60 Day Cyprus Tax Resident Valid For Tax Treaty Benefits?

[5K1PP3R]

And, if you carefully read Cyprus non-dom 60 days tax residency it says basically that you are considered tax resident unless you are considered tax resident somewhere else.

Interesting, I wasn't aware of the implications actually. Indeed:

The '60-day rule' for Cyprus tax residency is satisfied for individuals who, cumulatively, in the relevant tax year:

• do not reside in any other single state for a period exceeding 183 days in aggregate
• are not considered tax resident by any other state
• reside in Cyprus for at least 60 days, and
• have other defined Cyprus ties.

From PWC



So it is sufficient for other country to consider you tax resident for Cyprus to step back. But how would it work practically? Do I need to challenge the claim myself and bring Cyprus tax authorities a court ruling?

Regarding Georgia, it doesn't give you tax residency obviously but it's the same hack as Dubai, gives you undeclared income that your home country doesn't see because a Georgian bank considers you a local

 

[Marzio]

Do I need to challenge the claim myself and bring Cyprus tax authorities a court ruling?

If you stay 60 days there's nothing to challenge, you are not considerd Cyprus tax resident for that year.

if you stay 183+ days then you can access the double tax treaty (if there's one) between your home country and Cyprus (but honestly don't know how that would work, i was never involved in such thing)

Regarding Georgia, it doesn't give you tax residency obviously but it's the same hack as Dubai, gives you undeclared income that your home country doesn't see because a Georgian bank considers you a local

Georgia is tricky because, according to PWC, if you stay 183 days you are considered tax resident BUT even in this case your home country could screw you.

To find out if that's the case you have to check the double tax treaty between Georgia and your home country.

Take a look for example at the DTT between France and Georgia.

Take a look a the last 2 lines of text.

"This term, however does not include any person who is liable to tax in that State in respect only of income from sources in that Stat"

This means that even if you spent 183+ days in Georgia but you are paying taxes ONLY on local sourced income you are not considered tax resident.

To be extra safe a person should establish his tax residency in a country that has a DTT with his home country and doesn't contain that line.

 

[5K1PP3R]

If you stay 60 days there's nothing to challenge, you are not considerd Cyprus tax resident for that year.

Wait a minute. What is the point of '60-day rule' for Cyprus tax residency then?

 

[Marzio]

Wait a minute. What is the point of '60-day rule' for Cyprus tax residency then?

To give you quick tax residency if you don't have any ties with your country and don't spend 183+ days in any other country.

It's a compelling proposition in a world where you usually have to spend 183+ days to be considered tax resident.

If you are sure that your home country will not come after you because you don't have any house, wife, kids, company, bank account, cars and so on, you are free to claim you are tax resident in Georgia and stay only 1 days a year since your home country doesn't care and you don't have to stay a enough days to access a tax residency certificate.

Tax residency certificate is only used in case somebody will claim you are resident somewhere else but if nobody will ever claim that then there's no point in staying 183+ days in a place to procude a tax residency certificate that nobody will ever ask.

It all depends on which ties you have with your home country.

 

[5K1PP3R]

I see. I asked ChatGPT about France as an example:

so suppose my family doesn't live in France, I don't spend time or live there, (suppose I travel all the time), no professional activity in France, no business or investments. Suppose in 2022 I lived 60 days in Cyprus and complied with all the conditions. Can France challenge and claim that I am tax resident in France?

Based on the information you provided and as of my knowledge cutoff in September 2021, if you don't meet any of the French criteria for tax residency, France would generally not have a basis to consider you a tax resident.
However, the application of tax laws can be complex, and there may be additional considerations or circumstances that could affect your tax residency status. For instance, the French tax authorities might look into the nature and duration of your absence from the country, your intentions about returning, and other factors.
There are also reporting requirements when you change your residence from France to another country. The French tax authorities should be informed of the change in your tax residence, and there might be exit tax implications if you held certain assets in France.

In my case (Russia), people don't deregister as tax residents, especially now, but that's an interesting point that for EU you need to notify your country that you change tax residency

 

[Don]

Wait a minute. What is the point of '60-day rule' for Cyprus tax residency then?

To give you quick tax residency if you don't have any ties with your country and don't spend 183+ days in any other country.

It's a compelling proposition in a world where you usually have to spend 183+ days to be considered tax resident.

If you are sure that your home country will not come after you because you don't have any house, wife, kids, company, bank account, cars and so on, you are free to claim you are tax resident in Georgia and stay only 1 days a year since your home country doesn't care and you don't have to stay a enough days to access a tax residency certificate.

Tax residency certificate is only used in case somebody will claim you are resident somewhere else but if nobody will ever claim that then there's no point in staying 183+ days in a place to procude a tax residency certificate that nobody will ever ask.

It all depends on which ties you have with your home country.

The purpose is to attract individuals who are not tax residents in any other country for any tax year but want to have a tax residency somewhere. It can be tricky for some people who are mobile. Cyprus is not the worst place on earth to have tax residency and company, and 60 days/year gives you decent flexibility.

 

[JohnJ81]

Cyprus will give you a tax residence certificate for staying there 60 days. Are you saying it cannot be used for the tax treaty benefits? My home country has a tax treaty with Cyprus but if you have the 60 day tax certificate are you saying it would not allow me to benefit? in my case, using the tax treaty the witholding tax is 0% when using the treaty with Cyprus.

 

[Marzio]

If you are considered tax resident by another state you are not considered Cyprus tax resident.

No further explanation is needed.

