Would this set-up trigger tax residency (in Southern European country)?

[Konstanz]

What I wrote about Spain applies in the same way to Italy. Read better what I wrote about the concept of domicile.
If you don’t agree and feel lucky, then good luck with GdF and your local Procura

It depends country by country. UK Non-dom scheme is very much popular by HNWI's and it legally works. I don't know maybe it depends country by country interpretation of tax residence.
If you can get normal tax residence certificate which is valid in terms of double tax treaties and RESIDENCE IS REAL, I don't think taxmen can win such case. With Cyprus non dom should be similar.

However, I have heard from my lawyer that 60 days Cyprus "residence" gives you tax residence certificate which states thats it's only valid in Cyprus and NOT VALID in terms of double tax treaties. That could be an issue if thats the case.
But I believe him, because he did many Cyprus residencies.

But I think most important part is to have as many ties with Cyprus as possible. Have real estate, spend time and money there with credit card. Apply for clubs, subscriptions and etc

 

[JohnnyDoe]

I prefer to take advice from a professional tax planner and look at facts; that from random people on the internet. I will ask you again, so every person that is a non-dom Cyprus resident and he comes from a civil law country is basically a tax evader?

No. This is not what I wrote.

Cypriot authorities are so stupid that didn't realize what you claim?

No.

Again if you, by definition, cut your ties from your home country( it's not the case for this Spanish guy who posted this) and you are not tax resident there (by the law), and you have Fiscal residency in Cyprus, no court can tell you that you have to pay taxes there.

That’s the kind of attitude that will eventually cause you big troubles, especially if you are dealing with Italian authorities.

People ask you about a legitimate source for your claims; you didn't provide anything, just "trust me, bro" ‍

This is not the place to write an essay on the concept of domicile and its interpretation in civil and common law jurisdictions.
Since you are Italian: it’s exactly how Valentino Rossi got in trouble some years ago with his London residency.

Uomo avvisato…

 

[Ads911]

No. This is not what I wrote.

No.

That’s the kind of attitude that will eventually cause you big troubles, especially if you are dealing with Italian authorities.

This is not the place to write an essay on the concept of domicile and its interpretation in civil and common law jurisdictions.
Since you are Italian: it’s exactly how Valentino Rossi got in trouble some years ago with his London residency.

Uomo avv

You are wrong in so many aspects, but I think everyone will keep his opinion, so there is no point in arguing...

Anyway, still no evidence about your claims.."Trust me, bro again," and the Valentino Rossi thing had different implications, nothing to do with the non-dom status, he would have been fined anyway regardless of the country of his residency.

 

[Marzio]

U.K. Resident Non-Domiciled Individual Not a Treaty Resident Eligible For U.K.-Italy Tax Treaty Benefits, Italian Supreme Court Says​

Anybody who want FACTS about non-dom implications should read this ruling from the Italian Supreme Court.

 

[JohnnyDoe]

You are wrong in so many aspects, but I think everyone will keep his opinion, so there is no point in arguing...

Anyway, still no evidence about your claims.."Trust me, bro again," and the Valentino Rossi thing had different implications, nothing to do with the non-dom status, he would have been fined anyway regardless of the country of his residency.

You don’t have to convince me but the procura. If you think you know best and can trick the Italian star authorities, go ahead. The money that will take from you will serve to pay a tiny portion of the ever growing National debt, it’s so much needed!

 

[Ads911]

U.K. Resident Non-Domiciled Individual Not a Treaty Resident Eligible For U.K.-Italy Tax Treaty Benefits, Italian Supreme Court Says​

Anybody who want FACTS about non-dom implications should read this ruling from the Italian Supreme Court.

Seriously you should read what you send!

first of all, here is the main point: (read the BOLD text)

The Supreme Court upheld the tax court’s and appellate court’s rulings, which ruled in favor of the tax agency and held that the taxpayer should be treated as a tax resident under the domicile test of Italy’s domestic tax law, considering that he had his most meaningful personal and family connections and substantial professional and economic interests in Italy, even though he regularly lived in the U.K.

This is the MAIN REASON.

here is the second point: (WHICH IS NOT THE MAIN REASON.

