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Digital Nomad Perpetual Traveler + Apartment in Cyprus = tax ?

Hydrox

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Hey Guys,
So i want to emigrate from germany but would like to have an apartment somewhere in case germany comes to the idea to tax me after my exit.
Then i could just show them my apartment and utility bills to show my place of business would be there.

I thought about renting the apartment in cyprus, as i like it there. To not be a tax resident there i would avoid being in cyprus for over 183 days and i would not open a company or be employed there. I would only get income from a single member US LLC.

This way i should be able to have an apartment + utility bill without triggering any tax residence at all right? (if i´m nowhere else a tax resident)

Of course cyprus could say you would need to tax your US LLC income with us, but i think thats unlikely if i am not there long enough right?

Any input is appreciated
 
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So i want to emigrate from germany but would like to have an apartment somewhere in case germany comes to the idea to tax me after my exit.
Then i could just show them my apartment and utility bills to show my place of business would be there.
But then you might still be tax resident in Germany, simply by having a place to stay available. Germany doesn't just care about days you spend in the country.

Especially since you plan for Cyprus seems to include not actually living there...

I thought about renting the apartment in cyprus, as i like it there. To not be a tax resident there i would avoid being in cyprus for over 183 days and i would not open a company or be employed there. I would only get income from a single member US LLC.
Technically, profits from an LLC may be considered personal income (like a salary) rather than dividends, which would mean a different and potentially higher tax rates.

This way i should be able to have an apartment + utility bill without triggering any tax residence at all right? (if i´m nowhere else a tax resident)
In Cyprus? All they really care about is number of days in the country. They don't take into account if you rent/own a place.

Of course cyprus could say you would need to tax your US LLC income with us, but i think thats unlikely if i am not there long enough right?
Yes, the risk is low.
 
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But then you might still be tax resident in Germany, simply by having a place to stay available. Germany doesn't just care about days you spend in the country.
Do you mean that he's tax resident in Germany because he has a place to stay available in Cyprus? That doesn't make much sense. Or did you think read it as he suggested to have a place available in Germany?
 
Do you mean that he's tax resident in Germany because he has a place to stay available in Cyprus? That doesn't make much sense. Or did you think read it as he suggested to have a place available in Germany?
I think I may have misread the post. I thought OP was going to keep an apartment in Germany but not live there, as a way to get around exit tax. Reading it again now, it seems OP's plan to avoid German exit tax is to establish a paper residence in Cyprus instead.
 
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I think I may have misread the post. I thought OP was going to keep an apartment in Germany but not live there, as a way to get around exit tax. Reading it again now, it seems OP's plan to avoid German exit tax is to establish a paper residence in Cyprus instead.
We sometimes had this question of some EU countries asking for tax certificates, tax residency, etc. after you deregister as resident. Does anybody know what Germany typically asks for after you left? Especially in the case of people that go travelling most of the year.

And which countries were those that like this certificate?

(To get around the exit tax, the best way is to stay registered in Germany for one or two years until the business goes bankrupt as you stop advertising. You can then leave freely. Will only work in case where there is no goodwill but saves the discussion with the tax guys whether there was a goodwill.)
 
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So i want to emigrate from germany but would like to have an apartment somewhere in case germany comes to the idea to tax me after my exit.

If Germany decides to tax you then having an apartment without being tax resident will not save you but if you will be considered tax resident then you could show them that you are renting an apartment all year long so based on DE-CY double tax treaty art4 they could go fukc themselves.
 
But then you might still be tax resident in Germany, simply by having a place to stay available. Germany doesn't just care about days you spend in the country.
I already canceled my appartment in germany. I would only stay at hotels or shortly at my family when i´m in germany.

In Cyprus? All they really care about is number of days in the country. They don't take into account if you rent/own a place.
this sounds good, so i could rent a place there 12 months to have utility bills on my name. And if i stay below 183 days they likely wouldnt tax my income right?

