Question about Cyprus tax on trader and residence

[Bill D]

Considering Cyprus as a natural person residence for day trader (stocks/cryptos), eu citizen
If I spend all year and day trade from cyprus, 183 days+ in cyprus will I get a real solid tax residence ?
Because from what I see I would be a "resident non domicialed" and I heard that these status were not necessarily recognized by some high tax countries.
From where I am it is important to be able to claim that I have solid tax residence substance somewhere else as a natural person, if possible with a TRC added to simplify things.

Secondly, few points I did not understand :

1)is it always better to open a company and trade through that company, then pay 12%profit tax +0%dividend tax,+5kisheur/years social tax, compared to keep the trading in your own name ?

2) is the exemption on tradfi trading, 0% on stocks, derivativ, so absolutely anything your broker offers out of forex and forex derivativ RIGHT ?) is not depending on the frequency ? example even with a million transaction a day you are fully exempted ?

3) it is not mandatory to distribute myself any salary whatever my time and involvement I have, not a grey area here, because pwc mentionned about salary obligation(that you cannot get huge dividend and 0/small salary) which could induce a huge tax ? Do you have confirmation on it?

4)basically I can just loan all my assets, from stocks to cryptos to fiat and trade throught the company ?

5)were you able to open bank accounts for the cyprus trading company, and for crypto routes too, to transfer from and to crypto platform ? I saw in cyprus it was impossible, but you always could via some other banks ?

6)am I automaticallty guaranteed to be non domiciled or do I have to request it ?

7)is cyprus(natural person residence+local LLC) a better choice than bulgaria LLC (+residence) in terms of banking/audits complexity and risks

8)once you get paid dividends from your cyprus llc you can always use that as a SOF or is it seen as risky by any broker worldwide (weaker than a salary)?

 

[Sols]

If I spend all year and day trade from cyprus, 183 days+ in cyprus will I get a real solid tax residence ?

Yes. To the Cypriot authorities, 60 days can be enough, if you aren't tax resident anywhere else. But 183+ days removes room for doubt in practically all cases.

Because from what I see I would be a "resident non domicialed" and I heard that these status were not necessarily recognized by some high tax countries.

This does not appear to be reflected in reality. The only case I've seen this brought up in, the non-domicile aspect was insignificant. As a foreigner, being non-domicile just means you aren't born Cypriot and haven't lived in Cyprus for 17 years.

6)am I automaticallty guaranteed to be non domiciled or do I have to request it ?

In one way you automatically are, but in order to enjoy the tax benefits, you have to obtain an exemption certificate from the tax authority. Very easy process if you have a lawyer or accountant do it for you.

7)is cyprus(natural person residence+local LLC) a better choice than bulgaria LLC (+residence) in terms of banking/audits complexity and risks

Company and residence in the same jurisdiction is almost always better and easier.

8)once you get paid dividends from your cyprus llc you can always use that as a SOF or is it seen as risky by any broker worldwide (weaker than a salary)?

In most cases and if there is nothing else suspicious or unusual about you, dividends are fine as a SOF.

There are other members who can answer the other tax questions better.

 

[Bill D]

Considering Cyprus as a natural person residence for day trader (stocks/cryptos), eu citizen
If I spend all year and day trade from cyprus, 183 days+ in cyprus will I get a real solid tax residence ?
Because from what I see I would be a "resident non domicialed" and I heard that these status were not necessarily recognized by some high tax countries.
From where I am it is important to be able to claim that I have solid tax residence substance somewhere else as a natural person, if possible with a TRC added to simplify things.

Secondly, few points I did not understand :

1)is it always better to open a company and trade through that company, then pay 12%profit tax +0%dividend tax,+5kisheur/years social tax, compared to keep the trading in your own name ?

2) is the exemption on tradfi trading, 0% on stocks, derivativ, so absolutely anything your broker offers out of forex and forex derivativ RIGHT ?) is not depending on the frequency ? example even with a million transaction a day you are fully exempted ?