According to the Supreme Court, the fact that a U.K. resident non-domiciled is subject to U.K. tax only if he derives income from sources within the U.K., while no U.K. tax is collected on non-U.K. source income, unless and until that income is remitted to the taxpayer in the U.K., results in the taxpayer’s failure to be the Treaty’s tax residence test of article 4, par. 1). As a consequence, according to the Supreme Court, the Taxpayer could not be treated as a resident of the U.K. under the definition of article 4, paragraph 1) of the Treaty and the tie-breaker provision of paragraph 2) of the Treaty did not apply.

Cyprus's non-dom status doesn't work like in the UK because they ask you to pay taxes (or corporate taxes) from your income, so the main reason why Italian authorities didn't accept the non-dom status, in THIS CASE, does not apply in Cyprus.

Third point:

Ruling n. 21695 stands as a warning for individual taxpayers who move to the U.K. and are treated as residents non-domiciled there while maintaining significant personal or economic ties to Italy. In the event the Italia tax administration has sufficient reasons to argue that they have their domicile in Italy and are tax residents there, under Italian internal tax law, they may have no relief under the U.K.-Italy tax treaty and remain indefinitely exposed to worldwide income taxation in Italy.

Again the whole point is that these people had a real economic and personal involvement in Italy; that's why the court could do that, then it also mentioned the thing about UK non-dom, but if you read what you sent, you can see that they mention something that doesn't even happen in Cyprus because the non-dom status it's not the main point and in the right condition IT IS A FISCAL RESIDENCY.

Italy has this non-dom status too!

You both should read what you send instead of being a smartass, and "Berlusconi" should send documentation that confirms what he is claiming instead of "trust me, bro"

 

[Sols]

That ruling does not mean that being non-domicile resident makes you tax resident in Italy.

To come to that conclusion, you must be deliberately skipping key details, such as the Supreme Court "ruled in favor of the tax agency and held that the taxpayer should be treated as a tax resident under the domicile test of Italy’s domestic tax law, considering that he had his most meaningful personal and family connections and substantial professional and economic interests in Italy, even though he lived regularly in the U.K."

The particular tax treaty also states:

ARTICLE 4
Fiscal domicile
(1) For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature. But this term does not include any person who is liable to tax in that Contracting State only if he derives income from sources therein.

Article 4, clause 1 in the Italy—Cyprus treaty does not include the last sentence:

1) For the purposes of this Convention, the term "resident of a Contracting State" means any person who, under the law of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.

Note the omission of "But this term does not include any person who is liable to tax in that Contracting State only if he derives income from sources therein" in that treaty.

But if we take a look at the Cyprus—Spain tax treaty, that wording is in there. The same might be in the UK—Spain tax treaty. Do your own homework. If it is, the risk of the UK non-domicile backfiring for people who maintain substantial professional and economic interests in Spain probably exists. For someone who correctly cuts ties, though, the risk does not appear significant.

However, it's not a relevant concern in the case Cyprus. The same ruling would likely not apply and a new ruling would have to be issued. The Cypriot non-domicile exemption status works differently from UK. A Cyprus non-domicile resident does not have to pay capital gains tax (SDC, Special Defense Contribution), but has to be pay ordinary income tax on their worldwide income.

But, just to reiterate, the situation presented for the purposes of this thread does not appear sound, and is fraught with risk.

 

[Ads911]

You don’t have to convince me but the procura. If you think you know best and can trick the Italian star authorities, go ahead. The money that will take from you will serve to pay a tiny portion of the ever growing National debt, it’s so much needed!

OK, smartass, I am sure that you know better than a professional tax planner the laws, your only argument is "trust me, bro" it is no coincidence that you have a photo of Berlusconi.

That ruling does not mean that being non-domicile resident makes you tax resident in Italy.

To come to that conclusion, you must be deliberately skipping key details, such as the Supreme Court "ruled in favor of the tax agency and held that the taxpayer should be treated as a tax resident under the domicile test of Italy’s domestic tax law, considering that he had his most meaningful personal and family connections and substantial professional and economic interests in Italy, even though he lived regularly in the U.K."

The particular tax treaty also states:


Article 4, clause 1 in the Italy—Cyprus treaty does not include the last sentence:

Note the omission of "But this term does not include any person who is liable to tax in that Contracting State only if he derives income from sources therein" in that treaty.

