Freelancers in High-Tax Europe: Move the Company, or Move Yourself?
Registering a company somewhere cheaper is the decision freelancers research for months. It’s also the one that changes nothing. The decision that moves the bill is the one almost nobody prepares properly.
A developer on r/cscareerquestionsEU described their working year in one sentence: working at 60% capacity, because earning more is pointless.
That isn’t burnout and it isn’t laziness. It’s an accurate reading of a threshold in the Italian flat-tax regime, and versions of it exist across high-tax Europe. The question that follows is always the same: should I move the company somewhere cheaper? The honest answer is that moving the company alone achieves nothing, and moving your own tax residence achieves almost everything. The catch is that leaving is a documented process with a burden of proof attached, and Italy, Spain and Germany each maintain a rule specifically designed to follow a departing taxpayer.
The threshold that makes people stop working
Italy’s regime forfettario is the sharpest example, because the cliff is written into the rules. A 15% substitute tax, cut to 5% for the first five years, replaces income tax, regional and municipal surcharges and IRAP. It stops at €85,000 of revenue: cross that and you leave the regime from 1 January, cross €100,000 and you are out immediately in the year itself, with VAT owed from the invoice that crossed the line and the whole year recalculated under ordinary rules that top out at 43%. Invoicing €95,000 therefore costs nothing this year and costs you the regime from January, which is why the rational move is to stop at €84,000 rather than plan for one big year.
Most high-tax countries produce the same instinct with a gradient instead of a cliff. Spain’s reference income tax scale tops out at 47% above €300,000, and because each autonomous community sets part of the scale, the real combined top marginal rate runs from roughly 43.5% in Madrid to around 54% in Catalonia. One freelancer’s stated goal, posted across r/stripe and r/tax, was simply to avoid being taxed at 48% in Spain on freelance income. Different mechanism, same conclusion: past some line, the next piece of work stops being worth invoicing.
Moving the company is the cheap decision that changes nothing
The reflex is to form a company somewhere with a low headline rate and invoice through it. It fails for two separate reasons, and they’re worth keeping apart because they have different fixes.
The first is about the company. If you are the one running it from where you already live, that country can treat it as effectively managed there, or as having a taxable presence there, whatever the registration certificate says. A company run single-handedly from one apartment is the easiest possible case for a tax authority to make. The second is about you. If your country of residence has controlled foreign company rules, profit left sitting inside the company can be attributed to you personally without ever being distributed, which is precisely what the “retain it, don’t pay dividends” plan is designed to avoid. Both tests are worked through in why “legally offshore” is mostly a myth.
None of that makes foreign entities useless. A US LLC or an Estonian OÜ solves real problems: payment rails, invoicing, a clean entity for foreign clients. What neither solves is the tax residence of the person operating it, which is the only thing the 60%-capacity freelancer needs solved.
Leaving is the part with a burden of proof
Departure is not a flight and a registration form. Each of Europe’s large high-tax countries decides residence on the facts of your life, whether that’s a day count, a home available to you or where your economic centre sits, and each has a separate rule aimed at people who leave for somewhere cheap.
| Italy | Spain | Germany | |
|---|---|---|---|
| Basic test | Presence for the greater part of the tax year, meaning 183 days or 184 in a leap year, is enough on its own | Over 183 days in the calendar year, with sporadic absences counted unless you prove tax residence elsewhere; or your main base of economic interests being in Spain | A home available to you, or habitual abode, rather than a pure day count |
| Does deregistering help? | Not by itself. Since the 2023 reform of the residence article, registering with AIRE is no longer automatic proof of foreign residence, and failing to register is no longer conclusive proof of Italian residence either | Not by itself. The economic-interests test applies independently of where you are registered | Not by itself. Deregistration is an administrative step, not a tax determination |
| The rule that follows you | An Italian citizen removed from the resident register who moves to a jurisdiction on the privileged-tax-regime list is presumed still resident in Italy, with the burden of proof reversed onto them | A Spanish national who moves to a listed tax haven keeps taxpayer status for the year of the move and the following four tax periods, regardless of day count | Extended limited tax liability for up to ten years after departure. It catches a German national who was fully taxable in Germany for five of the previous ten years, then moved to a low-tax jurisdiction while keeping substantial German economic interests, and it applies only in years where the relevant income exceeds €16,500 |
| Who’s on the list | The United Arab Emirates and Hong Kong are both on Italy’s. Switzerland was removed from tax year 2024. Georgia, Romania and Bulgaria are not on it | Spain maintains its own list of non-cooperative jurisdictions, which is not the same as Italy’s | No list. “Low-tax” is a calculated comparison against the German burden on a reference income |
Spanish rules quoted from the Agencia Tributaria’s own residence page, read directly, including the four-additional-periods wording. Italian and German rules read through specialist tax practices rather than the underlying decree and statute texts. Verified July 2026.
