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Expatriate Tax planning in the Baltics

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Prepared by Valters Gencs, Tax attorney situated in Riga, Latvia

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Expatriate Tax planning in the Baltics

  1. 1. Expatriate Tax Planning in the BalticsExpatriate Tax Planning in the Baltics ITSG European Conference 18/19 th May 2017 Sofia Valters Gencs, TaxValters Gencs, Tax attorneyattorney
  2. 2. Baltic States
  3. 3. Sofia, 18/19th May, 2017 “Baltic Taxes” available on the Apple App Store and the Android Market  Baltic Taxes is a tax planning and optimization application which helps the user to calculate the VAT, corporate and personal income taxes in the Baltic States (Latvia, Lithuania and Estonia). You can find all tax rates as well!  Now available for Android and IOS! Baltic Taxes
  4. 4. Tax rates in Baltics
  5. 5. Dividend calculation
  6. 6. Salary taxation in Baltics Sofia, 18/19th May, 2017
  7. 7. Detection of offshore accounts Offshore company Latvian credit card 1 use in Sweden Inquiry to Latvia from Sweden Banks obligation to disclose • Taxpayers does not file declarations Loan agreement justification Sofia, 18/19th May, 2017
  8. 8. Suspect transactions  Cash 60000 EUR (except salary, pension and social fee)  Cash 2000 EUR change of small nominal  15000 EUR lump-sum payments  Currency exchange more than 8000 EUR in cash  Transfers for 60000 EUR without opening account or taking from account  Prohibition to execute cash transaction exceeding 7200 EUR (not applicable to natural persons)  Cash declaration exceeding 1500 / 3000 EUR  Loans over 15000 EUR reported. Sofia, 18/19th May, 2017
  9. 9. Lists of Low Tax Countries In Latvia In Estonia In Lithuania  Alderney  Andorra  Anguilla  Antigua & Barbuda  Aruba  Bahamas  Bahrain  Barbados  Belize  British Virgin Islands  Brunei  Cayman Islands  Cook Islands  Costa Rica  Curacao  Djibouti  Dominica  Ecuador  Grenada  Guam  Guatemala  Hong Kong  Isle of Man  Jamaica  Jordan  Kenya  Labuan  Lebanon  Liberia  Lichtenstein  Macau  Maldives  Marshall Islands  Mauritius  Monaco  Montserrat  Nauru  New Caledonia  Niue  Panama  Saint Helena  Saint Kitts & Nevis  Saint Lucia  Saint Pierre & Miquelon  Saint Vincent & the Grenadines  Samoa  San Marino  Sao Tome and Principe  Seychelles  Sint Maarten  Tahiti  Tonga  Turks and Caicos Islands  Uruguay  Vanuatu  Venezuela  Virgin Islands (USA)  Andorra  Anguilla  Antigua & Barbuda  Antilles  Aruba  Bahamas  Barbados  Belize  Bermuda  British Virgin Islands  Brunei Darussalam  Cayman Islands  Chile  Commonwealth of Dominica  Cooks Islands  Costa Rica  Djibouti  French Polynesia  Gibraltar  Grenada  Guam  Guatemala  Guernsey  Hong Kong  Jamaica  Kenya  Kuwait  Labuan  Lebanon  Liberia  Liechtenstein  Macao  Maldives  Mauritius  Monaco  Montserrat  Nauru  Netherlands  New Caledonia  Niue  Oman  Panama  Philippines  Puerto Rico  Qatar  Saint Kitts & Nevis  Saint Lucia  Saint Vincent & the Grenadines  San Marino  Seychelles  The Marshall Islands  Turks & Caicos Islands  Uruguay  Vanuatu  Venezuela  Virgin Islands (USA)  Andorra  Anguilla  Antigua & Barbuda  Aruba  Azores  Bahamas  Bahrain  Barbados  Belize  Bermuda  British Virgin Islands  Brunei Darussalam  Cayman Islands  Commonwealth of Dominica  Cook Islands  Costa Rica  Djibouti  Ecuador  Gibraltar  Grenada  Guatemala  Guernsey, Sark, Alderney  Hong Kong  Independent State of Samoa  Isle of Man  Jamaica  Jersey  Kenya  Kuwait  Lebanon  Liberia  Liechtenstein  Macao  Madeira Islands  Maldives  Mauritius  Monaco  Montserrat  Nauru  Netherlands Antilles  New Caledonia  Niue  Panama  Saint Helena  Saint Kitts & Nevis  Saint Pierre & Miquelon  Saint Vincent & the Grenadines  San Marino  Seychelles  Tahiti Island  The Marshall Islands  Tonga  Turks & Caicos Islands  United Arab Emirates  Uruguay  Vanuatu  Venezuela  Virgin Islands (USA) Sofia, 18/19th May, 2017