3) it is not mandatory to distribute myself any salary whatever my time and involvement I have, not a grey area here, because pwc mentionned about salary obligation(that you cannot get huge dividend and 0/small salary) which could induce a huge tax ? Do you have confirmation on it?

4)basically I can just loan all my assets, from stocks to cryptos to fiat and trade throught the company ?

5)were you able to open bank accounts for the cyprus trading company, and for crypto routes too, to transfer from and to crypto platform ? I saw in cyprus it was impossible, but you always could via some other banks ?

6)am I automaticallty guaranteed to be non domiciled or do I have to request it ?

7)is cyprus(natural person residence+local LLC) a better choice than bulgaria LLC (+residence) in terms of banking/audits complexity and risks

8)once you get paid dividends from your cyprus llc you can always use that as a SOF or is it seen as risky by any broker worldwide (weaker than a salary)?

9)what would be the tax if you day trade assets (all sorts of asset, crypto etc) high frequency in your personal capacity ?

Yes. To the Cypriot authorities, 60 days can be enough, if you aren't tax resident anywhere else. But 183+ days removes room for doubt in practically all cases.

so there are no cases where the cyprus tax residency is weaker than an other one (not talking about the bilateral tax conventions), just meaning I get an actual TRC and cyprus claims me as a tax resident of their country (natural person), in that sense I will be as much tax resident in cyprus (living there all year) than I would be tax residence of bulgaria by living there all year or any other country without that "non domiciled" status

In one way you automatically are, but in order to enjoy the tax benefits, you have to obtain an exemption certificate from the tax authority. Very easy process if you have a lawyer or accountant do it for you.


Company and residence in the same jurisdiction is almost always better and easier.

thanks, yes I meant all in the same juridiction (bg natural person residence+eood vs cyprus natural person 183+ residence+ cyprus llc), looking for most straighforward setup, for easiest (hard already) banking, been a resident in bg last years, paid tax as individual and need to make a proper setup now to access better banking and not be closed to the few bank which accept withdrawal from a crypto platform

 

[CyprusBusiness]

9)what would be the tax if you day trade assets (all sorts of asset, crypto etc) high frequency in your personal capacity ?

This depends on what assets you will be trading.

I listed these assets on another thread. The exemptions cover both company and individual basis

Please see below:

A circular was issued by the Income Tax Authorities listing the financial instruments that fall within the definition of "titles" as mentioned in the Income Tax Law N118(I)/2002. The legislation provides that any gain on the disposal of titles is exempt from income tax.

The full list of financial instruments that fall within the definition is as follows:

• Ordinary shares
• Founder's shares
• Preference shares
• Options on titles
• Debentures
• Bonds
• Short positions on titles
• Futures/forwards on titles
• Swaps on titles
• Depositary receipts on titles (ADRs and GDRs)
• Rights of claims on bonds and debentures (rights on interest of these instruments are not included)
• Index participations only if they result in titles
• Repurchase agreements or Repos on titles
• Participations in companies; Russian OOO and ZAO, US LLC provided that their profits are subject to taxes, Romanian SA and SRL and Bulgarian AD and OOD.
• Units in open-end or closed-end collective investment schemes that have been incorporated, registered and operate in accordance with the provisions of the relevant legislation of the incorporated country

Examples of such units are:

• Investment trusts, investment funds, mutual funds, unit trusts, real estate investment trusts
• International collective investment schemes - ICIS
• Undertakings for collective investments in transferable securities or UCITS
• Other similar financial institutions

Anything not covered by the above is considered taxable. Thus Forex trading and crypto trading (including crypto and forex derivatives) are taxable.

 

[Sols]

so there are no cases where the cyprus tax residency is weaker than an other one (not talking about the bilateral tax conventions), just meaning I get an actual TRC and cyprus claims me as a tax resident of their country (natural person), in that sense I will be as much tax resident in cyprus (living there all year) than I would be tax residence of bulgaria by living there all year or any other country without that "non domiciled" status

I have seen the argument be made but no one has presented evidence to back it up. The only case that's been quoted had very little to do the person's non-domicile status and more to do with the person not having a demonstrable tax residence (and some other problems).

