You earn a good living as a freelance IT consultant: are you based in the right country?
- 2 days ago
- 11 min read
Summary
Introduction
An independent IT consultant who bills €120,000, €180,000, or €250,000 per year rarely works from a single location. Assignments come in via platforms, through the network, sometimes from European IT services companies, and the bulk of the work is done behind a screen. Yet, the legal and tax structure most often remains the one chosen on the first day of business , when revenue was still in the five figures.
The question isn't which country has the lowest taxes. It's whether your current country of residence still reflects the reality of your business , the distribution of your clients, your actual mobility, and your financial planning. A cloud consultant working for three major French clients from Lisbon is not in the same situation as a data architect whose clients are spread across London, Berlin, and Dubai.
This article addresses the question directly and attempts to answer it using verifiable criteria rather than a ranking of rates. We detail the rules of affiliation, the thresholds at which arbitrage becomes truly significant, and the jurisdictions most frequently studied by technical experts. We recently published an analysis of the timeline for transferring tax residence , which usefully complements this article.
Coreway Consulting supports independent professionals and executives across ten jurisdictions. The following information is based on publicly available regulations and the specific challenges faced by high-income consultants, without any promise of guaranteed returns or shortcuts . A personalized assessment remains essential before making any decisions.
Why is this question being asked today by IT consultants?
The IT consulting profession has changed fundamentally in the last decade. Development, cloud, cybersecurity, and data engineering services are now delivered entirely remotely , with teams spread across multiple time zones. The location where value is generated has become difficult to pinpoint physically, unlike the situation for a craftsman or a shopkeeper.
This shift to digital has a direct tax impact. Unlike a business tied to a physical location, IT consulting can be carried out from almost anywhere without any loss of quality or clientele. The country of residence then becomes a truly arbitrable factor , which is not the case for most freelancers.
A gradual approach that bites late but strongly
In France, a consultant operating as a company is subject to corporate income tax and then, upon withdrawal, to dividend taxation. Operating as a sole proprietor or under the micro-enterprise scheme, they are subject to the progressive income tax scale, plus social security contributions and, above certain income thresholds, the exceptional tax on high incomes . The cumulative effect is particularly noticeable for profits exceeding €100,000.
This structure explains why the question of establishing a presence almost never arises at €40,000 in revenue and becomes a recurring issue at €150,000. This isn't a passing fad; it's simply a matter of tiered growth . The consultants who consult us have generally crossed this threshold two or three years prior.
The second trigger is related to assets. A self-employed individual who accumulates cash within their business, invests in real estate, or holds valuable shares eventually begins to consider long-term considerations, particularly when contemplating a transfer of tax residence to a jurisdiction like Panama . Annual taxation is then no longer the sole issue.
What "good country" really means in tax terms
The expression "being settled in the right country" only makes sense if we define what determines your tax residency. Under French law, tax residency is not a matter of choice: it is determined based on four alternative criteria. Meeting just one of these criteria is sufficient to remain taxable in France on all your worldwide income.
The four French criteria for attachment
The first criterion is the home, that is, the place where the taxpayer and their immediate family usually live. The second is the principal residence, assessed using the 183-day rule for the calendar year. The third is the place where the principal professional activity is carried out, and the fourth is the center of economic interests.
For an IT consultant, the third and fourth criteria are the most delicate. If 90% of your income comes from French clients, the tax authorities can argue that your center of economic interests remains in France , even if you spend ten months a year elsewhere. This is the main source of disputes concerning these profiles.
The bilateral tax treaty then comes into play to resolve cases of dual residency. It applies a series of successive tests: permanent home, center of vital interests, habitual residence, and finally, nationality. A consultant who maintains an apartment in France and a family there generally loses on the first test .
What mobility alone cannot prove
Many freelancers believe that a nomadic lifestyle is enough to exempt them from French tax jurisdiction. In practice, the absence of an established tax residence elsewhere often leads the tax authorities to maintain the original tax residency status , unless proven otherwise. The tax residency certificate issued by the host country is therefore a crucial document.
The right country is therefore first and foremost one where you can demonstrate a real presence, stable housing, and a business effectively managed on-site. A country with a zero tax rate but impossible to document is, from a risk perspective, a bad country .
At what income level does arbitrage become significant?
There is no legal threshold, but there is a threshold of economic rationality. Below €80,000 in annual profit, the fixed costs of a foreign structure, local accounting, travel, and legal support absorb most of the theoretical gain . The operation then becomes primarily a life project, not a tax-driven strategy.