We sometimes had this question of some EU countries asking for tax certificates, tax residency, etc. after you deregister as resident. Does anybody know what Germany typically asks for after you left? Especially in the case of people that go travelling most of the year.
Usually they dont ask for tax certificates of other countries after exiting. This is why i thought if there would be a discussion where i would need to pay taxes, it would rather be the country where i have the appartment rented (cyprus) than germany, where i have nothing rented. Considering i would be on both countries only around 4 months. Does this make sense as an extra layer of security?


(To get around the exit tax, the best way is to stay registered in Germany for one or two years until the business goes bankrupt as you stop advertising. You can then leave freely. Will only work in case where there is no goodwill but saves the discussion with the tax guys whether there was a goodwill.)
Yes thats a good way, however since i am a sole proprietorship with around 100k profit, my advisor told me we can write a "company evaluation" stating the company is almost worth nothing if exit tax ever came to speech.


If Germany decides to tax you then having an apartment without being tax resident will not save you but if you will be considered tax resident then you could show them that you are renting an apartment all year long so based on DE-CY double tax treaty art4 they could go fukc themselves.
Dont you think having an appartment in cyprus even without being tax resident there would be a clear indicator that you should not be taxed in germany? I dont want to be tax resident in cyprus thats why i´m looking for a "light gray" solution
 
If Germany decides to tax you then having an apartment without being tax resident will not save you but if you will be considered tax resident then you could show them that you are renting an apartment all year long so based on DE-CY double tax treaty art4 they could go fukc themselves.
You can't use the Cyprus - Germany tax treaty if you're not tax resident in Cyprus.
 
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Dont you think having an appartment in cyprus even without being tax resident there would be a clear indicator that you should not be taxed in germany?

I don't have to think, this is not an opinion.

Germany will tax you if they decide to do so, unless you are tax resident in Cyprus,

When 2 countries claim you are tax residents in both, only then having a permanent accomodation in one country will help you.

If you are not considered tax resident by the other country, you don't even have the chance to access double tax treaties.

I dont want to be tax resident in cyprus thats why i´m looking for a "light gray" solution

Your "light gray" solution will get you in trouble unless you are 100% sure that Germany will never come after you. If you don't have any ties in Germany then your CY paper residency is perfectly fine.
 
Your "light gray" solution will get you in trouble unless you are 100% sure that Germany will never come after you. If you don't have any ties in Germany then your CY paper residency is perfectly fine.
You can't use the Cyprus - Germany tax treaty if you're not tax resident in Cyprus.
I´m picking the positive message out of this, which is if germany doesnt come after me it´s fine.

Of course I have to consider them coming after me, and i would assume then they ask for a residency somewhere else and maybe a tax number, which would be enough for them to acknowledge ok this guy pays taxes in cyprus.

Even if i dont pay the taxes in cyprus and am not a tax resident there, i would have an appartment and could most likely still get a tax number (TIN) to show the german authorities.

Do you think they would verify if i really paid my taxes there or these documents would be enough?
 
OP, are you asking about taxation of business income that is not tied to a PE?
Germany has some weird rule for German expats where they can tax profits that are not linked to a foreign PE. If you have an apartment somewhere, then that apartment will be a PE. But if you're truly nomadic and you have a company with no clear corporate tax residency/no PE (like a US LLC), in theory, Germany could try to tax it. But I think you would still need to have some ties to Germany? I don't know all the details, I just know that this is something some German nomads worry about.
But it seems like this part of the law has never been enforced against nomads, and almost never in other cases, and if so, then only in cases where people still had very strong ties to Germany, such as rental income from German real estate, ownership in German companies etc.

Anyway, back to your question: Germany should only care about the fact that you are really gone. They may want to see proof that you are out of Germany, but as far as I know, they don't demand proof that you have rented a place somewhere else. Provided that you really have cut your ties. If you frequently travel to Germany or have other ties, it could be a different story. You should also avoid using a German business bank account etc.

So you don't have to take up a new residency anywhere else, you won't have to show a TIN or tax return. You only have to be able to prove that you were not in Germany. So if you show them you have traveled the world, that should be fine.
The only risk then would be if you return after 1-2 years. Then they could say it was only a vacation and you were not really gone. So in such a case a proper tax residency somewhere else might be useful.

