Non Tax Resident in Spain or France with low substance offshore Company

[cyprustoomuch]

If you spend <183 days per year in Cyprus, then you will only be considered tax resident in Cyprus even under domestic rules if no other country claims you as tax resident.
So as soon as Spain says you're tax resident there (for whatever reason), having residency in Cyprus wouldn't help you.

They have a DTT, so what you say is pretty much nonsense. In whatever country I have stronger connections with gets the right of taxation.

Renting some airbnb for 4 months in spain meanwhile having a fully equipped home in cyprus clears the case.

Please read properly before answering such nonsense.

 

[JustAnotherNomad]

Say you spend 170 days per year in Cyprus.
Spain says you are tax resident there under their own rules (whatever they may be).
Please explain to me how Cyprus could possibly say you're tax resident there when Cyprus' own rules say you either have to spend 183+ days per year there, OR 60+ days per year + no tax residency in any other country.
So Spain claiming you as Spanish tax resident would automatically cancel out the tax residency in Cyprus under Cyprus' domestic law.
The DTT wouldn't be relevant because Cyprus wouldn't consider you tax resident any more - that would require both countries to consider you tax resident (e.g. spending 190 days per year in Cyprus, but also having a permanent home in Spain, in case that triggers Spanish tax residency).
Please explain to me where I'm wrong.

 

[Don]

They have a DTT, so what you say is pretty much nonsense. In whatever country I have stronger connections with gets the right of taxation.

Renting some airbnb for 4 months in spain meanwhile having a fully equipped home in cyprus clears the case.

Please read properly before answering such nonsense.

Cyprus own rules also say you need to maintain home year-round and not just 60 days.

For Spanish purposes obtain from Cyprus tax office a tax residency certificate for each year under the Cyprus-Spain DTT, which says following:

he shall be deemed to be a resident only of the State in which he has a permanent home available to him;
if he has a permanent home available to him in both States,
he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);

 

[JustAnotherNomad]

Yeah, say he has a home in both countries and he spends <183 days (I guess absences can be counted as well, you get what I mean) in Cyprus and for some reason Spain says he's also a tax resident in Spain.

I don't think the tax treaty would even apply because it's for dual tax residents. But Cyprus would simply say "you are not a tax resident in Cyprus anyway because another country is claiming you as a tax resident".
Or am I mistaken?

 

[Marzio]

Renting some airbnb for 4 months in spain meanwhile having a fully equipped home in cyprus clears the case.

This only matters if you actually have the chance to USE the DTT

If you stay <183 days in Cyprus and at the same time some other country claim you are tax resident in that country because of its domestic rules you are fucked big time because Cyprus will revoke your tax residency.

 

[JustAnotherNomad]

Exactly, that's what I meant.

 

[Don]

This only matters if you actually have the chance to USE the DTT

If you stay <183 days in Cyprus and at the same time some other country claim you are tax resident in that country because of its domestic rules you are fucked big time because Cyprus will revoke your tax residency.

You are right that the tax residence certificate based on domestic law is quite worthless in protecting you against taxation in other jurisdictions.
However, if there is a conflict between the provisions of a DTT and domestic law, the provisions of the DTT will usually prevail.
The DTT primarily helps determine which country has the right to tax a particular source of income.

To access DTT you will need to inform the tax authorities of both jurisdictions. This is usually done through a formal process where you declare that you are a resident for tax purposes in one of the countries under the treaty, and you are claiming the treaty benefits.

Different countries have different procedures for claiming treaty benefits. You may need to fill out specific forms or provide additional documentation.
For example, In the U.S. non-resident aliens typically need to complete form W-8BEN to claim treaty benefits.
Estonia issues automatically tax residence certificates based on DTT-s, which you can then present to tax authorities in other jurisdictions.
Cyprus and Spain have their own forms and procedures.

Once you have filled out the appropriate forms, you need to submit them to the relevant tax authority. This might be as part of your annual tax return, or it could be a separate process.


The second issue is the corporate tax. The mere fact that a company is incorporated in Cyprus and pays taxes in Cyprus on its worldwide income (and therefore able to obtain a Tax Residence Certificate from the Cyprus Tax Authorities) is no longer sufficient for a business to guarantee that a Cyprus company can access the full treaty benefits offered through the expanding and favourable DTT network that Cyprus has to offer. Most tax jurisdictions will now examine whether the Cyprus company claiming tax benefits has substance, and is not just a shell company set up merely for tax purposes.

 

[Marzio]

if there is a conflict between the provisions of a DTT and domestic law, the provisions of the DTT will usually prevail.

That's true but the point here is the by being considered tax resident in another country he can't claim Cyprus tax residency because he didn't spend 183 days in Cyprus and the 60 days tax residency is only awarded IF all the criteria are satsified (which are not in this case)

 

[crassus54]

I have seen it happen in Spain and France. I have also seen it not happen.

Why are you so hung up on duration?

Just look at the French definition for example. Residents of France It doesn't even mention number of days.

The Spanish law does have a 183-day rule but it's only one possible way to become tax resident. Another is by having Spain as your main base or centre of economic/vital interests. So unless another country is your centre of economic interest, Spain might be.


Absolutely, people who spend a few weeks a year in either country and have lawyers helping them make proper arrangements. People with clear centres of economic interest somewhere else. People who don't really do any work while they're in Spain and France.

And then there are examples like Shakira and Lionel Messi where things maybe didn't go so well.

I have been wrestling with this. I was previously a US resident and citizen and could live with the Tax treaty as long as I wanted, as long as I had two permanent homes in the US and FR. Now, I will have to figure something out as I am getting rid of my US residency and moving Tax Residency to a territory not covered by the treaty.

Now I am forced to live somewhere else longer than I spend time in France, do you have any other ideas?

I am looking into Spain or Argentina, and would love to spend 5.5 months a year or so there without being a tax resident, is this possible?

Try to use cash to fly as low as possible while in Spain.Or use an "anonymous" crypt card where required to pay by card. Change them from time to time. A payonner card for example. Ask a friend/girlfriend to borrow you one for example.

I think you are afraid they might know you lived in Spain for 6 months because when you rent you need to register your rental contract. If you are spanish why don't you try to go to those countries where you can avoid taxes for a few years , like Chile, Argentina, or whatever the name are?

How does one avoid tax residency in Argentina?