 

[JohnJ81]

If you stay 60 days there's nothing to challenge, you are not considerd Cyprus tax resident for that year.

if you stay 183+ days then you can access the double tax treaty (if there's one) between your home country and Cyprus

Can you explain what this means? If my home country dont challenge it and I only stay 60 days then I am a Cyprus tax resident for that year? is that correct?

 

[Marzio]

If my home country dont challenge it and I only stay 60 days then I am a Cyprus tax resident for that year? is that correct?

Yes, but if your home country doesn't challenge your tax residency what's the point of taking Cyprus residency?

There could be better options depending which is your home country.

 

[5K1PP3R]

Yes, but if your home country doesn't challenge your tax residency what's the point of taking Cyprus residency?

Declared income. In my case especially banks can ask the source of funds which is my company dividends but additionally can ask for tax declaration. So far I didn't have that experience but this may happen. Banks don't work with self proclaimed tax nomads afaik.

 

[Don]

if you stay 183+ days then you can access the double tax treaty (if there's one) between your home country and Cyprus

You have to check the exact treaty. Not every DTT has 183 day test.

 

[Marzio]

Declared income. In my case especially banks can ask the source of funds which is my company dividends but additionally can ask for tax declaration. So far I didn't have that experience but this may happen. Banks don't work with self proclaimed tax nomads afaik.

Don't taking Cyprus tax residency doesn't mean being nomad, simply means being resident somehere else.

It all depends on DTT between his home country and the future residency country.

 

[Konstanz]

I heard from my lawyer that if you get TRC certificate under this 60 day rule, this certificate mentioned that it's not valid for double tax treaty.
So, it can be problematic to some people.

You have to stay more than 180 days to get normal TRC

But I cannot confirm that 100%

 

[Mr Gus]

Oh yes, they can.

Not being present 183 days is only part of the equation.

For example in some countryes having at your disposal an apartment could be enough to be considered tax resident (Portugal anyone?) or at least "claiming" you are tax resident.

Or claiming family ties.

And, if you carefully read Cyprus non-dom 60 days tax residency it says basically that you are considered tax resident unless you are considered tax resident somewhere else.

If you are, they will terminate your tax residency and you are automatically considerd tax resident in your home country because non-dom 60 days tax residency doesn't allow you to access double tax treaty.



For the same reason i explained above.

To be considered tax resident in Georgia you need to spend 183+ days in case your country will claim you are tax resident.

That's why i initially suggested PT because, in theory, having an apartment at hand is enough to be considered tax resident but his passport stamps prove otherwise.

How about the HNWI program in Georgia? Do you still have to be present 183+ days?

 

[Don]

Both of these (CY 60day and GE hnwi) are certificates issued based on domestic law and they will be disregarded for the purposes of double tax treaties, which have their own tests for determining tax residency.
As noted with 60 days rule in Cyprus you would lose tax residency of you are tax resident somewhere else - the fact that the cyprus service providers often fail to mention.
Valid tax certificates for treaty purposes are always issued based on the tax treaty and this will be clearly mentioned on the TRC.

 

[JohnJ81]

https://www.taliadorosaudit.com/images/taliadoros-publications/newletter/2018/ax-Residency-Certificates-under-the-60-days-rule.pdf

here is an example and doesn't mention anything about the tax treaty not being valid

 

[Marzio]

here is an example and doesn't mention anything about the tax treaty not being valid

Really?

Both of these (CY 60day and GE hnwi) are certificates issued based on domestic law and they will be disregarded for the purposes of double tax treaties, which have their own tests for determining tax residency.

This.

As noted with 60 days rule in Cyprus you would lose tax residency of you are tax resident somewhere else - the fact that the cyprus service providers often fail to mention.

I do understand why they do that and i think in this forum we are doing a great divulgation job.

 

[Don]

Really?



This.



I do understand why they do that and i think in this forum we are doing a great divulgation job.

To further expand on this:

A double tax treaty (DTT) is an agreement between two countries intended to relieve taxpayers from being taxed twice for the same income. These treaties not only protect against double taxation but also aim to prevent tax evasion and determine the taxation rights between two countries.

The mechanism of DTT is based on international law, which supersedes domestic law to some extent. This occurs in accordance with the legal principle known as "lex posterior derogat legi priori" or "the later law repeals the earlier one". In other words, if there is a conflict between a national law and an international treaty that a country has signed and ratified, the provisions of the treaty prevail.

Thus, even if under domestic law an individual could be considered a tax resident in two countries, the DTT would provide a mechanism to determine the individual's tax residency for the purposes of the treaty, superseding the domestic law.

 

[JohnJ81]

To receive my full dividend, I need a tax resident certificate from the foreign country. The Cyprus tax office also need to stamp my dividend form and then I need to present both to my home country tax authorities. They will have freedom of information within the EU to fully check my presence in Cyprus and will clearly know I am only in Cyprus 60 days.

I will be in my birth country for maybe 5 days only in the full year. I do not have a vacant property available to me there and I have no family there. I also do not receive a salary. I own properties there that are all fully rented.

I am pretty confident, that my home country will not say I am a tax resident there.

However they will see the 60 day on the tax certificate so it will be clear to them I am only in Cyprus 60/70 days per year yet still benefitting from the Tax Treaty. Cyrus consider me a tax resident but is my home country going to get pissed off and challenge it? The witholding tax will amount to about €500,000 each year so it is not huge but it is not tiny either. So will they be happy with the 60 day tax cert? I am depending on the tax treaty with this structure as the tax treaty allows the dividend 0% witholding tax.

So to be clear...

I will be in Cyprus for 60 days and claiming my tax residence is in Cyprus
I will not be 183 days in any country
My home country ties are very limited or none at all
No other country outside my home country will try to claim tax residence
I am using the 60 day Tax Cert to avail of the treaty dividend exemption.