Cyprus 90-day rule for foreign employment income

[CyprusLawyer101]

I guess it could work for example if you own an Estonian company and pay yourself a non-director salary. Salary would be tax free because you will be seen as a Cyprus tax resident.

The problem is that by residing in Cyprus for 183 days you are creating a PE of the Estonian company in Cyprus.

How is such a PE created?

 

[Marzio]

How is such a PE created?

Well, if you are the only shareholder, the only employee and you are tax resident in Cyprus then it's fair to assume that management and control are exercised in Cyprus.

Or Cyprus tax authorities believe that having an Estonian director is sufficient for managing the company?

If yes then great!

 

[CyprusLawyer101]

Well, if you are the only shareholder, the only employee and you are tax resident in Cyprus then it's fair to assume that management and control are exercised in Cyprus.

Or Cyprus tax authorities believe that having an Estonian director is sufficient for managing the company?

If yes then great!

PE and tax residency based on management and control are fundamentally different, equating them is not sound

 

[Marzio]

You are correct, i abbreviated "tax residency based on management and control" with PE. The question still remains, do tax authorities believes that having an Estonian director is sufficient for avoiding triggering tax residency based on management and control?

 

[CyprusLawyer101]

You are correct, i abbreviated "tax residency based on management and control" with PE. The question still remains, do tax authorities believes that having an Estonian director is sufficient for avoiding triggering tax residency based on management and control?

Management and control is a factual question therefore various factors would need to be assessed for the tax authorities to conclude of such managment and co trol taking place from Cyprus. The tax authorities in Cyprus would generally not attempt to claim management and control of foreing entities in Cyprus on a random basis. This does not mean though that the legislation is not in force.

 

[JustAnotherNomad]

I guess it could work for example if you own an Estonian company and pay yourself a non-director salary. Salary would be tax free because you will be seen as a Cyprus tax resident.

@CyprusLawyer101 Would this work? I thought you have to earn the salary outside of Cyprus for this to work? So you can't be working from Cyprus? But at the same time, you have to spend time in Cyprus to be tax resident there?

 

[Marzio]

I thought you have to earn the salary outside of Cyprus for this to work?

You have to work more at least 90 days outside CY for the salary to be tax exempt.

Since they are talking specifically about "salary" and salary is not a 3 months gig i read this as "dude, if you work overseas for at least 3 months, your foreign source salary is not taxed."