Seeking Tax Residency Advice & Info on Operating Offshore

[Chonsai]

Hey everyone,

Here's my situation right now:

• I'm a UK national living in the UK.
• I'm building a web3-based company that will begin trading soon, which includes the sale of NFTs.
• If I remain in the UK, I will be subject to the wrath of both the FCA & HMRC.
• Without licensing from the FCA I will be exploded.

I'm researching options for emigration to fix my personal tax residency status. I am also researching jurisdictions for company setup so that it can operate legally and efficiently, with proper licensing.

This thread is about the former - personal emigration for tax residency.

Cyprus Option: My first option is Cyprus. From what I gather:

• I'd need to stay there for at least 60 days a year and not be resident in any other country for more than 183 days.
• I heard I might need an active Cypriot company, perhaps paying into pensions and stuff. Anyone know about the costs and details related to this?
• Do I really need to rent an apartment all year round?

Thailand Option: My second option (which is actually my personal preference, but more restrictive) is Thailand.

• I would need the Thailand Elite Visa (which is supposedly being discontinued soon, so I must act soon)
• In Thailand some things are illegal and some things are "illegal". Does anyone have any experience on how strict they enforce this?
• I'm unsure of the tax implications of this and whether my company would then be subject to Thailand's corporate tax/regulation - Thailand's crypto regulation blows right now.

Other Options: Anywhere in Asia or Europe where I can live and run my crypto business would be great.

Novice Alert: Full disclosure: This is my first business, and everything about running an company, let alone offshore company, is new territory for me. I've done tons of reading, but it feels like the more I learn, the more I see what I don’t know. I get that I might not find all the answers here, but any advice or pointers would be fantastic. If someone could suggest some resources or the kind of expert I should consult to get this right from the start, I’d be grateful.

I've not been able to find what exactly I would get for paying for the "Mentor Group Gold" on this website, but it's enticing. Can anyone link a resource to sell it to me?

Thanks for taking the time. Really appreciate any insights you can share!

Chonsai

Re: Cyprus
The conditions for being classified as a tax resident in Cyprus require you to spend more than 183 days aggregate in any country for the year, and:

• He or she stays in Cyprus for at least 60 days in the tax year.
• He or she exercises any business in Cyprus and/or is employed in Cyprus and/or holds an office for a person tax resident in Cyprus at any time during the tax year.
• He or she maintains a permanent residence in Cyprus that is owned or rented by him or her.

Source: EY Personal Tax Immigration document (Sept-22)

So it sounds like the easiest option would be to 'Exercise a business in Cyprus [...] at any time during the tax year'. If anyone has links to a resource who could help organise such a set-up and to give a rough idea of costs to operate this, I'm interested to hear.

Chonsai

 

[Chonsai]

Follow-up 2:
Seems like Cyprus is not a particularly great place to live, so I'm less inclined to live there for 2 months a year.

Previously though I had to be a tax resident somewhere - this was misinformed. I did not know I could permanently not be a tax resident anywhere, was told this was a 'dated' solution. However, it does not seem to be.

The primary issue is to break my UK tax residency, which means leaving the UK before the new tax year starts. This allows me ~15 days to visit the UK across the year without being classified as a tax resident. Then, stay in no country longer than ~180 days, and I'm good to go.

I am exploring becoming a full-time tax resident in Thailand. It seems their remittance laws policies for foreign businesses would make it pretty easy to sustain myself, whilst continuing to pay no tax. I'm aware that it may not be sanctioned to conduct business with my foreign entity from Thailand though.

Anything I'm missing or overlooking? Second option is just to Digital Nomad around Asia.

 

[Ancova]

If you require a tax residency certificate, you can get it in Dubai even if you are not living here.

The requirement is to set up your company here and get a residency visa here you need to come once (investor visa) or twice (employment visa) a year.

 

[Chonsai]

If you require a tax residency certificate, you can get it in Dubai even if you are not living here.