If you spend 183+ days per year in Cyprus and cut ties to Bulgaria, it's unlikely to ever be questioned. If it is questioned for some reason, you should be able to defend it.

 

[Bill D]

I have seen the argument be made but no one has presented evidence to back it up. The only case that's been quoted had very little to do the person's non-domicile status and more to do with the person not having a demonstrable tax residence (and some other problems).

If you spend 183+ days per year in Cyprus and cut ties to Bulgaria, it's unlikely to ever be questioned. If it is questioned for some reason, you should be able to defend it.

Im not citizen of bg but from high tax eu country.
Heard once a youtuber, consultant mentionning that non domiciled tax residence (same one in malta i think) werent true tax residence and thus did not permit to mive you tax residence abroad (claim you are t+x redident elsewhere) for some of the very strict citizenship countries.

 

[Sols]

Im not citizen of bg but from high tax eu country.

Some countries have more rules than the 183-day test, but those rules are in many cases only invoked if they think you're abusing the system. If you're from for example Finland, you may remain tax resident in your home country even after you leave unless you specifically apply for non-residence (which is usually not a problem to get, if you do it right). Check your country's rules on becoming tax non-resident.

For most people in most circumstances, if you live 183+ days in Cyprus after cutting ties with your home country properly, no one is going to bother you. Even if you have a high tax EU country citizenship (except Hungary).

There are thousands of non-domicile residents in Cyprus and Malta from other EU countries. If this were a problem that could affect anyone, it would. The only people who get into trouble are those who don't follow the rules and do stupid things like owning property in their home country, spending time there, being CEO/CFO of a company there, and so on.

Heard once a youtuber, consultant mentionning that non domiciled tax residence (same one in malta i think) werent true tax residence and thus did not permit to mive you tax residence abroad (claim you are t+x redident elsewhere) for some of the very strict citizenship countries.

What credentials does the youtuber have? Listen to lawyers, not social media influencers. Using social media as part of your research into this is fine and can provide some helpful little tips here and there. But speak with an actual lawyer and pay for their advice if you want certainty.

 

[CyprusLaw]

Im not citizen of bg but from high tax eu country.
Heard once a youtuber, consultant mentionning that non domiciled tax residence (same one in malta i think) werent true tax residence and thus did not permit to mive you tax residence abroad (claim you are t+x redident elsewhere) for some of the very strict citizenship countries.

The non-dom is a separate concept from the tax residency. As Sols mentioned above, you are considered a non-dom as long as you have not lived in Cyprus for the last 17 years.

The tax residency is a different concept which is determined on an annual basis depending on days spent.

 

[Bill D]

The non-dom is a separate concept from the tax residency. As Sols mentioned above, you are considered a non-dom as long as you have not lived in Cyprus for the last 17 years.

The tax residency is a different concept which is determined on an annual basis depending on days spent.

From what I heard, some country require you to move your Domicile+residence abroad.
From that, moving to a country like Malta, Cyprus, Panama, (and some territorial status country), where one would only transfer his residence from a fiscal point of view, and not his domicile, would let the taxpayer taxable to his previous residence on worldwide income (for countries that require you to move your residence + domicile abroad)?

If someone settle in Malta or Cyprus, he is considered not to have transferred his Domicile there, thus the Domicile remaining in the previous residence country, said a consultant, this is really strange, appearently some case law worked against some which had this resident non domicialed in the UK to requalify them as a resident for their worldwide income(out of uk) on their previous country

 

[Bill D]

From what I heard, some country require you to move your Domicile+residence abroad.
From that, moving to a country like Malta, Cyprus, Panama, (and some territorial status country), where one would only transfer his residence from a fiscal point of view, and not his domicile, would let the taxpayer taxable to his previous residence on worldwide income (for countries that require you to move your residence + domicile abroad)?

