Moving to Cyprus as EU citizen

[Luxconsult]

Hi I am a new member here and would like to get some advice in regards to the below:

I am a Belgian citizen and have lived outside EU since 2007 in New Zealand where I was employed in the yachting industry.
Post COVID I am looking at emigrating back to EU preferably Cyprus to live there and work remotely as a contractor for a US based travel company dealing with UHNW.
Since Belgium has very high taxes I am interested to reduce them considerably. I would earn around 100-120k USD

What would be the best setup for reducing my taxes:

A) Live in Cyprus open up Maltese company who pays me dividends , Maltese company receives payment from US company for provided consultancy services.

B)Live in Cyprus open up Dubai company who pays me dividends , Dubai company receives payment from US company for provided consultancy services.

C)Live in Cyprus open Cyprus company as self employed , Cyprus company receives payment from US company for provided consultancy services.

open to other EU country suggestions

looking forward to receive your feedback /suggestions.

 

[Sols]

Easiest: Live in Cyprus, open Cyprus company, Cyprus company receives payments from clients, pay yourself dividends. Don't bother with formally employing yourself. Stick to dividends if the company is cash positive. No income tax to worry about.

Unless there's anything unusual in your setup, total tax burden is 12.50% CIT and 2.65% social security contribution (up to a max of somewhere around 120,000 EUR/year income).

Lowest tax: Live in Cyprus, open foreign company (anywhere, can be Malta, UAE), receives payments from clients, pay yourself dividends directly or into a Cypriot company.

Tax burden would then be 0–5% CIT (depending on where you incorporate), plus social security in Cyprus. But you run the risk of having difficulties proving that the foreign company is truly a foreign company. By being owned/managed/controlled by you, the foreign company becomes Cypriot tax resident. That's almost never enforced and Cyprus is full of expats with this arrangement. It's a risk, though.

 

[Don]

With your level of income, it probably makes more sense to incorporate a company in Cyprus, depending on how do you want to go about maintaining the residency. Do you want to stay mostly in Cyprus or only stay the minimum amount of 60 days and have the rental contract just to fill the requirement?

Requirements to become a tax resident of Cyprus:
i. residing in the territory of Cyprus for at least 60 days in a tax year;
ii. not spending more than a sum of 183 days in any other jurisdiction within a tax year;
iii. not being a resident for tax purposes of another jurisdiction within the same tax year;
iv. carrying on a business / being employed / holding an office in Cyprus during the tax year;
v. maintaining a permanent home in Cyprus (owned or rented).
All above conditions have to be fulfilled in order to use the 60-day rule of tax residency. An alternative to the above is spending more than 183 days per calendar year in Cyprus.

 

[baitmine]

I'm very interested in this question as well as I find myself in a similar "boat".

What makes you consider Malta over Dubai? Is there something about Malta having an "on paper" high taxation rate that exempts it from CFC/EM rules? If that's not the case, then clearly Dubai would be the better option (assuming you don't care about the CFC/EM rules).

I'd be curious to know.

 

[PolishCourier]

Try Poland, open limited liability company - 9% cit - salary up to 20k eur will be taxed 17% and will deduct from a tax of a company.

Other option: Polish sole proprietorship - 19% tax rate plus social contributions of about eur 3500 / year.

 

[baitmine]

Try Poland, open limited liability company - 9% cit - salary up to 20k eur will be taxed 17% and will deduct from a tax of a company.

Other option: Polish sole proprietorship - 19% tax rate plus social contributions of about eur 3500 / year.

I don't see how this is a relevant recommendation? Poland may be a lovely country, but I don't think that OP has shown any particular interest in Central Europe, given that he'd pay closer to 40% in effective-tax at his current income levels when taking into account income tax, corporate income tax, dividends tax, social security. Compare that to his Cyprus setup which will most likely have him at sub 15%.

 

[PolishCourier]

I don't see how this is a relevant recommendation? Poland may be a lovely country, but I don't think that OP has shown any particular interest in Central Europe, given that he'd pay closer to 40% in effective-tax at his current income levels when taking into account income tax, corporate income tax, dividends tax, social security. Compare that to his Cyprus setup which will most likely have him at sub 15%.

First of all, guy was asking about other suggestions. I give one. We can have a setup where he pays not more than 19% on income or even less, all depends on a nature of business.

My business pays 19% income tax, but others pay even 3,5% - all depends on a nature of income.