If you don't intend to become tax resident anyway, Paraguay is a popular option for nomads.
The bigger issue really will be compliance for your banks. They won't accept "I'm a nomad" as an answer when they ask where you live. Giving them an address from Paraguay could be a good option.
 
Of course I have to consider them coming after me, and i would assume then they ask for a residency somewhere else and maybe a tax number, which would be enough for them to acknowledge ok this guy pays taxes in cyprus.

No, they won't care about this. You can easily be tax resident in both countries.
The question for them will be: "Can we tax this guy in Germany?" - not "Does this guy pay tax somewhere else?"
Documents from another country will be helpful to prove that you really don't live in Germany anymore - if you can show you had a coffee in Larnaca every morning and dinner at a restaurant in Limassol every morning, then obviously you couldn't at the same time be living in Germany. So in that regard it will be helpful.
But it would work just the same if you can show you were on your boat sailing from Spain to Italy.
The only thing is that showing a rental contract and tax residency certificate might shut them up quicker than a simple: "What do you want, I'm a nomad now" - but that answer should generally be fine, too.

You should speak to a German tax lawyer to be sure. Or even better, contact the tax office and ask them what they need.
"Hey, I want to travel the world. I don't want to come back to Germany ever again, except to visit family once per year maybe. What do you need to accept I should not pay tax in Germany anymore? I have been thinking about renting an apartment in Cyprus, but to be honest, I will be traveling so much that there isn't much point in having the apartment. But if it's a requirement from your side that I rent something in another country, I will of course do it."

Another option could also be to get proper tax residency somewhere for the first year (e.g., spend 60 days in Cyprus), get the tax residency certificate, and then leave, but that really shouldn't be necessary in your case.
 
Provided that you really have cut your ties. If you frequently travel to Germany or have other ties, it could be a different story. You should also avoid using a German business bank account etc
I would still frequently travel to germany but only be there for 2-3 weeks and then be gone again. Maximum 5 months a year.

The only risk then would be if you return after 1-2 years. Then they could say it was only a vacation and you were not really gone. So in such a case a proper tax residency somewhere else might be useful.
Great answer from your side. I will make sure to do this longer than 2 years.

The bigger issue really will be compliance for your banks. They won't accept "I'm a nomad" as an answer when they ask where you live. Giving them an address from Paraguay could be a good option.
To solve this issue i would still get the appartment in cyprus and avoid triggering tax residency. This would be my way to have banks etc.
Or even better, contact the tax office and ask them what they need.
I dont want to bring this to their attention too much.
Another option could also be to get proper tax residency somewhere for the first year (e.g., spend 60 days in Cyprus), get the tax residency certificate, and then leave, but that really shouldn't be necessary in your case.
This is too expensive and requires accounting. With company costs + fees + accounting + social insureance in the first year you will easily spend 9k on the company alone. Then there come 12.5% corporate tax on top. Thats why i only want the apartment in cyprus not the tax residency.


I have made my US LLC in germany already and my german address is registered in it. Will i need to change that address too? or could i just leave it and nobody cares
 
But then you might still be tax resident in Germany, simply by having a place to stay available. Germany doesn't just care about days you spend in the country.

Especially since you plan for Cyprus seems to include not actually living there...


Technically, profits from an LLC may be considered personal income (like a salary) rather than dividends, which would mean a different and potentially higher tax rates.


In Cyprus? All they really care about is number of days in the country. They don't take into account if you rent/own a place.


Yes, the risk is low.
Can you clarify "the risk is very low'?

Eg if OP lived in Cyprus and ran an US LLC then got paid into his personal US bank account and used the card for the most part, the risk is low that CY authorities would ever know?
 
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I think most countries have reason to investigate if they think that you are actually still at home a lot of time. If you only show up 21 to 27 December at your partent's, it is no problem. If they have reason to suspect you being there for weeks while still working, they may investigate. Of course in many cases, they do not, but you never know. If you want to be on the safe side, make sure you are not there.
 
5 months a year in Germany = playing with fire


How many months would you consider safe without tax residency somewhere else?
 
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