The requirement is to set up your company here and get a residency visa here you need to come once (investor visa) or twice (employment visa) a year.

Thank you for your response, I'm not familiar with tax residency certificates. Are there commonly repercussions if I do not have them?

Seems an investor visa is off the cards due to the costs. Can you share any insights on the difficulties of getting an employment visa?

 

[yngmind]

UAE seems like a good option for you, but it has a high cost of living.

 

[Ancova]

UAE seems like a good option for you, but it has a high cost of living.

It depends what means "high"

The company incorporation with bank account , investor visa and Tax Residency certificate will be max 40k AED. Once this is done, he does not need to live here, can live pretty much anywhere.

If he however decides to live here, he can live a comfortable life with 15k AED per month.

 

[yngmind]

It depends what means "high"

The company incorporation with bank account , investor visa and Tax Residency certificate will be max 40k AED. Once this is done, he does not need to live here, can live pretty much anywhere.

If he however decides to live here, he can live a comfortable life with 15k AED per month.

There are requirements to become a UAE tax resident.

According to Cabinet Resolution No. 85, effective 1 March 2023, individuals can be considered tax residents in the UAE if they meet any one of the following conditions:

• Their principal place of residence and the center of their financial and personal interests are in the UAE.
• The individual has been physically present in the UAE for 90 days or more over a consecutive 12-month period and is a UAE citizen, UAE resident, or Gulf Cooperation Council (GCC) national who either has a permanent place of residence in the UAE or performs a job or business in the UAE.
• The individual has been physically present in the UAE for 183 days or more in a consecutive 12-month period.
  
  
  
  
• For this condition, the requirements are:
  
  • Individuals have to present an entry and exit report from the Federal Authority of Identity and Citizenship or a local competent Government entity confirming number of days spent in the UAE.
• AND one of the following:
  
  • Proof of permanent source of income or salary certificate or other proof of carrying on a business in the UAE,
• OR
  
  • Proof of permanent place of residence such as title deed or certified tenancy contract (EJARI) or other long-term rental contract. Utility bills will also be helpful.

 

[Ancova]

There are requirements to become a UAE tax resident.

According to Cabinet Resolution No. 85, effective 1 March 2023, individuals can be considered tax residents in the UAE if they meet any one of the following conditions:

• Their principal place of residence and the center of their financial and personal interests are in the UAE.
• The individual has been physically present in the UAE for 90 days or more over a consecutive 12-month period and is a UAE citizen, UAE resident, or Gulf Cooperation Council (GCC) national who either has a permanent place of residence in the UAE or performs a job or business in the UAE.
• The individual has been physically present in the UAE for 183 days or more in a consecutive 12-month period.
  
  
  
  
• For this condition, the requirements are:
  • Individuals have to present an entry and exit report from the Federal Authority of Identity and Citizenship or a local competent Government entity confirming number of days spent in the UAE.
• AND one of the following:
  • Proof of permanent source of income or salary certificate or other proof of carrying on a business in the UAE,
• OR
  • Proof of permanent place of residence such as title deed or certified tenancy contract (EJARI) or other long-term rental contract. Utility bills will also be helpful.

You are, that is official. But there are some exceptions where we can assist.

 

[yngmind]

It depends what means "high"

The company incorporation with bank account , investor visa and Tax Residency certificate will be max 40k AED. Once this is done, he does not need to live here, can live pretty much anywhere.

If he however decides to live here, he can live a comfortable life with 15k AED per month.

15k AED is just for a decent apartment, not really the amount for a comfortable life.

I would double it

 

[Ancova]

15k AED is just for a decent apartment, not really the amount for a comfortable life.

I would double it

I am living in Dubai for 10 years. If the person is single and alone, 15k can be enough. Obviously if you want a lavish lifestyle, you need to earn much more.

 

[thomasparra]

I am in a very similar boat, the only difference is that I am a French national and my business will not be in the cryptocurrency industry but rather traditional financial services/B2B Research.

