Live in Cyprus as FIRE. Tax implications?

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tomvan20

New member
If a EU national doesn't work and comes to Cyprus with individual stocks (for example only foreign listed stock market companies, such as Microsoft) worth 500.000 euro, which were bought for 200.000 euro 5 years before.
This would be real residence, more than 183 days per year, with longterm rental contract. So no permanent travelling or trying to avoid residency rules.
I don't trade, maybe I do 1 stock transaction every 4-5 months.

How are you taxed in Cyprus as a non-dom?

I know there is the 2,65% Gesy contribution on the dividends that one receives from the stocks.
There is no capital gains tax (let's say I sell the Microsoft stock for 600.000 euro 1 year after having non-dom residency in Cyprus).

But I get conflicting information about the sole-trader/social insurance bit.

- 1 Belgian lawyer said not to bother with Cyprus, because I would have problems opening bank accounts elsewhere in the EU or even keeping my bank accounts.
He suggested Portugal or Bulgaria. Which was quite stupid because Portugal's NHR system explicitly excludes stock capital gains, so they are taxed.
I guess he just wanted to sell me his Portugal/Bulgaria relocation/immigration/company formation services (which he didn't do for Cyprus).

- 1 Cyprus lawyer I contacted said I would only have the 2,65% on dividends, and further nothing because I am an individual who is not doing anyting of 'trading nature'.

- Here on the forum @CyprusLawyer101 and @CyprusLaw say that you will be considered as sole trader and have to pay social insurance contributions, and therefore a Cyprus company would be better.
But: is this the same as the Belgian lawyer who just wants to sell further services like company registration? :)
And how would the current (non-realized) capital gain be treated in Cyprus if I put the 500.000 euro stocks into the Cyprus company? This would constitute a realized gain for the individual in a lot of countries, so this wouldn't help at all.
 

complex

New member
Others seem to have gotten letters regarding the social contributions indicating that they don't have to pay. "Sole trader" typically implies a trade of services or goods, stock trading or investing does not fall into this category.

Sounds like the Belgian lawyer is indeed clueless since for cap. gains Portugal is completely useless.

In the end you're likely to have to find a local consultant who can arrange you the aforementioned letter. It's odd that this isn't specified clearly by the government, which leads me to believe it's done purposefully (some will unknowingly pay it).
 

tomvan20

New member
Others seem to have gotten letters regarding the social contributions indicating that they don't have to pay. "Sole trader" typically implies a trade of services or goods, stock trading or investing does not fall into this category.

In the end you're likely to have to find a local consultant who can arrange you the aforementioned letter. It's odd that this isn't specified clearly by the government, which leads me to believe it's done purposefully (some will unknowingly pay it).
How dit @Cyprustr fare with this ultimately?

Does anyone has a recommendation for a lawyer who can get this letter?

Or is there a procedure to do it yourself?
I know my way around administration, I have filed ruling applications myself in Belgium, as well as my MEU1 and tax registration in Cyprus.
I have a degree in tax law, but from experience with the little tax details in Belgium I know I have to ask local tax experts to be sure of taxation rules.
But things like filing for a ruling can be quite simple.
 

CyprusLawyer101

Mentor Group Gold
Yes this is clear, but what about social security contributions or other levies.

I don't really care if something is called tax or social or religious or what have you not.
Just how much I have to pay in total :)
You have to pay NHI at 2.65% of passive income generated from dividends, interest, rents, etc. This has a maximum cap of 180,000 Eur
 

tomvan20

New member
Yes this is clear, but what about social security contributions or other levies.

I don't really care if something is called tax or social or religious or what have you not.
Just how much I have to pay in total :)

You have to pay NHI at 2.65% of passive income generated from dividends, interest, rents, etc. This has a maximum cap of 180,000 Eur

No, it does not apply
Thank you!

Just one final question because I asked these things after reading a lot in the forum: what was the discussion about then in https://www.offshorecorptalk.com/threads/short-tax-residency-options.33230/
with the now banned Glenngoolie?
This was about paying social insurance contributions as a Cyprus non-dom individual, on profits from sales of securities if you have no other job and only live from your semi-passive income of listed stock market securities held in personal name.

There was also a discussion with @Cyprustr that he tried to obtain a letter from the social security department of Cyprus that explicitly states that he is not liable for social insurance contributions.
And @CyprusLawyer101 or @CyprusLaw said that they had received a letter that stated the contrary, that is WAS subject to social security contributions...
Any update on this?
 

CyprusLaw

Mentor Group Gold
Thank you!

Just one final question because I asked these things after reading a lot in the forum: what was the discussion about then in https://www.offshorecorptalk.com/threads/short-tax-residency-options.33230/
with the now banned Glenngoolie?
This was about paying social insurance contributions as a Cyprus non-dom individual, on profits from sales of securities if you have no other job and only live from your semi-passive income of listed stock market securities held in personal name.

There was also a discussion with @Cyprustr that he tried to obtain a letter from the social security department of Cyprus that explicitly states that he is not liable for social insurance contributions.
And @CyprusLawyer101 or @CyprusLaw said that they had received a letter that stated the contrary, that is WAS subject to social security contributions...
Any update on this?
There is a circular from the SI dept on this, it will depend on a case by case basis and the whole income structure so there is no rule covering it all as such.
 

tomvan20

New member
I can do this in a couple of days as I am away atm. Noting however that it is in Greek
Ok thank you. I put it in google translate.

Is it still possible (like in the discussion with @Cyprustr ) to get a letter of confirmation of the social security department, to have certainty about exemption from social security contributions?

In your opinion: if my whole wealth is in a stock portfolio (let's say 500k), my only income is dividends (10k per year) and an occasional stock sell/buy (let's say 1 sale of 15k per year for extra living money, and 1 sale of an existing stock of 200k (that has an internal capital gain of 50k) to buy another stock of 200k as portfolio rebalance), would I be liable for SI based on that circular?
 

zeroflag

New member
I'm interested in the same thing. If I would like to early retire on Cyprus and only living off my investment returns (either by selling stocks or receiving dividends from foreign companies) without having a job or owning any company, how much tax/social contribution/etc would I have to pay in total?

The way it works in many other countries is that you pay no tax on capital gains, plus depending on the double tax treaty agreement you pay 10-15% on the dividends, and you might need to pay a small fixed amount of money for socials in each month.

How does this compare to what you have in Cyprus?
 

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