Short tax residency options

[glengoolie]

There are plenty of options for favourable tax regimes around the world, most notably those with territorial tax system, but usually these jurisdictions require the 183 day rule to be met in order for a person to be able to get a tax residence for the year. Sometimes this is not something one wants to do, especially if said country might not fit the person culturally or otherwise.

Do you know about countries that provide either territorial tax regime, low or no income/capital gains tax that allows a person to obtain the tax residency without having to spend half a year there?

So far I have only seen Cyprus that allows 60 days tax residency with few conditions.

I guess another option is to get a citizenship, and domicile, in tax friendly country, with sufficient passport value, and avoid staying half a year in any other country to be tax resident of your domicile country(like St. Kitts for example).

 

[Piano]

There are plenty of options for favourable tax regimes around the world, most notably those with territorial tax system, but usually these jurisdictions require the 183 day rule to be met in order for a person to be able to get a tax residence for the year. Sometimes this is not something one wants to do, especially if said country might not fit the person culturally or otherwise.

Do you know about countries that provide either territorial tax regime, low or no income/capital gains tax that allows a person to obtain the tax residency without having to spend half a year there?

So far I have only seen Cyprus that allows 60 days tax residency with few conditions.

I guess another option is to get a citizenship, and domicile, in tax friendly country, with sufficient passport value, and avoid staying half a year in any other country to be tax resident of your domicile country(like St. Kitts for example).

what are the conditions of Cyprus exactly ?

 

[CyprusLaw]

what are the conditions of Cyprus exactly ?

The '60 day rule' for Cyprus tax residency is satisfied for individuals who, cumulatively, in the relevant tax year:

• do not reside in any other single state for a period exceeding 183 days in aggregate
• are not considered tax resident by any other state
• reside in Cyprus for at least 60 days, and
• have other defined Cyprus ties.

To satisfy the fourth criteria, the individual must carry out any business in Cyprus and/or be employed in Cyprus and/or hold an office (director) of a company tax resident in Cyprus at any time in the tax year, provided that such is not terminated during the tax year. Further, the individual must maintain in the tax year a permanent residential property in Cyprus that is either owned or rented by the individual.

 

[Piano]

The '60 day rule' for Cyprus tax residency is satisfied for individuals who, cumulatively, in the relevant tax year:

• do not reside in any other single state for a period exceeding 183 days in aggregate
• are not considered tax resident by any other state
• reside in Cyprus for at least 60 days, and
• have other defined Cyprus ties.

To satisfy the fourth criteria, the individual must carry out any business in Cyprus and/or be employed in Cyprus and/or hold an office (director) of a company tax resident in Cyprus at any time in the tax year, provided that such is not terminated during the tax year. Further, the individual must maintain in the tax year a permanent residential property in Cyprus that is either owned or rented by the individual.

ok, in case you are a trader of stocks, forex and futures , how would you structre the set up to minimise taxes and how much would that be ?

how can they control that you reside there minimum 60 days ?

 

[CyprusLaw]

ok, in case you are a trader of stocks, forex and futures , how would you structre the set up to minimise taxes and how much would that be ?

how can they control that you reside there minimum 60 days ?

Just for you or will you be offering investment services to clients?

 

[glengoolie]

ok, in case you are a trader of stocks, forex and futures , how would you structre the set up to minimise taxes and how much would that be ?

this is my case so i am actively looking at cyprus.

cyprus does not tax gains on capital from dividends, equities or properties. but forex is not exempt, futures as well. only securities. also, flipping local properties or shares of companies that flip cyprian proeprties or make at least 50% of money by selling cyprian properties si not tax exempt.

the best, fastest and simplest setup is simply to move to cyprus and trade stocks. if you are tax resident(183 day rule), you pay 0 income or capital gains taxes. but you will pay 2.65% health insurance, although i am not sure how that is calculated since you could buy stocks at the end of the year and show expense so your gain would be 0 and therefore your healthcare would be 0. i created a topic for this specific question in here o someone will answer it in time. also the healthcarei s capped at 400€ a month or something like that(2.65% up to 180k€).

there is the 60 days rule with the rules listed above but that brings quite an overhead and would be worth it only if you would make really good money and would not be able to stay there for half a year for some reason.

 

[CyprusLaw]

this is my case so i am actively looking at cyprus.

cyprus does not tax gains on capital from dividends, equities or properties. but forex is not exempt, futures as well. only securities. also, flipping local properties or shares of companies that flip cyprian proeprties or make at least 50% of money by selling cyprian properties si not tax exempt.

the best, fastest and simplest setup is simply to move to cyprus and trade stocks. if you are tax resident(183 day rule), you pay 0 income or capital gains taxes. but you will pay 2.65% health insurance, although i am not sure how that is calculated since you could buy stocks at the end of the year and show expense so your gain would be 0 and therefore your healthcare would be 0. i created a topic for this specific question in here o someone will answer it in time. also the healthcarei s capped at 400€ a month or something like that(2.65% up to 180k€).

there is the 60 days rule with the rules listed above but that brings quite an overhead and would be worth it only if you would make really good money and would not be able to stay there for half a year for some reason.