First of all, some people will tell you that you do not need to be tax resident somewhere but this is somewhat untrue in reality, at least for the first year or so after moving out from UK. The reason is that the UK tax office might not only ask for a tax certificate from the country you claim to be a tax resident of (i.e. 90 days in UAE if you open your business there), but it's also very likely the UK also asks you to provide more evidence about your true establishment as an individual there (e.g. tenancy contract for 1 year). There are tax treaties that stipulate all of these residency rules and that are specific to the UK and your new country of residence. I am sure many UK residents who moved to Dubai can share a lot on this (check Facebook groups). Generally, if you get a 1 year lease and set up your company in Dubai, that should technically provide you enough substance to tell the UK tax office to get lost. However, Dubai is expensive (5-10k GBP to set up a business, plus monthly expenses such as rent food etc) so you are looking at the very least at 40k pounds in expenses in your first year while your company has no concrete odds of success to this day so this is something to consider as well.

Besides the tax residency question, it's easy to open a business anywhere but getting banking access is another story, especially when your business is about crypto. From this perspective I do not know how Dubai views these businesses (my perception is that they are more or less OK/positive about it - but it would be definitely harder to get banking than for a 'traditional' business). Maybe you could look at HK as well, I know for a fact that they are particularly aggressive on attracting talent around blockchain and digital assets as a whole, as SG is a going a bit on the other side of the spectrum getting more and more restrictive. However, getting a HK visa is harder than UAE, so getting residency there might not be as straightforward or easy as Dubai.

 

[Chonsai]

The company incorporation with bank account , investor visa and Tax Residency certificate will be max 40k AED. Once this is done, he does not need to live here, can live pretty much anywhere.

So a one-off cost of 40k AED to set it up seems reasonable. But the issue comes with...

The individual has been physically present in the UAE for 183 days or more

So at 30k AED/month for 6 months and 15k AED/month for an apartment costs are now looking more like 270k AED per year + 40k AED setup.

40k pounds in expenses in your first year while your company has no concrete odds of success

And you summarised it well Thomas thank you, yeah I would not be able to afford such costs in my first year of business. I definitely would not save enough tax to justify it. Perhaps once I have found success!

Until then, like you said I should seek a tax residency certificate in another jurisdiction. Cyprus sounds like the easiest option (subject to set-up and digital nomad the rest of the time), but not the happiest existence. Thailand is still personal preference. I could also even go to Costa Rica to live, but again these places would require 183+ days a year, so it's a big commitment.

Thanks for the discussion RE: UAE everyone, if there are any more potential jurisdictions please share!

 

[thomasparra]

So a one-off cost of 40k AED to set it up seems reasonable. But the issue comes with...

So at 30k AED/month for 6 months and 15k AED/month for an apartment costs are now looking more like 270k AED per year + 40k AED setup.

And you summarised it well Thomas thank you, yeah I would not be able to afford such costs in my first year of business. I definitely would not save enough tax to justify it. Perhaps once I have found success!

Until then, like you said I should seek a tax residency certificate in another jurisdiction. Cyprus sounds like the easiest option (subject to set-up and digital nomad the rest of the time), but not the happiest existence. Thailand is still personal preference. I could also even go to Costa Rica to live, but again these places would require 183+ days a year, so it's a big commitment.

Thanks for the discussion RE: UAE everyone, if there are any more potential jurisdictions please share!

No worries, this is indeed a complex decision making process and very few people have the knowledge and the ability to be objective when recommending you options. Also remember than in Dubai you need to pay the full 12 month apartment rent directly, so you can't just rent for 6 months and move somewhere else cheap and prove to the UK office that you have full tax residency in UAE.

Maybe Malta or Cyprus would make sense, and you having a UK passport could make things easy (despite Brexit) in terms of visa/residency but I do not know anything about it. Bulgaria is also a popular option, you could rent an apartment for 500 euros per month in Sofia and be free to travel wherever. But again as your business is crypto you need to find a juridiction that is friendly towards that. It would also help to be in an ecosystem with people in your field so you can network.