Between €100,000 and €150,000 in profit, the equation approaches the break-even point. This is the range where the decision-making process depends heavily on family circumstances, the clients' geographical distribution, and their actual desire to relocate. Above €150,000, the annual difference becomes structurally significant and warrants a comprehensive analysis.
The heritage threshold, often forgotten
A second, less well-known threshold concerns the value of shareholdings. When company shares exceed €800,000 or represent more than 50% of the company's profits, the exit tax applies upon departure . Many consultants who have invested capital in their firms discover this threshold too late.
This point completely changes the optimal timeline for a project. Leaving before having valued one's structure and leaving after do not produce the same consequences, which explains why the study of a transfer of tax residence to Portugal or another European jurisdiction always begins with a precise asset inventory.
Five jurisdictions, five different logics
IT consultants almost always ask us about the same destinations. They don't differ in their tax rates but in the tax logic that governs them , and this logic determines their compatibility with your profile.
Territoriality, non-dom regime and nominal rate
Dubai and the UAE apply a 9% corporate tax on profits exceeding a certain threshold, with no personal income tax on business earnings. This model is suitable for truly mobile consultants who can be physically present in the country and whose clients accept invoicing from outside the European Union.
Cyprus combines a 12.5% corporate tax rate with a non-domiciled status that exempts dividends from defense contributions for seventeen years. Cyprus remains a member of the European Union, which greatly simplifies intra-community invoicing . Malta operates on a tax refund mechanism that reduces the effective tax burden well below the nominal rate of 35%.
Mauritius has a 15% corporate tax rate with reduced sectoral tax regimes and a tax treaty with France. Portugal, after the end of its historical non-habitual resident regime, maintains a system targeted at certain qualified activities, including several technology-related professions . Each system has distinct entry requirements.
The decisive criterion is not the rate
For an IT consultant, three factors often carry more weight than the advertised rate. The first is the ease of billing to existing clients, the second is the reality of physical presence requirements, and the third is the quality of the tax treaty with France in case of an audit.
Less publicized jurisdictions also deserve consideration, depending on individual circumstances. Investigating a tax residency transfer to the Bahamas is driven by wealth management considerations, while a plan to establish a presence on the continent is more likely to focus on Europe. The choice should be based on your specific situation, never on a track record.
Retaining French customers from abroad
This is the most frequent and most poorly handled question. In principle, nothing prevents a foreign company from billing French clients for IT services. The difficulties arise when the activity continues to be carried out from France , which constitutes an undeclared permanent establishment.
VAT follows its own logic. Between businesses, services subject to the standard VAT regime are generally taxable in the recipient's country, with reverse charge applied by the French client. From a jurisdiction outside the European Union, invoicing is usually done outside the scope of VAT, which requires prior verification of each client's status .
Platforms add a practical constraint. Freelance marketplaces impose eligibility rules related to the country of residence, payment methods, and sometimes the location of the bank account. A consultant who derives the majority of their income from a platform should check these conditions before relocating , not after.
Finally, some large French companies contractually restrict the use of service providers established outside the European Union, for reasons of compliance, data protection, or purchasing policy. This commercial constraint is often more limiting than tax constraints .
The economic substance, the real filter
Economic substance refers to the tangible reality of the business activity in the host country. It is assessed through concrete elements: an office, human resources, decisions made locally, and local expenditures. A structure lacking substance is the primary reason for reclassification during an audit.
French law provides several tools for this purpose. Article 209 B addresses the profits of foreign structures subject to preferential tax treatment and controlled by a French resident. Furthermore, the abuse of law procedure allows for the disregard of arrangements whose primary purpose is tax avoidance , with significant penalties.
This constitutes credible substance for a consultant
For an IT consulting business, substance does not require industrial premises. It requires an identifiable workplace, a regular physical presence, locally signed contracts, and traceability of management decisions . Connection logs, airline tickets, and local invoices constitute a body of evidence.
The automatic exchange of information makes this consistency essential. CRS and FATCA regulations facilitate the sharing of bank account data between government agencies, which also applies to a proposed transfer of tax residence to Andorra or any other cooperative jurisdiction. Opacity is no longer a viable option.
