two or three jobs for example (tax rate is not determinable for any company), they make you fill in a declaration form from 31,000.

Needless to say that most people do not reach 4000-odd euros per month in this industry.

http://www.fiduciaire-lpg.lu/impots.html

[Edited at 2011-06-14 12:23 GMT]


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