But if we take a look at the Cyprus—Spain tax treaty, that wording is in there. The same might be in the UK—Spain tax treaty. Do your own homework. If it is, the risk of the UK non-domicile backfiring for people who maintain substantial professional and economic interests in Spain probably exists. For someone who correctly cuts ties, though, the risk does not appear significant.

However, it's not a relevant concern in the case Cyprus. The same ruling would likely not apply and a new ruling would have to be issued. The Cypriot non-domicile exemption status works differently from UK. A Cyprus non-domicile resident does not have to pay capital gains tax (SDC, Special Defense Contribution), but has to be pay ordinary income tax on their worldwide income.

But, just to reiterate, the situation presented for the purposes of this thread does not appear sound, and is fraught with risk.

THANK YOU is what I just answered him.

Unfortunately, many Italians have the bad habit to act like smartass without knowing the topic they are talking about, without providing any data or evidence, and without reading carefully what they send you as "proof"

 

[JohnnyDoe]

I wish you to never have to deal with GdF, AdE and Procura.
Do you know what they will do with your definitions? The “professional tax planner” will not save your a*s, unfortunately. You will be royally fucked, in all positions, whipped, tortured, beyond your wildest imagination, for an indefinite amount of time, at their own pleasure and complete mercy, until, if you are lucky, they will accept a settlement. This is assuming you are right in theory
If you are not right… well, what I described above will be just the appetizer.

 

[Ads911]

U.K. Resident Non-Domiciled Individual Not a Treaty Resident Eligible For U.K.-Italy Tax Treaty Benefits, Italian Supreme Court Says​

Anybody who want FACTS about non-dom implications should read this ruling from the Italian Supreme Court.

Now that I read more carefully what you sent (you should try it's free)

That was a clear case of a person with a business completely based in Italy that goes to the UK, with proprieties, economic interest, and a family in Italy thinking it was enough not to pay taxes.

He made money from Italy, and since that money weren't tax in the UK, the court said that ALSO for that reason the UK residency was invalid.

Again nothing to do with the non-dom status per se or Cyprus.

I wish you to never have to deal with GdF, AdE and Procura.
Do you know what they will do with your definitions? The “professional tax planner” will not save your a*s, unfortunately. You will be royally fucked, in all positions, whipped, tortured, beyond your wildest imagination, for an indefinite amount of time, at their own pleasure and complete mercy, until, if you are lucky, they will accept a settlement. This is assuming you are right in theory
If you are not right… well, what I described above will be just the appetizer.

Nothing can change your ignorance... Professional tax planners are the ones you should contact if you want to optimize your taxation legally. You told me to ask the Guardia di Finanza , so I assume that you are so smart that when you have a legal problem, you don't call a lawyer, but you ask for help from a police officer .

You don't know anything about this topic, and it is clear because you are not able to argue, and you cannot provide any FACTS about non-dom Cyprus status being illegal in Italy!

the only "Fact" that was presented (by another Italian "smartass") basically confirmed that you guys are totally wrong, and I am 100% right.

 

[JohnnyDoe]

you guys are totally wrong, and I am 100% right.

good for you. Enjoy your tax free status

 

[Marzio]

Seriously you should read what you send!

I'll take your suggestion under careful consideration

That ruling does not mean that being non-domicile resident makes you tax resident in Italy.

I didn't said that.

I only posted that ruling because even if Cyprus taxes you on worldwide income it's safe to assume that OP would be tax resident under the 60 days rule and if Spain would claim that he is tax resident in Spain the DTA will not protect him because Cyprus will not defend his tax residency and the result will be analogous of that ruling.

 

[Ads911]

I wish you to never have to deal with GdF, AdE and Procura.
Do you know what they will do with your definitions? The “professional tax planner” will not save your a*s, unfortunately. You will be royally fucked, in all positions, whipped, tortured, beyond your wildest imagination, for an indefinite amount of time, at their own pleasure and complete mercy, until, if you are lucky, they will accept a settlement. This is assuming you are right in theory
If you are not right… well, what I described above will be just the appetizer.


hopefully the guy in your avatar is not you. My friend in the GdF who regularly reads this forum will certainly have taken a screenshot for future use
Mr. Maresciallo you know I am a good boy and I try to help people not to commit my mistakes

You are hilarious ahahahh how old are you? I am so scared now, your friend from the Gdf will start to monitor me, damn like I give a f**k! I have always paid my taxes and I make decisions only based on professional advice, FACTS, and the law. so you could tell to your imaginary friend from the guardian di Finanza to go f**k himself.