Exit tax and exit costs to anticipate
Relocating one's residence outside of France triggers the deferred taxation of capital gains on securities when certain thresholds are met. A deferral of payment automatically applies to departures to the European Union and to countries bound by an appropriate assistance agreement; elsewhere, it may be subject to the provision of guarantees .
An IT consultant who has accumulated cash and reserves in their company must therefore consider the full cost. This calculation includes any exit tax, the treatment of exit dividends, social security contributions for the transition year, and the recurring costs of the new structure . The net gain often appears later than anticipated.
Other points of contention exist: the taxation of real estate held in France, the fate of savings plans, social security coverage, and retirement. A sound plan addresses these issues proactively rather than in the last week of December. This is precisely the purpose of a preliminary, customized study .
Self-diagnostic checklist: Are you in the right place?
A few simple questions can help determine your position without requiring a full analysis. If you answer "no" to most of them, your current location is probably the result of inertia rather than a conscious choice.
Does your annual revenue consistently exceed €100,000? Are your clients spread across several countries, or concentrated in a single market? Do you already spend a significant portion of the year outside of France, and is this mobility documented with supporting evidence?
Does your family situation allow for a genuine relocation, including schooling and accommodation in your new location? Do your investments exceed the thresholds that trigger exit tax? Finally, do your clients or platforms accept invoicing from a foreign entity without contractual friction?
A credible project is recognized by the consistency of its responses, not by the attractiveness of a rate. Depending on the individual's profile, the approach may range from a European tax treaty jurisdiction to a transfer of tax residence to Georgia for highly mobile individuals with middle incomes. The right solution depends entirely on your specific circumstances.
Comparative table of the five jurisdictions
Jurisdiction | Corporate tax | Tax logic | Suitable IT consultant profile |
Dubai / UAE | 9% above the threshold | No income tax on activity | Real mobility, non-EU customers |
Cyprus | 12.5% | Non-domestic status, 17 years old | European customers, EU base |
Malta | 35% nominal, refund | Imputation mechanism | sustainable societal structure |
MAURITIUS | 15% | Sectoral reduced schemes | Activity in Africa and the Indian Ocean |
Portugal | 21% continental | targeted scheme for skilled professions | Proximity to the EU, local living |
The rates shown are official public rates and do not constitute a recommendation. Their application depends on specific eligibility conditions and changes regularly according to local finance laws.
Anonymized feedback
A 41-year-old cloud architecture consultant billed approximately €190,000 per year through a simplified joint-stock company (SASU), with four clients, including three major French accounts. He was considering Dubai based on an online rate comparison and believed he could maintain his entire portfolio as is.
The analysis revealed two obstacles. Two of his clients contractually prohibited the use of a service provider established outside the European Union, and his wife was employed in France, which undermined the household criterion as defined by the agreement. The initial project was therefore difficult to maintain.
The chosen scenario was different: a European expansion, a timeline spread over eighteen months, and a gradual renegotiation of the client portfolio. The tax benefit is less than initially expected , but the structure withstands scrutiny. This case is anonymized and does not prejudge any individual situation.
Frequently Asked Questions
Can I remain on freelance platforms while living abroad?
This depends on the terms and conditions of each platform, which govern the country of establishment, invoicing, and sometimes bank account details. This verification must be carried out before committing to the project , as it could jeopardize it.
Do we really need to spend 183 days in the new country?
The 183-day threshold is one criterion among others under French law, and each host jurisdiction sets its own residency requirements. In practice, a significant and documentable presence remains the best protection in the event of an inspection.
Is a foreign company sufficient if I continue to live in France?
No. A foreign structure managed from France generally constitutes a permanent establishment or falls under the regime of article 209 B. This scheme exposes one to a tax adjustment and penalties for abuse of law .
How long does a relocation project take?
A complete project typically spans six to eighteen months, depending on the asset structure, family situation, and tax calendar. Hasty departures at the end of the calendar year generate the majority of subsequent difficulties .
What is the cost of Coreway Consulting support?
Each situation requires a different scope depending on the number of jurisdictions involved and the complexity of the assets. A personalized study, available upon request, allows us to define this scope before any commitment is made.
Can I return to France after a few years?
Yes, a return is possible and is even anticipated in several mechanisms, notably the exemption from exit tax after a certain period. However, this scenario must be integrated from the project's inception .
You earn a good living as an independent IT consultant and you're wondering if your current country of residence is still the right one. You can request a personalized study from Coreway Consulting to compare your current situation with the requirements of the ten jurisdictions they support.
