Dividend Cash-Out (Cyprus or UAE)?

[JohnDones]

Hey guys,

I am looking to cash out 7 figures of dividends this and next year from an EU company (100% legit business, not crypto etc) but I have a difficulty choosing where to set up my personal tax residency for this purpose.

Note: Non-EU citizen, geographically Europe

It boiled down to two options I'm considering, Cyprus or UAE.

CYPRUS:
- I have difficulty getting pink slip residency (regular pleb temporary residency) in CY because I don't have any tax returns and no personal income for years (kept everything in the company).
- According to this thread, I could get non-dom + 60 day rule tax residency without ordinary residency with immigration. All I would need is a 1 year rental agreement?


UAE:
- Another option would be to go with Fred's Dubai setup, get a personal bank account there and distribute dividends to that account.
- The caveat would be having to stay there for 6 months for tax residency certificate (not needed for my country of origin but might be needed for foreign banks in future and KYC to explain why no tax returns)

I'd love to hear your thoughts on this, pros and cons you see that I might be missing,
JD

 

[CyprusLaw]

Hey guys,

I am looking to cash out 7 figures of dividends this and next year from an EU company (100% legit business, not crypto etc) but I have a difficulty choosing where to set up my personal tax residency for this purpose.

Note: Non-EU citizen, geographically Europe

It boiled down to two options I'm considering, Cyprus or UAE.

CYPRUS:
- I have difficulty getting pink slip residency (regular pleb temporary residency) in CY because I don't have any tax returns and no personal income for years (kept everything in the company).
- According to this thread, I could get non-dom + 60 day rule tax residency without ordinary residency with immigration. All I would need is a 1 year rental agreement?


UAE:
- Another option would be to go with Fred's Dubai setup, get a personal bank account there and distribute dividends to that account.
- The caveat would be having to stay there for 6 months for tax residency certificate (not needed for my country of origin but might be needed for foreign banks in future and KYC to explain why no tax returns)

I'd love to hear your thoughts on this, pros and cons you see that I might be missing,
JD

Hi I will send you a PM about Cyprus

 

[Fred]

UAE:
- Another option would be to go with Fred's Dubai setup, get a personal bank account there and distribute dividends to that account.
- The caveat would be having to stay there for 6 months for tax residency certificate (not needed for my country of origin but might be needed for foreign banks in future and KYC to explain why no tax returns)

I'd love to hear your thoughts on this, pros and cons you see that I might be missing,
JD

@JohnDones the 2nd point is wrong - no bank asks you for tax residence certificate.

They let you fill CRS and FACTA forms and when you fill them out with wrong details it's your offense not there.

I think OCT is the biggest misunderstanding about Tax Residence Certificate ever.

The banks - talking about banks you would deal usually with 7 figures - ask you on a very bad day - for audited financial statements but most likely bank statements are fine - at least for the international banks in DIFC like UBS, CS and even Swissquote.

As a non-EU national don't bother yourself with EU and do what makes the most sense.

 

[Gediminas]

Hey guys,

I am looking to cash out 7 figures of dividends this and next year from an EU company (100% legit business, not crypto etc) but I have a difficulty choosing where to set up my personal tax residency for this purpose.

Note: Non-EU citizen, geographically Europe

It boiled down to two options I'm considering, Cyprus or UAE.

CYPRUS:
- I have difficulty getting pink slip residency (regular pleb temporary residency) in CY because I don't have any tax returns and no personal income for years (kept everything in the company).
- According to this thread, I could get non-dom + 60 day rule tax residency without ordinary residency with immigration. All I would need is a 1 year rental agreement?


UAE:
- Another option would be to go with Fred's Dubai setup, get a personal bank account there and distribute dividends to that account.
- The caveat would be having to stay there for 6 months for tax residency certificate (not needed for my country of origin but might be needed for foreign banks in future and KYC to explain why no tax returns)

I'd love to hear your thoughts on this, pros and cons you see that I might be missing,
JD

Hey,

Dividends might be subject to withholding taxes in the country where the company which pays the dividends is established. Please check it before changing the residency.

