Best tax residence for freelancers or self-employed pilots (EU, EASA)
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Best tax residence for freelancers or self-employed pilots (EU, EASA)
I am sure some of you out here have this figured out and experience to share some advice - please feel free.
Currently I am residing in Germany, going the freelancer i.e the "self-employed" contracts route and it is going okay for me in terms of regular contracts and gross income. However the country I am living in is highly taxed, has high social deductions and does not recognize professional pilot occupation as freelance work but as commercial work and is commercially taxed (unlike other occupations like freelance artists, designers, photographers or acedemic freelancers like IT-specialists, scientists, tax consultants,web-designers etc). Commercial tax is credited towards income tax, but only to a certain threshold amount. VAT charges are no issue so far, as I do not conduct local flights within my country of residence - all of the renumeration stems from offshore sources outside the EU. So to spare with too much detail: after talking it through with my tax adviser I feel I am at a great disadvatage in terms of my current resedency and there are surely better options.to choose from.
From my own reseach, Malta seems to be a very interesting option on many levels - english language, fairly good proceeding connectivity.- As I am an EU citizen this would not pose an issue to aquire "ordinary residency", as I only have to deregister here and rent a place of residence in Malta and go through the fairly simple application process to fulfil the requirements. The 183 day per year rule may be a slight issue, as I do intend to be on contract slightly more than 6 months per annum.
What are the other options ? Cyprus comes to mind, but it seems not as interesting as Malta on first glance. South Africa or Namibia are options for me too, but they are just too far away for short contracts.
It is not my goal to pay zero taxes - I just want to have a fairer and better deal than to loose around 43% (or more through additional social taxes) of my income in this kind of lifestyle that forces one to save greater rescourses for future contingencies and backup plans for training and times of low demand.
Eager to read your replies!
Currently I am residing in Germany, going the freelancer i.e the "self-employed" contracts route and it is going okay for me in terms of regular contracts and gross income. However the country I am living in is highly taxed, has high social deductions and does not recognize professional pilot occupation as freelance work but as commercial work and is commercially taxed (unlike other occupations like freelance artists, designers, photographers or acedemic freelancers like IT-specialists, scientists, tax consultants,web-designers etc). Commercial tax is credited towards income tax, but only to a certain threshold amount. VAT charges are no issue so far, as I do not conduct local flights within my country of residence - all of the renumeration stems from offshore sources outside the EU. So to spare with too much detail: after talking it through with my tax adviser I feel I am at a great disadvatage in terms of my current resedency and there are surely better options.to choose from.
From my own reseach, Malta seems to be a very interesting option on many levels - english language, fairly good proceeding connectivity.- As I am an EU citizen this would not pose an issue to aquire "ordinary residency", as I only have to deregister here and rent a place of residence in Malta and go through the fairly simple application process to fulfil the requirements. The 183 day per year rule may be a slight issue, as I do intend to be on contract slightly more than 6 months per annum.
What are the other options ? Cyprus comes to mind, but it seems not as interesting as Malta on first glance. South Africa or Namibia are options for me too, but they are just too far away for short contracts.
It is not my goal to pay zero taxes - I just want to have a fairer and better deal than to loose around 43% (or more through additional social taxes) of my income in this kind of lifestyle that forces one to save greater rescourses for future contingencies and backup plans for training and times of low demand.
Eager to read your replies!
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Malta is highly taxed at 25 to 35 % for income for residents; social security is about 200€ a month. Except if you set up a company and you are the CEO, then after having paid the "secretary" and ancillary costs ( around 5 to 7000 a year), you will end up with only 5% of income tax, the set up of the company itself will be around 5000€ for a proper one.
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Malta is highly taxed at 25 to 35 % for income for residents; social security is about 200€ a month. Except if you set up a company and you are the CEO, then after having paid the "secretary" and ancillary costs ( around 5 to 7000 a year), you will end up with only 5% of income tax, the set up of the company itself will be around 5000€ for a proper one.
Quoting: Tax residents of Malta who are not domiciled in Malta are taxable on a remittance basis. Accordingly, non-doms who are resident in Malta are not taxable on foreign source income not received in Malta, nor on any capital gains arising outside Malta whether remitted or not. Tax is due only on a source basis on income and capital gains arising in Malta. A non-resident citizen of Malta is only taxable in Malta on Malta source income. The Budget Implementation Act passed recently however has introduced a minimum annual tax in Malta of €5,000 for individuals or couples who are resident but not domiciled in Malta, and who earn at least €35,000 yearly.
Last edited by Propellerpilot; 13th Jul 2018 at 14:31.
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From my lawyer in Malta, domiciled means NATIVE or having the nationality, it does not mean that you have a domicile there.
So if you reside in Malta, but you do not receive money from a maltese company you are NOT taxed ( besides the 5000)
If you do not reside and receive money from Malta you are taxed at 35 % ( except from the list of the 15%)
If you reside, but non-domiciled in Malta you are taxed at 35 % as well ( except from the list of the 15%)
I have no insight about self-employed in Malta.
So if you reside in Malta, but you do not receive money from a maltese company you are NOT taxed ( besides the 5000)
If you do not reside and receive money from Malta you are taxed at 35 % ( except from the list of the 15%)
If you reside, but non-domiciled in Malta you are taxed at 35 % as well ( except from the list of the 15%)
I have no insight about self-employed in Malta.
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From my lawyer in Malta, domiciled means NATIVE or having the nationality, it does not mean that you have a domicile there.
So if you reside in Malta, but you do not receive money from a maltese company you are NOT taxed ( besides the 5000)
If you do not reside and receive money from Malta you are taxed at 35 % ( except from the list of the 15%)
If you reside, but non-domiciled in Malta you are taxed at 35 % as well ( except from the list of the 15%)
I have no insight about self-employed in Malta.
So if you reside in Malta, but you do not receive money from a maltese company you are NOT taxed ( besides the 5000)
If you do not reside and receive money from Malta you are taxed at 35 % ( except from the list of the 15%)
If you reside, but non-domiciled in Malta you are taxed at 35 % as well ( except from the list of the 15%)
I have no insight about self-employed in Malta.
however only on the base of living expenses that are required to pay day to day bills i.e. funds that are actually used in Malta. .
So - what if I only rent (minimum annual 9600€) an appartment there - pay the 5000€ social bill and medical aid ? No inland or EU affiliated revenue or Maltese based income or company connection. Living expenses paid by credit card or bank transaction or drawn cash on day to day demand basis from the ATM on the street corner for example ?
Looks like it will be better to consult a lawer myself in this regard.
Last edited by Propellerpilot; 13th Jul 2018 at 16:37.