The pattern across all three columns is the same, and it’s the one thing to take from this article if you take nothing else. A high-tax country does not decide your residence by asking where you registered. It decides by asking where your life demonstrably is, and it keeps a claim on you for years afterwards if you left for somewhere it considers too cheap.
Spain states this with unusual bluntness. The Agencia Tributaria’s own wording is that Spanish nationals who prove their new residence in a tax haven “will continue to have the status of taxpayers for Personal Income Tax, both in the tax period in which they make the change of residence and in the following four tax periods.” Five tax years of continued Spanish taxpayer status, whatever the calendar says. And on the Italian list specifically, the United Arab Emirates and Hong Kong, the two destinations marketed hardest to European freelancers, are both on it.
What discharges the burden is unglamorous and documentary: a real home abroad on a real lease, family moved with you, the work actually performed there, money flowing consistently with the story, and the home-country utilities, directorships and VAT number closed rather than left dormant.
The bigger half of the bill isn’t the tax rate
Here is the calculation that almost never appears in these comparisons, and it changes the shape of the decision. The worked example below is Italian because Italy’s numbers are unusually easy to pin down, but the pattern is the general one: in most of Europe the income tax rate you’re comparing sits alongside a separate compulsory contribution layer, and the second one is often the larger.
Take a professional invoicing €80,000, past their fifth year so paying 15% rather than 5%, and without a profession-specific pension fund, so contributing to the general Gestione Separata scheme. The forfettario doesn’t tax revenue: it applies a profitability coefficient, 78% for professional and consulting activities, and taxes that. Social contributions are calculated on the same base and are then deductible from it.
| Step | Amount |
|---|---|
| Revenue invoiced | €80,000 |
| Deemed income at the 78% coefficient | €62,400 |
| Social contributions at 26.07% (Gestione Separata, 2026) | about €16,300 |
| Substitute tax at 15%, after deducting contributions | about €6,900 |
| Total | about €23,200, or roughly 29% of revenue |
An illustration of the mechanism, not a quote: coefficients vary by activity code, the rate differs for professionals covered by their own pension fund, and payment timing shifts the contribution figure between years. The 26.07% rate and the €122,295 contribution ceiling are the 2026 figures reported by Italian practices citing the INPS circular, which was not read in its original text for this piece. Verified July 2026.
The substitute tax is about €6,900 of that. The social contributions are about €16,300. So the freelancer agonising over “15% here versus 1% there” is comparing the smaller half of their own bill. Set the same €80,000 against Georgia’s 1%, assuming you actually move and do the work there, and the tax is about €800. Georgia’s funded pension scheme is voluntary for the self-employed and doesn’t compulsorily enrol foreign citizens without permanent residence, so there’s no equivalent mandatory contribution layer on top. Before local accounting fees, that’s a gap of roughly €22,000 a year, most of which was never income tax to begin with.
One thing that number hides, and it cuts against the regime rather than for it: that 78% coefficient is not a deduction, it’s a flat-rate stand-in for costs, and real expenses are simply irrelevant. Whatever you actually spend on software, subcontractors, travel or an office, the taxable base is the same. A freelancer whose real costs run to 30% or 40% of revenue is being taxed on money they never kept, so the 29% above is a floor that applies to a lean service business and rises sharply for anyone carrying real overheads. It’s also why the regime suits consultants and suits almost nobody who resells anything.
The comparison also names its own cost honestly. Those contributions were buying pension entitlement. Moving doesn’t delete that line, it converts it into something you now have to fund yourself, and a low-tax jurisdiction that charges no social contributions is not giving you a discount, it’s handing you back a bill you never had the option of skipping.
