Question Cyprus vs Dubai tax residency & business setup

[debudubai]

I'm looking at Cyprus and Dubai as my options to become a tax resident and set up a limited company. As these two jurisdictions are often mentioned on here, I would be keen to hear from folks who were/are in a similar situation and what made you go with one over the other.

I would also be interested in hearing if you set up a company in one place, and decided to later move on to the other. What were your reasons?

This is an open-ended question as there's more to the decision than just tax so welcome all viewpoints. Thanks.

 

[KDX]

I'm looking at Cyprus and Dubai as my options to become a tax resident and set up a limited company. As these two jurisdictions are often mentioned on here, I would be keen to hear from folks who were/are in a similar situation and what made you go with one over the other.

I would also be interested in hearing if you set up a company in one place, and decided to later move on to the other. What were your reasons?

This is an open-ended question as there's more to the decision than just tax so welcome all viewpoints. Thanks.

If you're looking for tax residency, Dubai is the way to go. You can run any offshore company from there tax-free. You can't do the same in Cyprus.

If you need some EU benefits, although some of them may be limited, you can then establish a Cyprus non-resident company which would pay 0% tax. (double check this)

 

[CyprusBusiness]

At the moment, on a Cyprus level we have a rather peculiar position regarding CFC rules. It seems the local legislation pertaining to CFC rules was ratified but at the moment captures only legal persons and not physical persons. We expect this to be changed though in the near future.

So for now, an individual incorporating both a Dubai and a Cyprus Company, from a Cyprus prespective the Dubai company would not be captured by the CFC legislation. Even if it did, there are certain exemptions as follows:

• De minimis exception

In line with the option given by the Directive, the Law provides that no CFC inclusion should be made of any non-distributed income of a CFC if a CFC has either:

i) Accounting profits that do not exceed Euro 750 000 and non-trading income which is not more than Eur75 000; or
ii) Accounting profits that do not exceed 10% of its operating costs for the tax year.

Of course, careful planning is needed if such a structure is pursued to avoid exposures.