Clarification of Cyprus Non-Dom for crypto

[blancmon229]

I know it has been discussed a lot in the forum but can someone clarify the following:

For a Cyprus non-dom, crypto taxation is vague. As some say crypto-crypto transactions are not taxable under the non-dom but we really don't know. Under the non-dom however there is a 100% Exemption for Salaried Services Outside of Cyprus. If one was to set up a company in a nil to low-tax jursidiction (ie: Bulgaria,UAE, etc...), that company would trade the crypto , then you would pay yourself a salary or dividends, this hypothetically would not be taxable in cyprus so long as the crypto trading was not done while physically in Cyprus.

Is the problem in Cyprus only trading crypto on your personal name? With the plethora of benefits of the non-dom there must be a way around it. Or at least other structures. Please advise.

 

[CyprusLaw]

I know it has been discussed a lot in the forum but can someone clarify the following:

For a Cyprus non-dom, crypto taxation is vague. As some say crypto-crypto transactions are not taxable under the non-dom but we really don't know. Under the non-dom however there is a 100% Exemption for Salaried Services Outside of Cyprus. If one was to set up a company in a nil to low-tax jursidiction (ie: Bulgaria,UAE, etc...), that company would trade the crypto , then you would pay yourself a salary or dividends, this hypothetically would not be taxable in cyprus so long as the crypto trading was not done while physically in Cyprus.

Is the problem in Cyprus only trading crypto on your personal name? With the plethora of benefits of the non-dom there must be a way around it. Or at least other structures. Please advise.

Good Morning,

You seem to be confusing a number of aspects.

There is no crypto taxation specifically for non-doms.

Tax residency is to become a Cyprus tax resident through the 60 day rule or the normal 183 day route.

With respect to Non-dom (which is a separate concept from the tax residency) please note the following:

(a) Foreigners who decide to move their personal tax residency in Cyprus, will automatically be considered as non-domiciled in Cyprus for a maximum of 17 years.

(b) For tax purposes, non-domicile persons who become Cyprus tax residents will now be completely exempt from Special Defence Contribution tax (“SDC”).


(c) SDC generally applies on dividends and interest. As SDC tax does not apply in the case of Cyprus tax resident individuals who are non-domiciled in Cyprus, dividend and interest earned by such persons will now be completely tax exempt in Cyprus.

With respect to crypto-related income, at the moment there is no guidance and it has not been implemented in the tax regime of Cyprus. Therefore, you cannot tax something which it has not been recognised/defined, therefore we consider that (as implemented in several other jurisdictions) the taxable event for a crypto related transaction is the realisation to FIAT.

If for example you have a company trading crypto in UAE or Bulgaria, then (a) you would need to see how that form of corporate income is taxed in that country (b) dividends would be exempt when received in Cyprus provided that you are a tax resident in Cyprus, as you would also be considered as non-dom, but they could still potentially be subject to tax at the source. Therefore you need to get legal advise from an advisor at the country where the company would be incorporated.


Finally, you have the simpler option of living in Cyprus, forming a Cyprus company, paying 12.5% tax and get SDC exempt dividends.

Happy to PM you to discuss this.

 

[blancmon229]

Thank you for the information. Please PM me.

 

[5K1PP3R]

You are forgetting CFC laws, if you have a company in Dubai and don't pay taxes, that means you need to pay Cyprus corporate tax on the profit of your Dubai company

And for Cyprus company keep in mind, mandatory audit, 2k EUR per year, accounting another ~1k EUR, secretary services. And lawyers who fish for clients here are not the best and expensive. Cyprus is a lawyer's mess, 3 lawyers, 3 different opinions.
And if banks know you are crypto related, they will probably close your account.
Why would you choose Cyprus?
BTW you will need to come every 90 days to Cyprus

 

[blancmon229]

And for Cyprus company keep in mind, mandatory audit, 2k EUR per year, accounting another ~1k EUR, secretary services.

Annoying, but not a crazy expense if profit justifies the cost.

And if banks know you are crypto related, they will probably close your account.