If someone settle in Malta or Cyprus, he is considered not to have transferred his Domicile there, thus the Domicile remaining in the previous residence country, said a consultant, this is really strange, appearently some case law worked against some which had this resident non domicialed in the UK to requalify them as a resident for their worldwide income(out of uk) on their previous country

@CyprusLaw @CyprusLawyer101 @CyprusBusiness do you have any confirmation on that point and that citizenship country cannot claim the tax instead of Cyprus by saying that I did not transfer my domicile to Cyprus sorry I am having hard time to find much information about that and it seem controversial point

 

[CyprusBusiness]

@CyprusLaw @CyprusLawyer101 @CyprusBusiness do you have any confirmation on that point and that citizenship country cannot claim the tax instead of Cyprus by saying that I did not transfer my domicile to Cyprus sorry I am having hard time to find much information about that and it seem controversial point

Usually the domiciliation (citizenship) alone will not trigger a tax liability in the country of citizenship. However, in very few cases (i.e. US nationals) will be taxed by the US even though they have changed tax residency, but certain foreign tax credits and foreign earned income exclusions exist to mitigate the tax burden.

Please share your citizenship so that we can advise you more precisely on this.

Also please note that if a double tax treaty is in place this should contain guidelines to determine 'fiscal residence' using ties test and place of economic abode. The Treaties also cover scenarios where the residency is not clear.

 

[CyprusLawyer101]

Yes domicile remains and generally has an impact on domestic inheritance tax laws amongst a few others, however it generally does not impact income tax laws.

 

[Bill D]

Usually the domiciliation (citizenship) alone will not trigger a tax liability in the country of citizenship. However, in very few cases (i.e. US nationals) will be taxed by the US even though they have changed tax residency, but certain foreign tax credits and foreign earned income exclusions exist to mitigate the tax burden.

Please share your citizenship so that we can advise you more precisely on this.

Also please note that if a double tax treaty is in place this should contain guidelines to determine 'fiscal residence' using ties test and place of economic abode. The Treaties also cover scenarios where the residency is not clear.

No it's Western EU, so there is no taxation on passport however there is a requirement to be a real tax resident somewhere else, and the bilateral agreement does not work I think in that case because in the definition of resident section it says that this agreement does not apply for people who are not paying tax on their worldwide income in cyprus. I will send you a PM

Yes domicile remains and generally has an impact on domestic inheritance tax laws amongst a few others, however it generally does not impact income tax laws.

It's a bit complicated because different country have difference definition of residence and domicile.
All that would matter to me is about the fact that my tax residence would be solely in cyprus without having citizenship country able to tax income+cap gains worldwide (not talking about any income+cap gains realized in the citizenship country as there are none)

 

[CyprusLawyer101]

No it's Western EU, so there is no taxation on passport however there is a requirement to be a real tax resident somewhere else, and the bilateral agreement does not work I think in that case because in the definition of resident section it says that this agreement does not apply for people who are not paying tax on their worldwide income in cyprus. I will send you a PM

It's a bit complicated because different country have difference definition of residence and domicile.
All that would matter to me is about the fact that my tax residence would be solely in cyprus without having citizenship country able to tax income+cap gains worldwide (not talking about any income+cap gains realized in the citizenship country as there are none)

Each case should be assessed on its own merits. Your citizenship country may tax you based on it being your centre of vital interests.

 

[Bill D]

Each case should be assessed on its own merits. Your citizenship country may tax you based on it being your centre of vital interests.

Right, I was talking about the case where you do not respect any criteria of residence in your citizenship country internal laws. To make it simple as it's not the subject I was meaning, from your citizenship country : you have no local family, not any local revenue, not any local goods, and spend your whole year in Cyprus where you have your center of interest.

 

[CyprusLawyer101]

Right, I was talking about the case where you do not respect any criteria of residence in your citizenship country internal laws. To make it simple as it's not the subject I was meaning, from your citizenship country : you have no local family, not any local revenue, not any local goods, and spend your whole year in Cyprus where you have your center of interest.

You should be fine !