I'll take your suggestion under careful consideration



I didn't said that.

I only posted that ruling because even if Cyprus taxes you on worldwide income it's safe to assume that OP would be tax resident under the 60 days rule and if Spain would claim that he is tax resident in Spain the DTA will not protect him because Cyprus will not defend his tax residency and the result will be analogous of that ruling.

The only reason Spain will claim that he is a tax resident there is because of his 50% participation in a Spanish company and probably because its Cyprus company makes money in the Spanish market (my speculation I don't know), and then for the other reason he claimed...

Again nothing to do with the non-dom status of CY as a primary reason, if he had a fiscal resident in Germany the Spanish tax man could take him to court and claim that he is a tax resident in Spain too.

 

[Sols]

I'm just wondering why all the hundreds if not thousands of Italians living abroad under non-domicile schemes (after having severed ties to their home country, besides citizenship) aren't being hauled into court. Italy is desperate for money. We all know the ferocity of the Italian (and Spanish) tax authorities. Exchange of information is either automatic or practically guaranteed upon request between EU states (and UK). If what you claim is true, there would be millions if not billions for the tax authorities to lay claim to and fill up the dwindling government coffers. Strange, isn't it?

Using the same principle, couldn't they go after people living in UAE and other tax havens? The ruling mentioned here focuses on the income not being taxed at all, not just specifically the non-domicile status.

I didn't said that.

You're right. I could've clarified that my comment wasn't aimed at you personally. My point was general in nature to anyone reading, who might think that the ruling means non-domicile residents automatically are tax resident based on citizenship if they are Italian/Spanish/whatever.

I only posted that ruling because even if Cyprus taxes you on worldwide income it's safe to assume that OP would be tax resident under the 60 days rule and if Spain would claim that he is tax resident in Spain the DTA will not protect him because Cyprus will not defend his tax residency and the result will be analogous of that ruling.

I don't think it's quite that clear cut.

There a lot about that ruling that isn't relevant for OP. For one, it's an Italian ruling for non-domicile resident in the UK. But even if we take the ruling into account, it seems to focus on absence of personal tax. What we're talking about in OP's case is a Spanish citizen living in Cyprus where he would be liable for ordinary income tax (albeit with an optional 50% reduction for foreigners/previous non-residents), ordinary VAT and corporate income tax on his business activities, and social security contributions. It's only SDC that non-domicile residents are exempt from.

The main similarities that are relevant are that Spain and Italy have similar (but not identical) rules of law, and that OP — like the person in the ruling — maintains professional or economic interests in their home country. It's likely but not guaranteed that a Spanish court would make a similar ruling under similar circumstances as in the Italian case. We don't know if OP's home country ties are as strong, so it's hard to comment on.

But we're in agreement that OP's plan is risky.

 

[JohnnyDoe]

I'm just wondering why all the hundreds if not thousands of Italians living abroad under non-domicile schemes (after having severed ties to their home country, besides citizenship) aren't being hauled into court. Italy is desperate for money. We all know the ferocity of the Italian (and Spanish) tax authorities. Exchange of information is either automatic or practically guaranteed upon request between EU states (and UK). If what you claim is true, there would be millions if not billions for the tax authorities to lay claim to and fill up the dwindling government coffers. Strange, isn't it?

some things of Italy can only be understood by Italians and after you have gone through the experience and gained an insider’s perspective.
Obviously, unless one is very unlucky, nobody cares about a few thousand € or even 6 figures, which is what the typical Italian is avoiding by moving abroad.

 

[Marzio]

If what you claim is true, there would be millions if not billions for the tax authorities to lay claim to and fill up the dwindling government coffers. Strange, isn't it?

It's not strange.

It's simply that those people cut their ties with italy and Italy can't claim that they are tax resident there.

In the OP case he has ties with Spain and the DTA will only help him if he will stay more than 183+ days in Cyprus.

Anyway i agree, it was a bad example.