I guess that's the point of EMI's

And lawyers who fish for clients here are not the best and expensive. Cyprus is a lawyer's mess, 3 lawyers, 3 different opinion

Do you have any suggestions of better lawyers you used? With a good lawyer it will be easier to navigate the mess.

Why would you choose Cyprus?

Benefits of the non-dom seem pretty good compared to other tax jurisdictions. Also given the simplicity of a 60 day annual stay.

BTW you will need to come every 90 days to Cyprus

Isn't the non-dom just 60 days a year as long as you are not tax resident of another country?

 

[5K1PP3R]

I guess that's the point of EMI's

nope, most banks in the world. I need to buy crypto and I have several personal bank accounts and it is not possible.

Benefits of the non-dom seem pretty good compared to other tax jurisdictions. Also given the simplicity of a 60 day annual stay.

If you home country claims tax residency, this nullifies your non-dom 60 days tax residency, search here, this was discussed many times

Isn't the non-dom just 60 days a year as long as you are not tax resident of another country?

you are confusing two things, 60 days tax residency is available but it will come only after normal residency like visitor residency. Non dom is just a status that you basically "not from Cyprus" and it will give you almost 0% dividends, in fact I think 2.65% up to 300k EUR profit. To keep visitor residency you will need to come every 90 days. May be if you lose it you can keep tax residency, I am not sure. But some people don't come every 90 days and border control let them enter. Cyprus is a ḉłứṣƫӗȓfµςҝ

 

[CyprusLaw]

nope, most banks in the world. I need to buy crypto and I have several personal bank accounts and it is not possible.

If you home country claims tax residency, this nullifies your non-dom 60 days tax residency, search here, this was discussed many times

you are confusing two things, 60 days tax residency is available but it will come only after normal residency like visitor residency. Non dom is just a status that you basically "not from Cyprus" and it will give you almost 0% dividends, in fact I think 2.65% up to 300k EUR profit. To keep visitor residency you will need to come every 90 days. May be if you lose it you can keep tax residency, I am not sure. But some people don't come every 90 days and border control let them enter. Cyprus is a ḉłứṣƫӗȓfµςҝ

With respect to having to come every 90 days, this is not the case.

If you are an EU citizen you simpley get the yellow slip, if you are non-EU you get a temporary residence permit which you need to renew every year (very simple process).

 

[5K1PP3R]

However, while you are living in Cyprus with a temporary Cyprus residence permit, you cannot leave the country for longer than 3 months since your permit would be automatically cancelled.

 

[Konstanz]

60 day residence is not normal tax residence. Not the same as 180 days.
With 60 day residence you get tax certificate but it's mentioned on it that it's not valid in terms of double tax treaties.
So even if Cyprus say you are tax residence, other countries could say you are not tax resident.
Also it's an Island outside of Schengen area and entry / exit is tracked

 

[Mssquirrel]

60 day residence is not normal tax residence. Not the same as 180 days.
With 60 day residence you get tax certificate but it's mentioned on it that it's not valid in terms of double tax treaties.
So even if Cyprus say you are tax residence, other countries could say you are not tax resident.
Also it's an Island outside of Schengen area and entry / exit is tracked

I think Cyprus joined Schengen recently or at least I saw that online

 

[CyprusLaw]

I think Cyprus joined Schengen recently or at least I saw that online

Cyprus joined the Schengen Information System (SIS), not the Schengen Zone, even though it is an important step towards full membership which should be achieved in some point in the near future.

 

[5K1PP3R]

60 day residence is not normal tax residence. Not the same as 180 days.
With 60 day residence you get tax certificate but it's mentioned on it that it's not valid in terms of double tax treaties.
So even if Cyprus say you are tax residence, other countries could say you are not tax resident.
Also it's an Island outside of Schengen area and entry / exit is tracked

but i know a guy who had working visa through his company and didn’t know about 90 days rule, so he was away often away for a year or even two and nothing happened

 

[AndyAresa]

With 60 day residence you get tax certificate but it's mentioned on it that it's not valid in terms of double tax treaties.

Thanks. Can you give the exact wording how this is mentioned on the certificate?

