Regarding corporate tax in Europe, lowest seems to be Hungary (9%), then Ireland (12.5%), then Lithuania (15%). Unsurprisingly, this is why loads of corporations are based in Ireland, and others like Revolut Bank, in Lithuania.
I can tell about Spain, which is where I live and have my company incorporated. Simplifying: general corporate tax is 25%, but for small companies and revenues less than 1 M€/year a 23% is applied. And new companies are taxed 15% during its first two years.
I founded and have run for many years a consulting business which I have recently sold. At its peak we were a team of 12 and I was the CEO and only founder. For me the corporate tax was never an issue, because it applies to the money you leave in the company. If you are small as we were, you take most of the benefits as salary or dividends, which are not subject to corporate tax, but to income tax.
So my experience is: if you are making lots of money as a solopreneur or tiny team, then consider moving the business to where it's optimal. (AFAIK Pieter Levels' is based in Singapore). if you are just earning a living, even if it's a good one, it doesn't pay off the troubles.
I'm based in Spain too and is crazy the amount of taxes I paid over the years plus the "autonomo" fee that is 380 Euros right now, crazy!
My wife does all the bookkeeping for me, she has the time to put into it if needed but as said I don't know if it's worth it.
I came across this andigarcia.com/que-es-llc/ (Sorry for non Spanish speakers), looks like you could be saving a lot of money legally but you know it's hard to trust this stuff as they are trying to sell you the service, and is much better to hear it from a guy like you.
I will keep researching and please if you have anything else to share would be of a lot of help :)
It's crazy depending on who do you compare it to. Taxes in Spain and Europe are certainly higher than in the US, but these are different systems. I can only tell about Spain:
The autonomous (Social Security) montly tax provides you free healthcare system and a (modest) retirement pension. The higher you pay, the higher your pension. It also covers a disability pension. I pay a fixed 385 €/month which doesn't vary with my income.
Income tax is proportional and usually misunderstood. You pay 19% for your first 12 k€. Then it increases to 24% for every euro above 12 k€ but under 20 k€. Then it's 30% between 20 and 35 k€, and so on. Every euro you earn above 300 k€ is currently taxed at 47%.
In Spain the average salary is ~25 k€/year. As I see it, an average young couple can live confortably in most parts of the country with their combined 50 k€/year per household, including a decent flat via a mortgage or rental. (However, many young people struggle to make 25 k€).
So say you make 100 k€/year from your business — that would be a pretty good gross income in Spain, catapulting you to the top 1% best-paid of the population.
Say yo decide to leave 25 k€ in your company for reinvestment, and take 75 k€ home for your expenses.
In taxes:
You would pay 4,6 k€ to the Social Security, and have free health insurance and a modest pension when you retire or in case of disability.
In corporate tax you would pay 5,65 k€ more (23% of the 25 k€ you decided to reinvest).
In personal income you would be taxed 20,1 k€.
So you would pay, in total ~30 k€, leaving you ~70 k€ from your total 100 k€ gross income. Your combined average tax rate is around 30% for that high income.
Of course you would then pay VAT when spending that money: ranging from 4% for basic goods to 21% for most of regular consumer goods.
On the other hand, public education is also free in Spain. Even university tuitions. As an example, my own education, from high school to my college graduation, was completely free. I even received public grants to pay for books and other expenses.
As far as I know, it's pretty similar across Europe. As said in my prior answer, corporate tax varies greatly among countries. But that is of little impact to indie makers, solopreneurs and even small business owners.
To me, the issue is when you are starting up and you don't make much money. Then the Social Security fixed tax is particularly painful.
Regarding corporate tax in Europe, lowest seems to be Hungary (9%), then Ireland (12.5%), then Lithuania (15%). Unsurprisingly, this is why loads of corporations are based in Ireland, and others like Revolut Bank, in Lithuania.
Singapore seems singular because it has a territorial tax system so that only income sourced in Singapore is subject to tax, but I ignore the fine print. And usually there is.
I can tell about Spain, which is where I live and have my company incorporated. Simplifying: general corporate tax is 25%, but for small companies and revenues less than 1 M€/year a 23% is applied. And new companies are taxed 15% during its first two years.
I founded and have run for many years a consulting business which I have recently sold. At its peak we were a team of 12 and I was the CEO and only founder. For me the corporate tax was never an issue, because it applies to the money you leave in the company. If you are small as we were, you take most of the benefits as salary or dividends, which are not subject to corporate tax, but to income tax.
So my experience is: if you are making lots of money as a solopreneur or tiny team, then consider moving the business to where it's optimal. (AFAIK Pieter Levels' is based in Singapore). if you are just earning a living, even if it's a good one, it doesn't pay off the troubles.
Thanks a lot, Jaime.
I'm based in Spain too and is crazy the amount of taxes I paid over the years plus the "autonomo" fee that is 380 Euros right now, crazy!
My wife does all the bookkeeping for me, she has the time to put into it if needed but as said I don't know if it's worth it.
I came across this andigarcia.com/que-es-llc/ (Sorry for non Spanish speakers), looks like you could be saving a lot of money legally but you know it's hard to trust this stuff as they are trying to sell you the service, and is much better to hear it from a guy like you.
I will keep researching and please if you have anything else to share would be of a lot of help :)
It's crazy depending on who do you compare it to. Taxes in Spain and Europe are certainly higher than in the US, but these are different systems. I can only tell about Spain:
The autonomous (Social Security) montly tax provides you free healthcare system and a (modest) retirement pension. The higher you pay, the higher your pension. It also covers a disability pension. I pay a fixed 385 €/month which doesn't vary with my income.
VAT is generally 21%, in the European average.
Corporate tax is generally 25%, less than the European standard. And 23% for small business.
Income tax is proportional and usually misunderstood. You pay 19% for your first 12 k€. Then it increases to 24% for every euro above 12 k€ but under 20 k€. Then it's 30% between 20 and 35 k€, and so on. Every euro you earn above 300 k€ is currently taxed at 47%.
In Spain the average salary is ~25 k€/year. As I see it, an average young couple can live confortably in most parts of the country with their combined 50 k€/year per household, including a decent flat via a mortgage or rental. (However, many young people struggle to make 25 k€).
So say you make 100 k€/year from your business — that would be a pretty good gross income in Spain, catapulting you to the top 1% best-paid of the population.
Say yo decide to leave 25 k€ in your company for reinvestment, and take 75 k€ home for your expenses.
In taxes:
You would pay 4,6 k€ to the Social Security, and have free health insurance and a modest pension when you retire or in case of disability.
In corporate tax you would pay 5,65 k€ more (23% of the 25 k€ you decided to reinvest).
In personal income you would be taxed 20,1 k€.
So you would pay, in total ~30 k€, leaving you ~70 k€ from your total 100 k€ gross income. Your combined average tax rate is around 30% for that high income.
Of course you would then pay VAT when spending that money: ranging from 4% for basic goods to 21% for most of regular consumer goods.
On the other hand, public education is also free in Spain. Even university tuitions. As an example, my own education, from high school to my college graduation, was completely free. I even received public grants to pay for books and other expenses.
As far as I know, it's pretty similar across Europe. As said in my prior answer, corporate tax varies greatly among countries. But that is of little impact to indie makers, solopreneurs and even small business owners.
To me, the issue is when you are starting up and you don't make much money. Then the Social Security fixed tax is particularly painful.
How is that in your countries?