Realizing gains in UAE before having lived 183 days and obtaining tax certificate?

[Verbatim]

Let's say I move to UAE in September 2021 and cash out crypto in December 2021.
I think the earliest i could obtain a tax certificate would be July 2022 because the 183 days need to be in the same fiscal year - is this correct?
How do I then report my crypto gains to the tax authorities in the UAE?
Can you/should you make a tax declaration for your UAE income for 2021? and the tax ceritificate is an entirely separate issue?

 

[TravelAfficionado]

You don't need to do anything from a UAE perspective. No tax certificate, no reporting of gains, no tax declaration.

There's a good chance you don't even need the tax certificate at all. It depends on which countries might try to claim you as tax resident. i.e. what is your citizenship or current country of residence?

 

[Gamblord]

i'm not an expert so you have to research this better before acting but I think the problem is that UAE is a CRS country and they would report your UAE banking information to Germany or whatever passport you opened the bank with. At that point your home country will send you a letter to your last known home country address and say you owe them $$$$. This is why it is important to establish tax residence...it's so difficult to do this. I am considering using Nomad Capitalist but they are very expensive and I'm not even sure they have an easy solution.

 

[TravelAfficionado]

If OP opens the bank account with a residence visa and Emirates ID, and even better a local residential address, then the bank will consider him a UAE tax resident and there will be no onwards CRS reporting. There is no need for a UAE tax residency certificate from the UAE perspective.

So the main question is whether his 'home' country will try to claim that he is still tax resident. If there is such a claim, and it's valid, he will be liable to pay taxes in that country, regardless of whether there is any CRS reporting from the UAE to that country.

So then it really depends on what is his 'home' country. If it's the UK, then it's just a case of applying the Statutory Residence Test, and there's no point in obtaining a UAE tax residency certificate. If it's Germany then I believe it's a question of whether you have a house and/or are physically present for either 6 months consecutively or in any given calendar year (excluding short absences). So, again, a UAE tax residency certificate is not required.

As far as I can tell, the certificate is mainly of use to people from countries with which the UAE doesn't have tax agreements in place.

 

[Verbatim]

You don't need to do anything from a UAE perspective. No tax certificate, no reporting of gains, no tax declaration.

There's a good chance you don't even need the tax certificate at all. It depends on which countries might try to claim you as tax resident. i.e. what is your citizenship or current country of residence?

I actually wish to go to live in the UAE for years - actually living in the country , set up a business there and so on.
But I am concerned about the lack of a tax declaration in the UAE.
Say that you have some profits in the UAE and want to transfer them to a European bank. The tax declaration acts as proof of funds. How to UAE residents go around this problem?

 

[Verbatim]

If OP opens the bank account with a residence visa and Emirates ID, and even better a local residential address, then the bank will consider him a UAE tax resident and there will be no onwards CRS reporting. There is no need for a UAE tax residency certificate from the UAE perspective.

So the main question is whether his 'home' country will try to claim that he is still tax resident. If there is such a claim, and it's valid, he will be liable to pay taxes in that country, regardless of whether there is any CRS reporting from the UAE to that country.

So then it really depends on what is his 'home' country. If it's the UK, then it's just a case of applying the Statutory Residence Test, and there's no point in obtaining a UAE tax residency certificate. If it's Germany then I believe it's a question of whether you have a house and/or are physically present for either 6 months consecutively or in any given calendar year (excluding short absences). So, again, a UAE tax residency certificate is not required.

As far as I can tell, the certificate is mainly of use to people from countries with which the UAE doesn't have tax agreements in place.

I think its reasonable to assume that when you actually report foreign income to previous residency (e.g. if you leave in the middle of the year) it would be helpful to have the UAE tax certificate to support your case that the income was actually foreign. It must not be a requirement but I think it would be good.

 

[Mr Gus]

Check if there is a tax treaty between your home country and the UAE that can back you up legally.

If there is no tax treaty prepare for the worst and put yourself in a very good position against the tax authorities in your home country, by basically cutting all ties with your home country.

- Get a permanent home in the UAE (rent or buy).
- Close bank accounts in your home country as soon as you have bank account in the UAE or outside your home country
- Get rid of cars, or permanent homes in your home country. (rental properties should be no issue)
- Make sure to spend the majority if the year in the UAE, if there is no tax treaty this "183 day rule" doesn't apply. You want to be sure to spend 80/90% of your time there just to be sure
- Get rid gym memberships etc.

You basically want to get every single tie you have with your home country if there is no tax treaty, and your home country's tax authority are very aggressive.

If you move to a country that does have a tax treaty that can support you, you will not have to cut all ties and the 183 day rule will apply. However this depends on the treaty and the requirements there are set.

 

[petal355]

I think some countries have tax treaty with uae but applied only for emirati citizen so the same as if there werent any.

Correct me if Im wrong but the most important is not to spend 80/90% of time in UAE but it is to spend less than 10/20% in your citizenship country to make sure you dont trigger tax residence there isnt it ? (As well as cut other ties)

 

[kkein]

I think you'd have better luck cashing out in 2022. It's going to be easier for you to show that you have been tax resident in UAE for the whole year = less risk.

 

[BlueMist]

Say that you have some profits in the UAE and want to transfer them to a European bank. The tax declaration acts as proof of funds. How to UAE residents go around this problem?

It’s easy. If you have a business you can pay yourself monthly salaries, bonuses, allowances, dividends. Just make a formal payslips every month, sign and stamp them and that’s it. Same for dividends. You also have bank statements confirming such payments were made to you. That’s enough. I transfer money from UAE to Europe regularly and nobody questioned anything.

 

[petal355]

It’s easy. If you have a business you can pay yourself monthly salaries, bonuses, allowances, dividends. Just make a formal payslips every month, sign and stamp them and that’s it. Same for dividends. You also have bank statements confirming such payments were made to you. That’s enough. I transfer money from UAE to Europe regularly and nobody questioned anything.

But if these profits are personnal capital gains on crypto sales, thus not reportable (not salary), isnt it an issue if your only income derive from it

 

[CaptK]

But if these profits are personnal capital gains on crypto sales, thus not reportable (not salary), isnt it an issue if your only income derive from it

Then you need to structure your business as a day trader.
Alternatively you can sell your crypto OTC in the UAE. If it's a large amount you can talk to the private banking department of the bank.

 

[petal355]

Then you need to structure your business as a day trader.
Alternatively you can sell your crypto OTC in the UAE. If it's a large amount you can talk to the private banking department of the bank.

How would you structure as a online financial day trader as every consultant I could see adviced not to pick any financial freezone activity

 

[Verbatim]

Then you need to structure your business as a day trader.
Alternatively you can sell your crypto OTC in the UAE. If it's a large amount you can talk to the private banking department of the bank.

So there are banking options for crypto in the UAE? I was under the impression that it's not easy to do crypto banking.

 

[CaptK]

So there are banking options for crypto in the UAE? I was under the impression that it's not easy to do crypto banking.

Crypto banking can be done but you need to start the conversation with 200K.

You need to first put the funds in to the exchange and then trade. Then when you take profits from the exchange/broker you can show where it came from.