Banks will not ask tax residency certificate, basically, in order to identify your residency country, they ask for your residency permit (Emirates ID in case of UAE and “yellow slip” in case of Cyprus), and they might ask for a tenancy contract, utility on your name.

A tax residency certificate might be asked for by tax authorities in some countries where you have ties. Cypriot tax residency certificate issued under 60 days rule is not valid internationally. Only the “183 days” certificate matters. In UAE currently, there are no ways to get a tax residency certificate without spending 6 months. But basically, a tax residency certificate is required only you might meet the residency test in a foreign country (and foreign tax authorities might ask this).

 

[JohnDones]

Amazing answer thank you!

Noted on banks.

A tax residency certificate might be asked for by tax authorities in some countries where you have ties. Cypriot tax residency certificate issued under 60 days rule is not valid internationally. Only the “183 days” certificate matters. In UAE currently, there are no ways to get a tax residency certificate without spending 6 months. But basically, a tax residency certificate is required only you might meet the residency test in a foreign country (and foreign tax authorities might ask this).

What's the use case for Cyprus 60 day tax certificate if it's not internationally recognized?

@Fred I believe you mentioned there are cases where UAE issues a tax certificate with less than 6 months spent in a year?

 

[Businessguy32]

Hi brother, I just read you post on one the the threads which is copied below about Cyprus

"A tax residency certificate might be asked for by tax authorities in some countries where you have ties. Cypriot tax residency certificate issued under 60 days rule is not valid internationally. Only the “183 days” certificate matters."

i am literally about to change my residence country this week and move to to Cyprus to do the 60 days so I can get the personal Cyprus tax cert and claim a personal dividend free from witholding tax from my home country in Europe.

Can you tell me where you got this information that the 60 day rule is not valid for personal dividend.??? I would be so grateful for your guidance

Perhaps you have saved me in the nick of time!!!!

 

[Don]

Hi brother, I just read you post on one the the threads which is copied below about Cyprus

"A tax residency certificate might be asked for by tax authorities in some countries where you have ties. Cypriot tax residency certificate issued under 60 days rule is not valid internationally. Only the “183 days” certificate matters."

i am literally about to change my residence country this week and move to to Cyprus to do the 60 days so I can get the personal Cyprus tax cert and claim a personal dividend free from witholding tax from my home country in Europe.

Can you tell me where you got this information that the 60 day rule is not valid for personal dividend.??? I would be so grateful for your guidance

Perhaps you have saved me in the nick of time!!!!

Check double tax treaties for example.
Its a complex topic and best if you speak with an international tax advisor.

You might want to consider Estonia for residency.

In Estonia, dividends received outside Estonia are exempt from income tax if income tax has been paid on the share of profit on the basis of which the dividends are paid or if income tax on the dividends has been withheld in a foreign state.

 

[Businessguy32]

Thanks four your reply. i have checked the double tax treaties that most of the european countries have with Cyprus and most are the same conditions. The Cyprus tax treaties are quite old, usually agreed decades ago and do not define a resident as being there for 183 days. it simply says "if a resident is a tax resident of Cyprus and not a tax resident of country A"

Estonia is 15% witholding tax on dividends in the country of origin for most countries in Europe so thats not great.

Most tax advisors are hopeless, i find the higher you pay the less they know. Especially PWC. Only people who have actually tried this stuff out themselves or worked with people who have actually done it know the pitfalls involved and that is why this forum is so valuable.

Perhaps this new clause in the German Cyprus tax treaty is attacking the 60 day rule - International Tax Update - Cyprus Double Tax Treaty

Entitlement to benefits​

Article 27 “Application of the Agreement in Special Cases” has been amended so that a benefit under this Treaty shall not be granted, in respect of an item of income, if it is reasonable to conclude, having regard to all relevant facts and circumstances, that obtaining that benefit was one of the principal purposes (Principal Purpose Test) of the arrangement or transaction that resulted directly or indirectly in that benefit.