The above is pretty much correct.

about the 2.65% towards the health system - this applies on the dividends. So if the plan is to make all investments through the company and take no dividends then there won't be a 2.65% liability. Any payments that cannot pass as company expenses and will be deemed to be dividend payments will be charged with the 2.65%. I hope this clarifies your question.

 

[glengoolie]

my confusion was not related to company but to individual How is GHS calculated for investors?

 

[CyprusLaw]

my confusion was not related to company but to individual How is GHS calculated for investors?

This is similar to the previous discussion we had. So GHS is charged 2.65% on dividend payment, so if eg. the company makes 200,000 EURO in profit and the investor is paid dividends on 150,000 euro then this 150,000 is charged by 2.65% so 3975 is paid towards the GHS. The remaining 50,000 will show as profit in the company's balances and be charged with 12.5% (if applicable) corp tax.

 

[glengoolie]

so if i trade stocks as individual and i have no stocks that pay dividends, no matter how profitable i am by trading stocks, i will pay 0€ GHS, correct?

if i would on the other hand receive 1000€ from dividends during the year, i would pay the 2.65% on those 1000€ alone, right?

 

[CyprusLaw]

so if i trade stocks as individual and i have no stocks that pay dividends, no matter how profitable i am by trading stocks, i will pay 0€ GHS, correct?

if i would on the other hand receive 1000€ from dividends during the year, i would pay the 2.65% on those 1000€ alone, right?

No.

The dividends apply to dividends paid by a company to its shareholder. The same with the corp tax exemption with respect to stocks.

If you are trading as an individual this could potentially fall under income tax rules and it will be different, for example any income received will be treated as taxable income and you would need to be GHS and social insurance + income tax as an individual (unless of course any exemptions apply).

Taking into account your structure the best scenario would be to trade through a company, stocks would be corp tax exempt and then pay dividends if necessary to pay just 2.65%.

 

[glengoolie]

if i trade stocks as individual, yes, that is income, like any other income, but it is tax exempt. i don't need a company to do that. i am merely asking how the GHS is calculated in such case.

 

[CyprusLaw]

if i trade stocks as individual, yes, that is income, like any other income, but it is tax exempt. i don't need a company to do that. i am merely asking how the GHS is calculated in

As an indivudual have in mind you would be liabke for social insurance

 

[glengoolie]

social security does not apply to unemployed people. only to employees, employers and self-employed.

 

[CyprusLaw]

social security does not apply to unemployed people. only to employees, employers and self-employed.

This is not how it works. You can't just earn income without declaring and registering. You will need to register as self employed so that you pay social insurance and GHS.

 

[glengoolie]

that makes zero sense. i am not saying i will not declare the income from investments. i am just saying that this type of income is tax exempt. for example i can buy a house with my own money, outside of cyprus, sell it, make profit, declare that profit as income and pay no income tax because it is tax exempt as gain on capital. equities are the same. i do not need to be self-employed since i am not providing any services to anyone. you have it confused.

 

[CyprusLaw]

that makes zero sense. i am not saying i will not declare the income from investments. i am just saying that this type of income is tax exempt. for example i can buy a house with my own money, outside of cyprus, sell it, make profit, declare that profit as income and pay no income tax because it is tax exempt as gain on capital. equities are the same. i do not need to be self-employed since i am not providing any services to anyone. you have it confused.

Dear Glengoolie,

As we have been having this trend in other threads as well, I understand that you or not located in Cyprus nor you have received advice from a Cyprus advisor other than what you understand from what you read online. Please get proper professional advice as this results into misinforming other people who read this thread. Regardless of stock trading being tax exempt you still have an obligation to register and declare as income in order to pay social insurance and GHS.

 

[glengoolie]

i am not disagreeing with what you said. i clearly stated that declaring income from investments is expected and will be exempt from taxation because of the type of income it is. social security is not paid by unemployed people, anywhere in the world. i was asking about healthcare and you brought up social security for no apparent reason.

 

[CyprusLaw]

i am not disagreeing with what you said. i clearly stated that declaring income from investments is expected and will be exempt from taxation because of the type of income it is. social security is not paid by unemployed people, anywhere in the world. i was asking about healthcare and you brought up social security for no apparent reason.

From the moment you earn income you have an obligation to be registered as a sole trader in Cyprus, this will bring an obligation for S.I payment and GHS payment

 

[glengoolie]

if that would be the case then cyprus would have absolutely no advantage for investors whatsoever. hence i doubt this is true. we're just talking s**t online, and that is fine. i will find out once i land there next year and figure things out from a local tax authority. i am merely disagreeing with your statements based on what i read so far, how european union works and my own logic and perception, that's all. no hate.