 

[saintjohnny]

Easiest: Live in Cyprus, open Cyprus company, Cyprus company receives payments from clients, pay yourself dividends. Don't bother with formally employing yourself. Stick to dividends if the company is cash positive. No income tax to worry about.

Unless there's anything unusual in your setup, total tax burden is 12.50% CIT and 2.65% social security contribution (up to a max of somewhere around 120,000 EUR/year income).

Lowest tax: Live in Cyprus, open foreign company (anywhere, can be Malta, UAE), receives payments from clients, pay yourself dividends directly or into a Cypriot company.

Tax burden would then be 0–5% CIT (depending on where you incorporate), plus social security in Cyprus. But you run the risk of having difficulties proving that the foreign company is truly a foreign company. By being owned/managed/controlled by you, the foreign company becomes Cypriot tax resident. That's almost never enforced and Cyprus is full of expats with this arrangement. It's a risk, though.

A UK LLP or a US LLC would pay 0% tax, for example?

I am interested in this setup. I would live in Cyprus 60/365 and then travel around.

 

[Sols]

A UK LLP or a US LLC would pay 0% tax, for example?

Yes, for example. You then have the choice of not declaring the income at all or declare it as dividends from a foreign company (not taxed).

This leaves you with the risk that one day the company becomes discovered/considered tax resident in Cyprus, but it is a fairly common arrangement and the tax authority in Cyprus hasn't gone after any expats doing this (as far as I or anyone I've spoken to seems to know).

 

[CyprusLaw]

As it has been recommended the best option would be to live in Cyprus and set up a Cyprus company. This is the best way to enjoy the full benefits of setting up a Cyprus company. Non- Cypriots who decide to move their personal tax residency in Cyprus, will automatically be considered as non-domiciled in Cyprus for a maximum of 17 years. For tax purposes, non-domicile persons who become Cyprus tax residents will now be completely exempt from Special Defence Contribution tax (“SDC”). SDC generally applies on dividends and interest. As SDC tax does not apply in the case of Cyprus tax resident individuals who are non-domiciled in Cyprus, dividend and interest earned by such persons will now be completely tax exempt in Cyprus. Non-domiciled tax residents will have dividend and interest completely tax exempt in Cyprus.

 

[saintjohnny]

Yes, for example. You then have the choice of not declaring the income at all or declare it as dividends from a foreign company (not taxed).

This leaves you with the risk that one day the company becomes discovered/considered tax resident in Cyprus, but it is a fairly common arrangement and the tax authority in Cyprus hasn't gone after any expats doing this (as far as I or anyone I've spoken to seems to know).

Hmmm, interesting. I'm considering Cyprus or Andorra now.

 

[dlttrading]

I also would recommend Cyprus.
Also with local CY Limited company. Cyprus is great place and for you who comes back from NZ perfect place to start in EU.
Just find nice flat or house to rent . Register in local authority your residence. The rest like company formation, bank, emi¨s can be done remote via internet, accountands, lawyers etc. The quality and flexibility of service you will receive with local accountands and lawyers is fantastic for the price.

 

[rivertorain]

I also would recommend Cyprus.
Also with local CY Limited company. Cyprus is great place and for you who comes back from NZ perfect place to start in EU.
Just find nice flat or house to rent . Register in local authority your residence. The rest like company formation, bank, emi¨s can be done remote via internet, accountands, lawyers etc. The quality and flexibility of service you will receive with local accountands and lawyers is fantastic for the price.

But you need 200k EUR capital (for non-EU) to start a Cyprus company. Or was your comment for EU?

 

[CyprusLaw]

But you need 200k EUR capital (for non-EU) to start a Cyprus company. Or was your comment for EU?

Actually this is not correct. There is no capital requirement in Cyprus for a non EU starting and operating a company in Cyprus. Such criteria only come into play when non-EU personnel is to be employed, noting that even then the capital requirement leads to a fast track procedure for the employment of non-eu personnel, there are other ways to employ on-eu personnel without the capital requirement. But, in any event, the capital requirement does not relate with setting up and running a company!

 

[rivertorain]

Actually this is not correct. There is no capital requirement in Cyprus for a non EU starting and operating a company in Cyprus. Such criteria only come into play when non-EU personnel is to be employed, noting that even then the capital requirement leads to a fast track procedure for the employment of non-eu personnel, there are other ways to employ on-eu personnel without the capital requirement. But, in any event, the capital requirement does not relate with setting up and running a company!