 

[Ads911]

I'm just wondering why all the hundreds if not thousands of Italians living abroad under non-domicile schemes (after having severed ties to their home country, besides citizenship) aren't being hauled into court. Italy is desperate for money. We all know the ferocity of the Italian (and Spanish) tax authorities. Exchange of information is either automatic or practically guaranteed upon request between EU states (and UK). If what you claim is true, there would be millions if not billions for the tax authorities to lay claim to and fill up the dwindling government coffers. Strange, isn't it?

Using the same principle, couldn't they go after people living in UAE and other tax havens? The ruling mentioned here focuses on the income not being taxed at all, not just specifically the non-domicile status.


You're right. I could've clarified that my comment wasn't aimed at you personally. My point was general in nature to anyone reading, who might think that the ruling means non-domicile residents automatically are tax resident based on citizenship if they are Italian/Spanish/whatever.


I don't think it's quite that clear cut.

There a lot about that ruling that isn't relevant for OP. For one, it's an Italian ruling for non-domicile resident in the UK. But even if we take the ruling into account, it seems to focus on absence of personal tax. What we're talking about in OP's case is a Spanish citizen living in Cyprus where he would be liable for ordinary income tax (albeit with an optional 50% reduction for foreigners/previous non-residents), ordinary VAT and corporate income tax on his business activities, and social security contributions. It's only SDC that non-domicile residents are exempt from.

The main similarities that are relevant are that Spain and Italy have similar (but not identical) rules of law, and that OP — like the person in the ruling — maintains professional or economic interests in their home country. It's likely but not guaranteed that a Spanish court would make a similar ruling under similar circumstances as in the Italian case. We don't know if OP's home country ties are as strong, so it's hard to comment on.

But we're in agreement that OP's plan is ris

Thank you, these guys don't have any idea and are spreading misinformation; I see you are a staff member. I think you should take action, especially for Jhonny doe AKA "Berlusconi," not only because he is acting as a smartass spreading FAKE information but because when the fool realized that I was right and couldn't answer, he threatened me, saying that he will use my Profile picture to make me monitor by "his friend" in the Italian authorities.

Obviously, he is lying, and I don't give a f**k anyway because I don't, and I won't have any problem with the law, but I don't think he should stay here because it is inappropriate.

 

[JohnnyDoe]

Tax on foreign income

Find out whether you need to pay UK tax on foreign income - residence and ‘non-dom’ status, tax returns, claiming relief if you’re taxed twice (including certificates of residence)

www.gov.uk

Non dom:
UK residents who have their permanent home (‘domicile’) outside the UK

So how do you explain to Italy (Spain, or whatever other country) that your permanent home is not in the UK? (Or Cyprus or whatever other country where such status is possible)

 

[Ads911]

some things of Italy can only be understood by Italians and after you have gone through the experience and gained an insider’s perspective.
Obviously, unless one is very unlucky, nobody cares about a few thousand € or even 6 figures, which is what the typical Italian is avoiding by moving abroad.

"can only be understood by Italians" bulls**t, you are Italian and you don't know s**t.

I think you are the only one who knows the truth here, while a professional tax planner doesn't know anything....right?

What is the experience you have been through? you got caught because of your stupidity?

Tax on foreign income

Find out whether you need to pay UK tax on foreign income - residence and ‘non-dom’ status, tax returns, claiming relief if you’re taxed twice (including certificates of residence)

www.gov.uk

Non dom:
UK residents who have their permanent home (‘domicile’) outside the UK

So how do you explain to Italy (Spain, or whatever other country) that your permanent home is not in the UK? (Or Cyprus or whatever other country where such status is possible)

You can't be that stupid, seriously

 

[JohnnyDoe]

Thank you, these guys don't have any idea and are spreading misinformation; I see you are a staff member. I think you should take action, especially for Jhonny doe AKA "Berlusconi," not only because he is acting as a smartass spreading FAKE information but because when the fool realized that I was right and couldn't answer, he threatened me, saying that he will use my Profile picture to make me monitor by "his friend" in the Italian authorities.

Obviously, he is lying, and I don't give a f**k anyway because I don't, and I won't have any problem with the law, but I don't think he should stay here because it is inappropriate.

yes I should be banned for that Thank you for revealing how to avoid paying taxes in Italy. The world was waiting for this.