LebGeeks

mzaouar

Member

Freelancing, Engineering and taxes

Hi all,

- I had been living and working in France for the past 5+ years.
- I moved back to Lebanon in 2020 and set up a company in Estonia (via e-residency) to bill clients in Europe.
- I'm an engineer (going through registration in أشغال and نقابة).
- I want to pay taxes in Lebanon (yes), but also need to pay taxes in Lebanon (Estonia/France might ask me for proof that I'm paying my taxes in Lebanon).

It seems that I'm currently stuck, because:

- I don't have a tax identification number yet, and it seems that I can't get one until I finish the نقابة registration? (which is weird.. what if I were a freelancer with no degree?)
- How will I be able to pay my taxes in 2020 if I finish my نقابة registration in 2021? (with the gov shutdown it will probably spill over to 2021)
- Can I pay myself a salary now, or not yet?

I'm new to the Lebanese work/tax game, so any information is highly appreciated!

zizo99

Member

Re: Freelancing, Engineering and taxes

first of all what kind of freelance engineering are you working?

I'm a licensed architect registered in the order "nakaba" since 2013. and I pay my taxes every January ONLY for the permits I sign on.
I work as a freelance part-time (interior designs, 3D renders, etc.) but I don't pay any taxes for my freelance work

Last edited by zizo99 (November 11 2020)

mzaouar

Member

Re: Freelancing, Engineering and taxes

I'm a software engineer.
Interesting point regarding permits.. In any other country, you'd definitely need to pay taxes on all income you make.

zizo99

Member

Re: Freelancing, Engineering and taxes

I'm a software engineer.
Interesting point regarding permits.. In any other country, you'd definitely need to pay taxes on all income you make.

In Lebanon, the freelancing work is hard to be tracked for the ministry of finance (but it can be doable) since there are no official registered records or contracts between you and the client.
Tho I know a friend they charge him additional taxes with penalties by tracking his Instagram posts they knew he works as an interior design. so he was forced to register all contracts in the ministry of finance. (he posted so many of his work with all the detailed information)

As for the permits, it's easy to track since all permits go through the "orders of engineers" this can't be avoided.

Note: working as a freelance for outside the country is tax-free.

mzaouar

Member

Re: Freelancing, Engineering and taxes

For your last point, is it mentioned somewhere?
(I can almost assure you that it is taxable income).

xerxes

Member

Re: Freelancing, Engineering and taxes

I can answer all your questions on this matter, but let me understand the situation well

Why are you so eager to pay taxes? are you going to bill your customers in EU using the entity in Lebanon?

do you want to be registered as an engineer (Sole proprietorship) or are you planing to choose a different legal entity?

mzaouar

Member

Re: Freelancing, Engineering and taxes

I moved (alongside with my fiscal residency) from France to Lebanon, and started a company in Estonia (all my clients are in the EU).

> Why are you so eager to pay taxes? are you going to bill your customers in EU using the entity in Lebanon?

I'm billing my EU clients using the entity in Estonia. However, the Estonian authorities could ask you for proof that you paid your taxes (the salary I give to myself) in Lebanon.

My EU clients insist that they do business with an EU-based entity, which is why I based the company in Estonia.

> do you want to be registered as an engineer (Sole proprietorship) or are you planing to choose a different legal entity?

- I'd like to be in the clear in the eyes of all authorities: France (but that shouldn't matter much in this equation), Estonia and Lebanon.
- I'd like to pay taxes where they're due, but not be gouged.

I'm working physically from Lebanon FWIW.

xerxes

Member

Re: Freelancing, Engineering and taxes

Let's first talk about double taxation, Lebanon in the past years has signed many treaties with countries to avoid double taxation on the SAME INCOME.
that depends mainly on your tax residency (Criteria differs from country to country).

Anyway, if you were to register as an engineer at the MOF you won't be able to assign a salary to yourself. A Sole proprietorship is a pass through entity, Income generated by this entity will be passed on to yourself and will be taxed accordingly (Income tax and not salaries tax).

Note that income made in Estonia is also taxable in Lebanon since you are a resident of Lebanon (for tax purposes) as defined by the income tax legislation.  I am unaware if there is any treaty between Lebanon and Estonia regarding double taxation.

mzaouar

Member

Re: Freelancing, Engineering and taxes

I'm not worried about double taxation, just worried that Estonia will look and see that I'm not paying my personal taxes but I should be, and shut down my company because I'm using it as a vehicle to commit fraud/tax evasion.

I want to register as an engineer at the MOF, but I need to pass through the ministry of public works, and then via the order of engineers.. Since I started the procedure in October, it seems that I won't be able to register before 2021 (things are taking forever at the ministry).

As you said, it means that the passthrough entity currently doesn't exist. But, would I be able to pay myself $ this year, and once the sole proprietorship in Lebanon is established, retroactively pay taxes for this year in 2021?

xerxes

Member

Re: Freelancing, Engineering and taxes

I'm not worried about double taxation, just worried that Estonia will look and see that I'm not paying my personal taxes but I should be, and shut down my company because I'm using it as a vehicle to commit fraud/tax evasion.

I want to register as an engineer at the MOF, but I need to pass through the ministry of public works, and then via the order of engineers.. Since I started the procedure in October, it seems that I won't be able to register before 2021 (things are taking forever at the ministry).

As you said, it means that the passthrough entity currently doesn't exist. But, would I be able to pay myself $ this year, and once the sole proprietorship in Lebanon is established, retroactively pay taxes for this year in 2021?

by the book, you are required to pay any taxes on income you make. The issue is, is it legal to provide services to clients without a License from the order of engineers?

if you want you can contact me privately to discuss the case in details