Non-Dom in Cyprus

[jackfrost]

Soo with all the 2019 ATAD / CFC crap going on it is time to get up to speed with alternatives in the EU again.

If i move to Cyprus as an EU national (never lived there, never been tax resident there, never had a company there) would this be the 2019-post-cfc-atad proof setup or am i looking in the wrong direction:

1) form LTD in Cyprus
2) move to Cyprus in 2019, stay there at least 60 days, less than 183 in any other country, rent full time, fulfill cypriot ties through having the cyprus LTD
3) cyprus ltd conducts IT consulting business worldwide
4) I as the then owner / UBO / cyprus non-dom resident + tax resident do not pay myself a wage as the director but only pay out dividends to myself as the shareholder

This ?should? mean:

- 12.5% corp tax on the profits of the cyprus ltd
- 0% personal tax as its dividends to a non-dom which are allowed be cyprus sourced - no need for holding company, no social security & co
- accounting, living costs

Anything else?

Better solution (in the EU)?

 

[Martin Everson]

If you stay less than 183 days then where will you be entering on record with the bank etc that you are tax resident? If you don't work this one out the taxman will decide where your centre of activity is based.

 

[negon]

4) I as the then owner / UBO / cyprus non-dom resident + tax resident do not pay myself a wage as the director but only pay out dividends to myself as the shareholder

It's going to be hard to proof that this is only dividends if someone get's after you. But well possible. Actually to be a Cyprus resident or to stay there and navigate around the tax laws is pretty easy if you have professional assistance. I assume it's the same as for instant in Latvia, Czech Republic and other Baltic countries.

 

[jackfrost]

So is there something like in the US that you are required to pay yourself a fair market salary? Are you not allowed to pay out dividends to yourself as the shareholder?

If you stay less than 183 days then where will you be entering on record with the bank etc that you are tax resident? If you don't work this one out the taxman will decide where your centre of activity is based.

According to the 2017 changes cyprus will grant you tax residency if you stay 60+ days + rent + have your company in cyprus?

But yes 183 days would not be an issue either.

 

[jackfrost]

https://www.pwc.com.cy/en/publications/assets/direct-tax-update-14-2017.pdf

This one i was basing the 60 days on.

 

[Martin Everson]

According to the 2017 changes cyprus will grant you tax residency if you stay 60+ days + rent + have your company in cyprus?

But yes 183 days would not be an issue either.

Ok so you are going to consider yourself tax resident in Cyprus. I misunderstood your point 2). I read it as you wanted to avoid being ordinarily tax resident in Cyprus.

Why not just move to Estonia and setup a company. Then take out the small amounts you need to live on as income. Then the rest of your income not distributed sits in your Estonia company at 0% tax rate?

 

[jackfrost]

@Martin Everson Oh no yeah i was referring to becoming a tax resident and really living there. The 60 days rule just comes in handy with lots of traveling. Although i still hope there is a way around all of this with Malta.

As for Estonia - because i do like living on a sunny island and i do spend some money + at some point you need to get it out of the Estonian company.

@negon I could not find anything that i cannot pay myself the company profits as dividends in Cyprus? E.g. If i pay myself 20 or even 40k a year and e.g. 200k in profits as dividends which should be completely tax free as non-dom is there any rule against that?

 

[happyjohn]

If you become tax resident in Cyprus you won't have to worry about all the other stuff. I would setup a company there as well and don't have any activity somewhere else.

 

[jackfrost]

If you become tax resident in Cyprus you won't have to worry about all the other stuff. I would setup a company there as well and don't have any activity somewhere else.

I do think you have to pay yourself kind of a fair market salary at least and cannot do 100% dividends. Don't remember where i read it though. It would not be such a big deal with all the non-dom concessions though.

 

[negon]

I agree with @jackfrost! However, it's something you can coordinate with your local tax advisor in order to avoid troubles.