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Mess due to failing Cyprus non-dom eligibility

yggdorf

yggdorf

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Nov 7, 2022
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#1
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Story: I registered in Cyprus end of 2022/early 2023 under the non-dom regime. Or so I thought, I was not aware that the tax authorities of cyprus would require boarding passes and bank statements to back up my eligibility for tax residency in Cyprus under the non-dom regime (>60 days in country, not tax resident anywhere else). Now, for reasons mostly related to stupidity, I didn't pass this eligibility test - ie I am tax resident elsewhere. This elsewhere happens to be Spain (jay!) where I was planning anyway to register during 2024 anyway, since I see myself actually living there (despite all).

But I am in a weird situation now. Do I declare my taxes for 2023 in Spain? My Cyprus accountants say that I can't continue (yes, I've already paid some dividend for the few months in 2022 and 2023) and paying tax in Cyprus. My Spanish potential accountant said that it's probably better to just register in Spain for 2024 and "forget" about 2023, mostly because it's impossible to retroactively pay social fees in Spain. The accountant also says that it's unlikely the Spanish tax authorities ask about my previous tax history unless I apply for the special tax regime (Beckhams). Which sucks to not be able to do, but at this point I don't care about it. Another slight worry is wether or not my home country (scandinavian, "aggressive" tax authority) at some point would ask about my 2023 year.

I see my options as these;

1. don't declare my private taxes of 2023 anywhere. Register in spain and start paying taxes from 2024 onwards
2. declare the private 2023 taxes in spain and hope they don't ask "oh where does the dividend come from, I wonder if she effectively managed the company from Spain also"
3. declare the private 2023 taxes in my home country and hope the same thing as in #2

I wanted to check in what the offshorecorp hivemind thinks about this..?
 
#4
Curious about Cyprus asking you for boarding passes and bank statements.

If it's not too much to ask, did you simply not spend 60 days in Cyprus, or did you spend over 183 in Spain?
 
#5
yggdorf said:
Story: I registered in Cyprus end of 2022/early 2023 under the non-dom regime. Or so I thought, I was not aware that the tax authorities of cyprus would require boarding passes and bank statements to back up my eligibility for tax residency in Cyprus under the non-dom regime (>60 days in country, not tax resident anywhere else). Now, for reasons mostly related to stupidity, I didn't pass this eligibility test - ie I am tax resident elsewhere. This elsewhere happens to be Spain (jay!) where I was planning anyway to register during 2024 anyway, since I see myself actually living there (despite all).

But I am in a weird situation now. Do I declare my taxes for 2023 in Spain? My Cyprus accountants say that I can't continue (yes, I've already paid some dividend for the few months in 2022 and 2023) and paying tax in Cyprus. My Spanish potential accountant said that it's probably better to just register in Spain for 2024 and "forget" about 2023, mostly because it's impossible to retroactively pay social fees in Spain. The accountant also says that it's unlikely the Spanish tax authorities ask about my previous tax history unless I apply for the special tax regime (Beckhams). Which sucks to not be able to do, but at this point I don't care about it. Another slight worry is wether or not my home country (scandinavian, "aggressive" tax authority) at some point would ask about my 2023 year.

I see my options as these;

1. don't declare my private taxes of 2023 anywhere. Register in spain and start paying taxes from 2024 onwards
2. declare the private 2023 taxes in spain and hope they don't ask "oh where does the dividend come from, I wonder if she effectively managed the company from Spain also"
3. declare the private 2023 taxes in my home country and hope the same thing as in #2

I wanted to check in what the offshorecorp hivemind thinks about this..?
Click to expand...
Make sure you have what the lawyer states in writing and follow that.

He’s on the line then not you.
 
