“Firma im Ausland gründen” is one of the most searched money phrases in the German-speaking world. The ads make it sound like a weekend project: pick a sunny country, pay a fee, cut your tax to 0%. The reality is better and worse. Better, because a well-built company abroad can legally cut your tax bill by half or more. Worse, because the company location is rarely the thing that decides it.
This guide covers where a company abroad makes sense, what it costs to set up and run in the countries we cover, the steps from idea to bank account and the traps we see most often. General information as of September 2026, not tax or legal advice.
The rule that decides everything: where the company is run#
A company is taxed where it’s registered and where it’s managed. When those are two different countries, the country of management usually wins. Three rules do the work:
- Place of management. If the key decisions are made at your desk in Cologne, Germany treats the company as German-managed: corporate tax plus trade tax, roughly 30% together. Our place of management guide has the details and a self-check.
- Permanent establishment. Even without management, a fixed place of business or a dependent agent in Germany makes the profit linked to it taxable there.
- CFC rules. If you live in Germany and control a foreign company with low-taxed passive income (below 15% effective), Germany adds that income to yours, paid out or not. See German CFC rules.
So the first question isn’t “Dubai or Cyprus?” It’s “Where will I live?”
| Your situation | What a company abroad does |
|---|---|
| You stay in Germany and run the company yourself | Little to nothing for tax. Often worse: two sets of accounts, German tax anyway |
| You stay in Germany, the company has real local management and staff | Can work, like any genuine foreign subsidiary. Passive income still faces CFC rules |
| You move abroad and run the company from your new home | The classic setup. Company and residency in the same country, taxed there |
| You move abroad, company in a third country | Possible, but management and CFC rules of your new country apply. Keep it simple |
If moving is on the table, read moving abroad: what happens to your taxes alongside this one. The company plan and the residency plan are one plan.
Where: the shortlist with real running costs#
Headline rates are only half the story. A 5% country with €7,000 of annual overhead can cost more than a 15% country with €2,000. Here are the countries we cover, with the numbers from our country guides (as of September 2026):
| Country | Corporate tax | Setup time | Yearly running cost | Best for |
|---|---|---|---|---|
| Estonia | 0% retained, 22% on distribution | 1–2 working days online | ≈ €1,500–2,500 | Founders who reinvest; fully digital |
| Dubai (UAE) | 0% up to AED 375,000, 9% above; 0% on qualifying free zone income | ≈ 1 week, visa 2–4 weeks more | ≈ €6,000 | Founders who move; no personal income tax |
| Cyprus | 15% (since 2026) | 1–2 weeks | ≈ €5,000 (audit mandatory) | Non-dom residents paying out profits |
| Malta | 35%, ≈5% after the 6/7 refund, or a final 15% (FITWI) | 1–2 weeks | ≈ €7,000 (audit mandatory) | Larger profits, EU and English |
| Romania | 1% of turnover up to €100,000 (micro), else 16% | 1–2 weeks | ≈ €1,500–3,000 | Lean EU businesses with an employee |
| Bulgaria | 10%, plus 5% on dividends | About 1 week | ≈ €2,000 | Cheapest EU running costs |
| Hungary | 9%, plus up to 2% local business tax | 1–5 working days | ≈ €2,500–4,000 | Lowest EU headline rate |
| United Kingdom | 19–25% | 1 day | ≈ £1,500–2,500 | Credibility, English law, fast setup |
| Delaware (US LLC) | Transparent: taxed where you live | 1–3 days, plus EIN | ≈ $1,000–1,500 | Online businesses with US clients |
| Georgia | 0% retained, 15% on distribution | 1–2 days | ≈ €2,000 | Low costs outside the EU |
| Singapore | 17%, ≈8% on €100,000 after exemptions | 1–2 days | ≈ €5,000 (incl. local director) | Asia business |
| Switzerland | ≈ 11.85% in Zug, up to ≈ 20.5% | 1–3 weeks | ≈ €4,000–6,000 | Stability, Swiss franc |
Two things this table can’t show. First, personal tax on the way out: dividends are taxed again where you live, unless your new home spares them (UAE: 0%, Cyprus non-dom: 0% plus 2.65% health contribution). Second, reputation: Bulgaria is on the FATF grey list at the time of writing, which means extra bank questions. Our Nerdy Index scores every country on tax, costs, reputation and residency access – here’s how we score.
What it really costs#
One-off setup costs#
- Formation. Registry fees plus the corporate service provider’s fee. Budget low four figures in most countries; Estonia is cheaper (the e-Residency card costs €150), Dubai more once a licence and a residence visa are included.
- Documents. Notarised and apostilled passport copies, proof of address, sometimes a business plan and proof of source of funds.
- Bank onboarding. Often free, sometimes a fee from the provider who prepares the file. The real cost is time: weeks in Cyprus, Malta and the UAE.
- Your home-country advisor. Checking exit tax, CFC and place of management before you start. Often the best-spent money in the whole project.
Yearly running costs#
- Accounting and tax returns – everywhere, in the local language and format.
- Audit – mandatory for every company in Cyprus and Malta, above thresholds elsewhere.
- Registered office, company secretary, licence renewal – the UAE licence renews every year, as does Delaware’s $400 annual LLC tax.
- Substance – an office or desk, maybe a local director, travel. This is the line people forget and tax offices check.