Thanks for the info! My understanding is that without being employed in the company, you would still need a local Cypriot as the director (and you remain as a shareholder receiving dividends). Do you know what the common approach is for this for non-eu? Do most people hire companies to act as directors on their behalf?

 

[CyprusLaw]

The reason Cyprus nominees are used as directors is to show substance and control in Cyprus for tax purposes, in the event that you would be living in Cyprus (therefore no issue in showing substance and control in Cyprus) then you can act as a director in your company without the need to have a Cyprus nominee. In the event you will be living abroad then you can still be a director in the company (no permit is required for acting as a director) but in that case it would be advisable to appoint Cyprus nominees so that the majority of the board is Cyprus-based.

 

[orangekangaroo]

Hi I am a new member here and would like to get some advice in regards to the below:

I am a Belgian citizen and have lived outside EU since 2007 in New Zealand where I was employed in the yachting industry.
Post COVID I am looking at emigrating back to EU preferably Cyprus to live there and work remotely as a contractor for a US based travel company dealing with UHNW.
Since Belgium has very high taxes I am interested to reduce them considerably. I would earn around 100-120k USD

What would be the best setup for reducing my taxes:

A) Live in Cyprus open up Maltese company who pays me dividends , Maltese company receives payment from US company for provided consultancy services.

B)Live in Cyprus open up Dubai company who pays me dividends , Dubai company receives payment from US company for provided consultancy services.

C)Live in Cyprus open Cyprus company as self employed , Cyprus company receives payment from US company for provided consultancy services.

open to other EU country suggestions

looking forward to receive your feedback /suggestions.

To get 5% tax rate in Malta you need double company structure. Expect that to cost 10k a year to maintain. That is almost 10% of your income. So that alone is 15%.

I would say become non dom in Cyprus. If you proof enough wealth no need for company to employ yourself. If you work for more than 90 days outside Cyprus for a company not resident in Cyprus, the income will be tax free. You still have to pay the socials. I think this easiest setup if you can manage more than 90 days outside Cyprus.

 

[CyprusLaw]

To get 5% tax rate in Malta you need double company structure. Expect that to cost 10k a year to maintain. That is almost 10% of your income. So that alone is 15%.

I would say become non dom in Cyprus. If you proof enough wealth no need for company to employ yourself. If you work for more than 90 days outside Cyprus for a company not resident in Cyprus, the income will be tax free. You still have to pay the socials. I think this easiest setup if you can manage more than 90 days outside Cyprus.

Just to clarify something - you don't need to be for more than 90 days outside Cyprus - under the current regime any non-Cypriot who decide to move their personal tax residency in Cyprus, will automatically be considered as non-domiciled in Cyprus for a maximum of 17 years and therefore have all the non dom benefits, such as no tax on dividend.

 

[orangekangaroo]

Just to clarify something - you don't need to be for more than 90 days outside Cyprus - under the current regime any non-Cypriot who decide to move their personal tax residency in Cyprus, will automatically be considered as non-domiciled in Cyprus for a maximum of 17 years and therefore have all the non dom benefits, such as no tax on dividend.

That is not what I was referring to with regards to 90 days. I have taken this section from the KPMG file:

1. 100% exemption on remuneration for salaried services rendered outside Cyprus for more than 90 days in a tax year to a non-Cyprus resident employer.

So let's take the situation in of the OP, who has a salaried job form a USA company to provide travel services to HWNI. If these services can be rendered outside Cyprus for more than 90 days, than no need for expensive company structures.

The salary is 100 to 120K and with all corp structures being proposed here we look at a cost of 10 to 15%, before any taxation.

 

[CyprusLaw]

That is not what I was referring to with regards to 90 days. I have taken this section from the KPMG file:

1. 100% exemption on remuneration for salaried services rendered outside Cyprus for more than 90 days in a tax year to a non-Cyprus resident employer.

So let's take the situation in of the OP, who has a salaried job form a USA company to provide travel services to HWNI. If these services can be rendered outside Cyprus for more than 90 days, than no need for expensive company structures.

The salary is 100 to 120K and with all corp structures being proposed here we look at a cost of 10 to 15%, before any taxation.

Noted re the above - about the structuring however this would have to be discussed with the person who made the original post as I believe his needs wouldn't fall under this. I also note that you seemed to link non-dom with this, which are different concepts, as this has to do with salary, while non-dom benefits have to do with the company's shareholder.