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#7
Xshore said:
Do you need to prove tax residency in Cyprus to be able to file and pay taxes there? Or is that only if you request a tax residency certificate?
Click to expand...
No, you can also file taxes as a non tax resident, for locally sourced income
 
#9
Xshore said:
I mean do you have to prove residency to file as a resident?
Click to expand...
Since he doesn't qualify as a non-dom, he would not be exempt from the SDC tax on dividends, which is 17% in Cyprus.
I guess this relates to foreign-sourced income so OP is looking at a potential tax bill.
 
#12
Xshore said:
I thought he meant he didn't qualify as a tax resident, I'm sure he qualifies as a non dom.
Click to expand...
An individual can qualify as Non-Domiciled if they have been living in Cyprus for less than 17 years, but they spend more than 60 days per year in Cyprus. This is irrespective of whether their home in Cyprus is of origin or of choice.
 
#14
yggdorf said:
1. don't declare my private taxes of 2023 anywhere. Register in spain and start paying taxes from 2024 onwards
2. declare the private 2023 taxes in spain and hope they don't ask "oh where does the dividend come from, I wonder if she effectively managed the company from Spain also"
3. declare the private 2023 taxes in my home country and hope the same thing as in #2

I wanted to check in what the offshorecorp hivemind thinks about this..?
Click to expand...

1. This is likely to work cause Hacienda is sloppy at best.
2. Also likely to work but why do it when you can do 1.
3. Same as above.

Unless the divis are massive you are likely to just be 'just another string of data' in some bank/EMI spreadsheet.
Beware of where you received the divis, as in in which bank, and where that bank thinks you are a resident.

The above is very important, dont ignore it.
 
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#16
yggdorf said:
Story: I registered in Cyprus end of 2022/early 2023 under the non-dom regime. Or so I thought, I was not aware that the tax authorities of cyprus would require boarding passes and bank statements to back up my eligibility for tax residency in Cyprus under the non-dom regime (>60 days in country, not tax resident anywhere else). Now, for reasons mostly related to stupidity, I didn't pass this eligibility test - ie I am tax resident elsewhere. This elsewhere happens to be Spain (jay!) where I was planning anyway to register during 2024 anyway, since I see myself actually living there (despite all).

But I am in a weird situation now. Do I declare my taxes for 2023 in Spain? My Cyprus accountants say that I can't continue (yes, I've already paid some dividend for the few months in 2022 and 2023) and paying tax in Cyprus. My Spanish potential accountant said that it's probably better to just register in Spain for 2024 and "forget" about 2023, mostly because it's impossible to retroactively pay social fees in Spain. The accountant also says that it's unlikely the Spanish tax authorities ask about my previous tax history unless I apply for the special tax regime (Beckhams). Which sucks to not be able to do, but at this point I don't care about it. Another slight worry is wether or not my home country (scandinavian, "aggressive" tax authority) at some point would ask about my 2023 year.

I see my options as these;

1. don't declare my private taxes of 2023 anywhere. Register in spain and start paying taxes from 2024 onwards
2. declare the private 2023 taxes in spain and hope they don't ask "oh where does the dividend come from, I wonder if she effectively managed the company from Spain also"
3. declare the private 2023 taxes in my home country and hope the same thing as in #2

I wanted to check in what the offshorecorp hivemind thinks about this..?
Click to expand...
sorry but this does not sound right. IF you were living in Spain then move to Cyprus sporadically, you remain in Spain. If youwould have moved to Cyprus for 183 days or as you centre of life interest, you are Cypriot tax reisdent. The 60 days rule is basically more to fast track it- but you need to spend 60 days there, not spend 14 days in january as a holiday and then 1 day a week for the rest of the year
I think you can only blame yourself, regardless - if you are Cypriot tax resident, you are automatically non-dom assuming you have not been there before nor Cypriot passport holder. Then you can apply for a dividend SDC exemption certificate for Cypriot companies dividend distribution. But you dont need that for foreign company distribution
 
#18
Dandyline said:
How usual is it that they ask for boarding passes and bank statements?
Click to expand...
Cannot really know of frequency, but I would say it happens only when there is a challenge to your tax residency by another country's tax authority
 
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