Where the move actually lands
Three destinations come up constantly for European freelancers, and they fail or work for reasons that have nothing to do with the headline rate.
| Georgia | Romania | Bulgaria | |
|---|---|---|---|
| What you actually register | Yourself, as an Individual Entrepreneur with Small Business Status. It’s a sole trader registration, not a company: there is no separate entity | An SRL, a real company, taxed under the micro-company regime | An EOOD, a real company |
| Rate | 1% of turnover up to 500,000 GEL a year, roughly $180,000; 3% on the excess | 1% flat on turnover from 1 January 2026 | 10% flat corporate tax on profit, the second-lowest headline rate in the EU behind Hungary’s 9% |
| Ceiling | 500,000 GEL. Exceed it two years running and the status is revoked from January of the third year | €100,000, cut from €250,000 in 2025 and tested at group level | None |
| The requirement guides skip | The 1% only reaches income from work physically carried out in Georgia. Your activity must also stay outside the excluded categories, and declarations are due monthly even in zero-income months since March 2026 | At least one full-time employee or a paid administrator mandate with contributions, within 90 days of registration | A physical administrator and a registered address, roughly €180-300 a year for the address alone |
| Stripe | Not supported. Georgia does not appear on Stripe’s country list | Supported | Supported |
| Where it stalls | The bank account. Opening an operating account as a non-resident is the step that fails or drags in all three, and it is the step the incorporation-services industry has least interest in mentioning | ||
Stripe availability checked directly against Stripe’s published country list, July 2026. Tax figures from concordant local practices and PwC’s tax summaries rather than the primary legislative texts, so treat them as accurate at the date of writing rather than permanent: Romania has changed this regime three times in about three years. Both company routes add a second, personal layer when you take the profit out as dividends, which this comparison doesn’t price. Verified July 2026.
Note what the first row does to the premise of this article. In Georgia there is no company to move, because the 1% regime attaches to you personally. It goes further than that: the rate applies to income Georgia treats as Georgian-source, and what makes it Georgian-source is the work being physically carried out in Georgia. Register from abroad and keep working from abroad, and the registration is valid but the rate isn’t earned. That makes Georgia the cleanest illustration of this article’s whole point, since the thing that lowers the bill is where you are, not what you set up at a distance.
What tempers it, beyond the rate: the regime excludes a list of licensed and regulated activities, and whether IT consulting sits inside that list is contested between Georgian practices, with the classification self-declared at registration and open to retroactive reassessment at 20%. Declarations are due every month, including months with no income. And if your reason for restructuring was payment-rail access, Georgia doesn’t supply it, because Stripe doesn’t operate there at all. There is also a separate labour permit, required of foreigners working from Georgia without a residence permit since March 2026, costing 200 to 400 GEL against a 2,000 GEL fine for going without. All of it is worked through in Georgia’s 1% small business status. The bank account, which is the common failure point across all three destinations, is covered for Georgia in opening a Georgian account as a non-resident.
When it still doesn’t pay
A €22,000 gap makes the answer look obvious. Against it, count what closing that gap actually costs: annual accounting and registered-address fees, at least one trip to open the bank account and possibly another for renewals, the contribution record you stop building, the cost and risk of proving your exit if it’s ever questioned, and the fact that you now live somewhere chosen partly for tax reasons. The last one isn’t financial and it’s the one people underestimate most.
And the trigger matters more than the total. One strong year that pushes you over a threshold is a bad reason to restructure a life, because these caps are level tests rather than spike tests: in Italy you leave the regime from 1 January, spend at least that year under ordinary rules, and can get back in once revenue is under the threshold again. A business that sits structurally above the cap is a different case entirely.
If the honest answer is “I’d stay where I am, I just need to invoice cleanly and get paid,” then the entity question and the residence question come apart and only the first one needs solving. How to structure an online business works through that split by where you live, who your clients are and how they pay.
Before you move anything
- ✓
Work out whether you’re above the threshold structurally or just this year, and check which side of your regime’s cliff you’re on. In Italy, over €85,000 costs you next year; over €100,000 costs you this one.
- ✓
Add up social contributions before comparing tax rates. On a professional invoicing €80,000 in Italy they’re more than double the substitute tax, so a rate-versus-rate comparison is measuring the smaller half.
