Cyprus and royalty income

[AtlasShrugged]

After doing some research, I found this website: Passive income taxation - Patrikios Pavlou & Associates LLC

Royalties earned on rights used within Cyprus are subject to withholding tax of 10%, except royalties relating to cinematographic films, where the withholding tax rate is 5%. Literary, dramatic or artistic work (excluding motion picture films and works on film or videotape for use in connection with television) are tax exempt. As with dividends, royalties earned by non residents of Cyprus, are also exempt from tax.

What does earned by non residents of Cyprus mean? Do they mean those with non-dom status? And can anyone from Cyprus confirm if this is true? For more context, the royalties will be derived from the US, and I know there already is a tax treaty between Cyprus and the US, so there's no withholding tax.
Cyprus - ECOVIS International this website mentions something similar:

10%	For IP rights used in Cyprus. Treaty rates may be as low as 0%

 

[Tetiana]

Are you a youtuber? What are the best options to receive US royalties tax free?

 

[AtlasShrugged]

Are you a youtuber? What are the best options to receive US royalties tax free?

No, most of my income comes from writing fiction.

For now it seems to be Cyprus. Although I found about this recently.

I've read somewhere here that you can do some kind of setup in Georgia and end up with 0 percent since they also have a tax treaty with the US, but I don't want to live there 6 months a year, so it's not an option for me.

Unfortunately for us who lives out of royalties, there aren't many of us, so finding info can be a bit tricky.

 

[alain]

@CyprusLaw @CyprusLawyer101 @CyprusBusiness can answer all this through their services.

 

[Tetiana]

I don't want to live there 6 months a year, so it's not an option for me.

I don't want to live there for 6 months a year either!

Could you explain what the deal is with Cyprus 10% withholding tax?

What does it means? That if i receive royalties in Cyprus it will be taxed at 10%?

 

[AtlasShrugged]

I don't want to live there for 6 months a year either!

Could you explain what the deal is with Cyprus 10% withholding tax?

What does it means? That if i receive royalties in Cyprus it will be taxed at 10%?

No, you misunderstood my post. If you receive royalties from the US and the country of your tax residency does not have a tax treaty, they'll withhold 30 percent. With a tax treaty, it can be as low as 0 or 5 percent 10 percent etc.

Cyprus does have a tax treaty with the US, so they won't withhold anything, so if Cyprus does not tax royalty income, according to the link I posted, we will end up paying 0 in taxes

I think I see now what you confused the 10% withholding tax with. That's for "Royalties earned on rights used within Cyprus" If you receive money from Youtube, if that's what you're doing, then that has not been earned on rights within Cyprus. Please, read the next sentence afterward.

 

[Tetiana]

if Cyprus does not tax royalty income

That would be awesome, hopefully somebody will confirm this

 

[Leo Vanguard]

No, most of my income comes from writing fiction.

For now it seems to be Cyprus. Although I found about this recently.

I've read somewhere here that you can do some kind of setup in Georgia and end up with 0 percent since they also have a tax treaty with the US, but I don't want to live there 6 months a year, so it's not an option for me.

Unfortunately for us who lives out of royalties, there aren't many of us, so finding info can be a bit tricky.

You can apply for Georgia HNWI and get their tax benefits without being there, if you have 500k to invest.
This will be a tax free setup for your royalties.

That would be awesome, hopefully somebody will confirm this

Following

 

[Leo Vanguard]

Also following this…

 

[openlaw]

Just found this thread. Well, please see primary sources, not some thoughts.
Cyprus and USA have DTA (double tax avoidance treaty).
The rate for withholding tax for royalty type of passive income is 0 (zero) percent.
All cyprus companies receive full remuneration from Google, Apple etc. No any withholding is done subject to correct W8 form submitted to payer.
Hope this clears everything.

 

[Leo Vanguard]

Just found this thread. Well, please see primary sources, not some thoughts.
Cyprus and USA have DTA (double tax avoidance treaty).
The rate for withholding tax for royalty type of passive income is 0 (zero) percent.
All cyprus companies receive full remuneration from Google, Apple etc. No any withholding is done subject to correct W8 form submitted to payer.
Hope this clears everything.

I’m planning to live in Cyprus for over 183 days a year, which would make me a Cyprus tax resident, and I’ll also be signing up for non-domiciled (non-dom) status. My LLC receives royalties, which I understand is classified as passive income.

With the Cyprus-USA Double Taxation Agreement (DTA) indicating a 0% withholding tax on royalty income from U.S. payers, and with my non-dom status, would this setup result in a zero-tax scenario on my royalties?

Or is there any other factor or local tax I might need to consider for compliance?

Thanks again for your insights!

 

[Marzio]

would this setup result in a zero-tax scenario on my royalties?

Of course not because you are Cyprus tax resident so you'll have to pay royalties at PIT rates since Cyprus sees US LLC as tax transparent.

 

[ChadMuska]

Of course not because you are Cyprus tax resident so you'll have to pay royalties at PIT rates since Cyprus sees US LLC as tax transparent.

What if you don't have an entity and you receive royalties as a physical person while being a non-dom?

 

[Marzio]

What if you don't have an entity and you receive royalties as a physical person

US LLC it's not an entity for Cyprus, it's like you being self employed.

That's why all income you receive is taxed at PIT tares.

while being a non-dom

It doesn't matter

 

[ChadMuska]

US LLC it's not an entity for Cyprus, it's like you being self employed.

That's why all income you receive is taxed at PIT tares.



It doesn't matter

That's not what ecovis and OP's other source say though.

"Royalties earned on rights used within Cyprus are subject to withholding tax of 10%, except royalties relating to cinematographic films, where the withholding tax rate is 5%. Literary, dramatic or artistic work (excluding motion picture films and works on film or videotape for use in connection with television) are tax exempt. As with dividends, royalties earned by non residents of Cyprus, are also exempt from tax."

 

[Marzio]

As with dividends, royalties earned by non residents of Cyprus, are also exempt from tax."

Is it clear now for you?

Non-dom doesn't mean non resident.

 

[ChadMuska]

Is it clear now for you?

Non-dom doesn't mean non resident.

A bit clearer, but what's the source that royalty income is taxed at PIT rates?

Also, I thought they didn't tax passive income if you're a non dom

Can you give an example of what a non-resident is?

 

[Marzio]

what's the source that royalty income is taxed at PIT rates?

What's the source that royalty income isn't taxed at PIT rates for non-doms?

https://taxsummaries.pwc.com/cyprus/individual/income-determination

Under "exempt income" there's no mention of royalties and they mention specifically that dividends and most type of interest are exempt from taxes for non-doms.

Can you give an example of what a non-resident is?

Anybody who don't fall into these criteria

https://taxsummaries.pwc.com/cyprus/individual/residence