  10. 10. Taxable income Sofia, 18/19th May, 2017  Advances – over 90 days  If not employees in LLC, and income over 1800 EUR  Loans exceeding 5 years (amounts limited to 30% income or equity-was 354m lats in 2011)  Lower interest rate – 30% allowed  Share option below 3 years – taxable  25% ownership of offshores
  11. 11. Social fee for immigration purposes (third countries) Gross salary should be per month at least:  1636 EUR – Board members  1227 EUR – High qualified specialists  818 EUR – Employees  380 EUR – Head of the representative office  1636 EUR – Self-employed persons  380 EUR – Spouse (family member)  228 EUR – Child (family member) Sofia, 18/19th May, 2017
  12. 12. Capital Income Tax 10% Sofia, 18/19th May, 2017  Deposits, account balance  Tax point- when is accesible  Foreign interest- declaration  Deposit before 1 Jan, 2010- taxable based on December 6, 2010 Constitutional Court decision- On cash bases Capital Gains Tax- 15% Personal Income Tax- 23%  Gifts- 23% from natural persons exceeding EUR 1425
  13. 13. Dividends - 10% 15% corporate tax (LV) 10% Total tax burden – 25% Recipient Sofia, 18/19th May, 2017
  14. 14. Dividend structure Shareholder worldwide Latvian Holding Company Subsidiary Not low tax country No Latvian income tax on dividends Low tax countries : 15% WTH (low tax) 15% Royalty 30% Extraordinary dividends Sofia, 18/19th May, 2017
  15. 15. Sofia, 18/19th May, 2017 Micro Tax 15% Includes Personal Income Tax, Corporate Income Tax and Social Tax up to 5 persons Micro company tax – 12% from turnover up to 7000 EUR For turnover from 7000,01 EUR till 100 000,00 EUR - tax rate is 15% In case turnover exceeds 100 000 EUR, the excess is subject of 20 % tax
  16. 16. Consulting fees Salary paid from Swedish company Swedish company Expatriate Latvian company Withholding tax VAT Consulting fee Sofia, 18/19th May, 2017 PE in Latvia?
  17. 17. Residence Certificates  Certificates valid for 5 years  Date and number of contract  Confirmation from Latvia tax authorities required (30 days answer)  WTH paid by payer if exemption is not obtained Sofia, 18/19th May, 2017
  18. 18. Sofia, 18/19th May, 2017
  19. 19. Sale of real property From 12.06.2007 – until 31.12.2008. From 01.01.2009 – 31.12.2009. From 01.01.2010. Income was tax exempt if property was owned more than 60 month and for more than 12 month this property has been persons residence place. Income tax exempt if property owned more than 12 month is sold Income tax exempt if property owned more than 60 months and at least 12 months to sale has been place of residence. Tax rate 15% of difference between sales price and acquisition costs. Sofia, 18/19th May, 2017
  20. 20. A1 certificate  Sent for 24 month – pay in home country  Pay where work, regardless where is residence  Work in 2 states for 12 month – pay where is residence  No residence in working states – where company’s legal address  Several employers – where is residence country Sofia, 18/19th May, 2017
  21. 21. Retirement tax planning  buypropertyinspain.eu  buypropertyinbarcelona.eu  buypropertyinmallorca.eu
  22. 22.  http://baltic-lawfirm.eu/
  23. 23. Sofia, 18/19th May, 2017

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