- ✓
Decide the residence question before the entity question. The entity follows the residence, and doing it the other way round is how people pay for a structure that leaves the bill exactly where it was.
- ✓
Check whether your destination triggers your own country’s departure rule: a privileged-regime list in Italy, non-cooperative jurisdictions in Spain, a calculated low-tax comparison in Germany. The UAE and Hong Kong sit on Italy’s list.
- ✓
Build the documentary trail as you go: lease, days actually present, closed utilities and directorships, consistent money flows. Deregistering from the home country’s residents’ register is not, on its own, evidence of anything.
- ✓
Check the payment rail before the tax rate. If you charge cards, a jurisdiction Stripe doesn’t cover is a non-starter no matter how low the percentage.
- ✓
Budget the bank account as a separate project with its own timeline and its own chance of rejection. It’s the step that fails, in all three destinations above.
FAQ
Can I lower my tax bill by moving just the company abroad?+–
Generally no. If you keep running it from where you live, that country can treat it as managed there, and if it has controlled foreign company rules, retained profits can be attributed to you personally even if you never take a dividend. The company’s location and your tax residence are decided by two different tests.
Does deregistering from my home country’s residents’ register make me non-resident for tax?+–
Not by itself. In Italy, after the 2023 reform, AIRE registration is no longer automatic proof of foreign residence. In Spain, residence turns on the 183-day count and on where your main base of economic interests sits, independently of registration. What counts is the underlying facts, documented.
Why is moving to Dubai or Hong Kong riskier than it looks from Italy?+–
Because both sit on Italy’s list of privileged tax regimes. An Italian citizen removed from the resident register who moves to a listed jurisdiction is presumed still resident in Italy unless they can prove otherwise, which reverses the burden of proof at exactly the moment it’s most expensive to carry. Spain and Germany each have their own version of a rule that follows a departing taxpayer, built on different criteria.
How much does an Italian freelancer on €80,000 actually pay?+–
Roughly €23,200 in a steady year past the fifth, on the illustration above: about €16,300 in social contributions and about €6,900 in substitute tax, once the 78% coefficient is applied. Two things matter more than the total. Contributions are the larger share, and rate comparisons ignore them. And the coefficient replaces your real expenses rather than allowing them, so anyone with meaningful costs is taxed on money they never kept and pays well above that 29%.
Is Georgia’s 1% tax as good as it sounds?+–
It’s real and it’s capped at 500,000 GEL of turnover, with 3% above. Three things temper it: your activity must not fall in the excluded categories and the classification can be revisited retroactively at 20%, declarations are due monthly even with no income, and Georgia is not on Stripe’s supported country list, so it doesn’t solve card payments at all.
Which is cheaper to run, a Romanian micro-company or a Bulgarian one?+–
They aren’t directly comparable, because Romania’s 1% is charged on turnover and Bulgaria’s 10% on profit, so the answer depends on your margin, and both add personal tax when you extract the profit as dividends. Romania also requires at least one full-time employee or a paid administrator mandate within 90 days, which is a real recurring cost. Bulgaria has no such requirement and no turnover ceiling, so it handles growth better. Both are supported by Stripe, and neither opens an operating bank account cleanly from abroad.
I’m under the cap and just want to invoice foreign clients properly. What should I do?+–
Probably nothing structural. Keep the domestic regime and solve the invoicing and payment problem on its own terms, which usually means a foreign entity only if a payment rail requires one. Restructuring your residence to fix a payments problem is an expensive way to solve the wrong thing.
Written by Daniel Hart, who covers neobanks, account freezes and cross-border banking for neobankfit. Based on the Spanish Agencia Tributaria’s published residence rules (read directly), Stripe’s own supported-country list (checked directly), Italian tax and social security figures for 2026 from specialist Italian practices and the INPS contribution circular, German commentary on extended limited tax liability, and Reddit discussions among European freelancers weighing the move (r/cscareerquestionsEU, r/ExpatFinance, r/stripe, r/tax).
This article is general information, not legal or financial advice. Tax residence tests, thresholds and lists of privileged jurisdictions change and depend on your nationality, country and specific facts. For your situation, check current rules and consider a qualified adviser.