 

[Konstanz]

Thanks. Can you give the exact wording how this is mentioned on the certificate?

I don't have particular wording, because I was advised by tax expert it would be like this and got the same confirmation on this forum.
Maybe someone has 60 day certificate and could share with removed data

 

[blancmon229]

I don't have particular wording, because I was advised by tax expert it would be like this and got the same confirmation on this forum.
Maybe someone has 60 day certificate and could share with removed data

I have seen it posted somewhere in this forum. The document does not specify whether you have been in Cyprus for 60 days or 183 days. It just says that based on Cyprus law you are a tax resident.

Perhaps, one of the Cyprus lawyers in the forum can clarify

 

[Siggi]

You are forgetting CFC laws, if you have a company in Dubai and don't pay taxes, that means you need to pay Cyprus corporate tax on the profit of your Dubai company

And for Cyprus company keep in mind, mandatory audit, 2k EUR per year, accounting another ~1k EUR, secretary services. And lawyers who fish for clients here are not the best and expensive. Cyprus is a lawyer's mess, 3 lawyers, 3 different opinions.
And if banks know you are crypto related, they will probably close your account.
Why would you choose Cyprus?
BTW you will need to come every 90 days to Cyprus

At the moment CFC rules in Cyprus only apply for companies and not individuals. Thats why most of the tax residents in Cyprus use offshore companies to lower the 12.5% corporate tax.

I agree that Cyprus is a lawyers mess. The benefit of Cyprus in regards to Crypto trading would be trading tax free as long as you do not cashout into fiat. If thats really the case you can pump your crypto bags and then cash out in a one time transaction or use the LTD for 12.5%.
I guess even accounting would be very basic as you only record the trade from fiat to crypto and then back from crypto to fiat since all the other trades are not being taxed anyways.

 

[CyprusLaw]

At the moment CFC rules in Cyprus only apply for companies and not individuals. Thats why most of the tax residents in Cyprus use offshore companies to lower the 12.5% corporate tax.

I agree that Cyprus is a lawyers mess. The benefit of Cyprus in regards to Crypto trading would be trading tax free as long as you do not cashout into fiat. If thats really the case you can pump your crypto bags and then cash out in a one time transaction or use the LTD for 12.5%.
I guess even accounting would be very basic as you only record the trade from fiat to crypto and then back from crypto to fiat since all the other trades are not being taxed anyways.

the fact that a transaction is non taxable it does not make it non reportable. So no accounting is not that simple, exactly the opposite

 

[Siggi]

the fact that a transaction is non taxable it does not make it non reportable. So no accounting is not that simple, exactly the opposite

Yes if you trade those crypto inside a company accounting rules apply. But on a individual level its not needed as you dont file a tax report for it. You either wait for Cyprus to release the new law for crypto regulation or transfer the crypto to a LTD with a capital injection if you want to cash out in fiat.

Would you agree?

 

[CyprusLaw]

Yes if you trade those crypto inside a company accounting rules apply. But on a individual level its not needed as you dont file a tax report for it. You either wait for Cyprus to release the new law for crypto regulation or transfer the crypto to a LTD with a capital injection if you want to cash out in fiat.

Would you agree?

Whether or not an audit applies on a physical person depends on several factors, it is not as straightforward as one would present it. Also please note that a tax report is obligatory whether or not you have taxable income. Each case should be treated on a case by case basis, and you should seek the advice of a lawyer or an auditor as to your obligations.

 

[Siggi]

Whether or not an audit applies on a physical person depends on several factors, it is not as straightforward as one would present it. Also please note that a tax report is obligatory whether or not you have taxable income. Each case should be treated on a case by case basis, and you should seek the advice of a lawyer or an auditor as to your obligations.

Yeah right.
I guess lawyers and accountants tend to make things look more complicated than they actually are.
If crypto to crypto is not being taxed thats 99% of the problems solved. The remaining 1% you mentioned is not where the pain of crypto traders is and can be solved once its time to pay out in fiat.

How come you guys are not actually spreading the word about crypto to crypto being tax free in Cyprus! This is actually huge benefit which only a few other countries have!