Worked example: €100,000 profit, paid out#
Anna runs a one-person consulting business with €100,000 profit and takes it all out. Rough numbers, ignoring social security and personal allowances:
| Setup | Company tax | Tax on the payout | Total |
|---|---|---|---|
| German GmbH, Anna lives in Germany | ≈ €30,000 (corporate + trade tax) | ≈ €18,500 (26.375% flat tax) | ≈ €48,500 |
| Cyprus company, Anna is a non-dom resident in Cyprus | €15,000 | ≈ €2,250 (2.65% health contribution) | ≈ €17,250 |
| UAE free zone company, Anna lives in Dubai | ≈ €1,100 (9% above ≈ €88,000) | €0 | ≈ €1,100 |
| Estonian OÜ, Anna lives in Estonia | €22,000 on distribution | €0 (taxed at company level) | €22,000 |
Now add running costs (€2,000–7,000) and the cost of living in each place. The difference to Germany is still large – but every line above assumes Anna really moved. Keep the company and stay in Cologne, and the first row applies to all four. Run your own numbers in the tax calculator.
How: setting it up step by step#
Setting up a company abroad
Decide your residency first
Where will you live and pay personal tax? That decides where the company can be managed. If you’re leaving Germany, start with leaving Germany.
Check your home-country rules
Exit tax on existing shares (German exit tax), CFC rules, place of management and – if you have one – what happens to your current GmbH.
Shortlist two or three countries
Use the Nerdy Index ranking, the country comparison and the Finder. Compare total cost, not headline rates.
Pick the legal form and a licensed provider
Ltd, OÜ, free zone LLC, US LLC. A good provider tells you what you can’t do, not only what you can.
Pass KYC
Apostilled passport, proof of address, CV, business description and source of funds. Expect detailed questions. That’s a good sign.
Incorporate and register for tax
Articles, registered office, directors, tax and VAT registration where needed. Setup takes one day (Estonia, UK) to a few weeks (Malta, Switzerland).
Open the bank account
Local bank, EU fintech or both. Plan it before incorporation – see banking abroad.
Build substance and a compliance calendar
Office, board minutes, bookkeeping, annual filings and your residency evidence. Put every deadline in one calendar.
The traps that make a company abroad expensive#
Red flags we see all the time
The kitchen-table director.
You live in Germany and make every decision from home. The company is German-managed, whatever the certificate says.
The nominee who never decides.
A local director who signs whatever you e-mail is evidence against you, not for you.
Passive income in a low-tax box.
Interest, licences or related-party fees parked abroad while you live in Germany: CFC rules add them back.
Secrecy as a selling point.
Beneficial owners are registered and bank data is exchanged under CRS. A provider selling anonymity is selling a problem.
A listed jurisdiction.
EU or FATF lists mean frozen payments and defensive tax measures. See blacklists and grey lists.
No plan for the old GmbH.
Moving abroad with 1% or more in a company can trigger exit tax – before the new company earns a cent.
Checklist before you sign anything#
Company abroad: ready to incorporate?
Tick them off – your progress is saved in this browser only.
You know where you’ll live and can show it (home, days, ties).
Exit tax, extended tax liability and your existing company reviewed by an advisor at home.
Decisions will really be taken in the company’s country – by you living there or a genuine local director.
Setup, yearly running costs, substance and personal tax on payouts, compared with staying put.
You know which bank or fintech will open the account and what they need.
Annual return, accounts, audit, licence renewal, VAT and your residency certificate.
Where Nerdy.Money fits#
We’re not a law firm or tax advisor, and we don’t sell letterboxes. Where legally possible, you contract with our company: one fixed quote, a licensed partner in the country does the work, we check it and only then pay the partner. Otherwise you contract the partner directly and we coordinate. Either way, the plan comes first: in a strategy session we map residency, company and exit together, and the fee is credited if you go ahead.
FAQ#
Can I run a foreign company while living in Germany?
Legally yes, but it rarely saves tax. If you manage it from Germany, it’s taxed in Germany like a GmbH, and low-taxed passive income is added to yours under CFC rules. It works only with real management abroad – see place of management.
What is the cheapest country to set up a company?
On running costs, a US LLC (about $1,000–1,500 a year), Estonia (about €1,500–2,500) and Bulgaria (about €2,000) are at the low end. The cheapest company is the one that fits where you live, because a mismatch costs far more than any fee.
How much does a company in Dubai cost?
Plan on about €6,000 a year for a free zone licence, one residence visa, accounting and tax filings, plus setup fees. Corporate tax is 0% up to AED 375,000 profit and 9% above; qualifying free zone income can be 0%. Details on the Dubai page.
Do I have to live in the country of my company?
Not by law, but for tax purposes the company needs real management there. For owner-managed businesses, the most reliable way to have that is to live there yourself.
Is setting up a company abroad legal?
Yes. Choosing a low-tax country and moving there is tax avoidance, which is legal. Hiding income, fake management or undeclared accounts is evasion, which is not. Everything on this site is about the first.
Can I move my German GmbH abroad?
A cross-border move of the registered seat is possible within the EU, but it can trigger German taxation of hidden reserves, and moving yourself can trigger exit tax on your shares. Often the cleaner route is a new company abroad and winding down or selling the old one. Get this planned before you move – see German exit tax.
Not sure where to start? Take the Jurisdiction Finder, then get the plan checked in a strategy session. This guide is general information, not tax or legal advice.
Sources#
- §10 AO – place of management (Germany)
- §12 AO – permanent establishment (Germany)
- Foreign Tax Act (AStG) – CFC rules §§7–14, exit tax §6
- OECD Model Tax Convention on Income and on Capital (2017)
- Estonia – e-Residency
- Estonian Tax and Customs Board
- UAE Ministry of Finance – corporate tax
- Cyprus Department of Registrar of Companies
- Cyprus Tax Department
- Malta Commissioner for Revenue
- UK Companies House
- IRS – Form 5472
- EU list of non-cooperative jurisdictions for tax purposes
- FATF – black and grey lists
