60 Day Cyprus Tax Resident Valid For Tax Treaty Benefits?

[5K1PP3R]

Interesting, I wasn't aware of the implications actually. Indeed:

From PWC

So it is sufficient for other country to consider you tax resident for Cyprus to step︀ back. But how would it work practically? Do I need to challenge the claim myself︁ and bring Cyprus tax authorities a court ruling?

Regarding Georgia, it doesn't give you tax︂ residency obviously but it's the same hack as Dubai, gives you undeclared income that your︃ home country doesn't see because a Georgian bank considers you a local

 

[Marzio]

If you stay 60 days there's nothing to challenge,‍ you are not considerd Cyprus tax resident for that year.

if you stay 183+ days⁠ then you can access the double tax treaty (if there's one) between your home country⁤ and Cyprus (but honestly don't know how that would work, i was never involved in⁣ such thing)

Georgia is tricky because,︁ according to PWC, if you stay 183 days you are considered tax resident BUT even︂ in this case your home country could screw you.

To find out if that's the︃ case you have to check the double tax treaty between Georgia and your home country.︄

Take a look for example at the DTT between France and Georgia.

Take a look a the︈ last 2 lines of text.

"This term, however does not include any person who︉ is liable to tax in that State in respect only of income from sources in︊ that Stat"

This means that even if you spent 183+ days in Georgia but︋ you are paying taxes ONLY on local sourced income you are not considered tax resident.︌

To be extra safe a person should establish his tax residency in a country that︍ has a DTT with his home country and doesn't contain that line.

 

[5K1PP3R]

Wait a minute. What is the‍ point of '60-day rule' for Cyprus tax residency then?

 

[Marzio]

To give you quick tax residency if you don't have‌ any ties with your country and don't spend 183+ days in any other country.

It's a compelling proposition in a world where you usually have to spend 183+ days to‍ be considered tax resident.

If you are sure that your home country will not come⁠ after you because you don't have any house, wife, kids, company, bank account, cars and⁤ so on, you are free to claim you are tax resident in Georgia and stay⁣ only 1 days a year since your home country doesn't care and you don't have⁢ to stay a enough days to access a tax residency certificate.

Tax residency certificate is︀ only used in case somebody will claim you are resident somewhere else but if nobody︁ will ever claim that then there's no point in staying 183+ days in a place︂ to procude a tax residency certificate that nobody will ever ask.

It all depends on︃ which ties you have with your home country.

 

[5K1PP3R]

I see. I asked ChatGPT about France as an example:

In my case (Russia),︇ people don't deregister as tax residents, especially now, but that's an interesting point that for︈ EU you need to notify your country that you change tax residency

 

[Don]

The purpose︆ is to attract individuals who are not tax residents in any other country for any︇ tax year but want to have a tax residency somewhere. It can be tricky for︈ some people who are mobile. Cyprus is not the worst place on earth to have︉ tax residency and company, and 60 days/year gives you decent flexibility.

 

[JohnJ81]

Cyprus will give you a tax residence certificate for staying there 60 days. Are you‌ saying it cannot be used for the tax treaty benefits? My home country has a‍ tax treaty with Cyprus but if you have the 60 day tax certificate are you⁠ saying it would not allow me to benefit? in my case, using the tax treaty⁤ the witholding tax is 0% when using the treaty with Cyprus.

 

[Marzio]

If you are considered tax resident by another state you are not considered Cyprus tax‌ resident.

No further explanation is needed.

 

[JohnJ81]

If you stay 60 days there's nothing to challenge, you are not considerd Cyprus tax‌ resident for that year.

if you stay 183+ days then you can access the double‍ tax treaty (if there's one) between your home country and Cyprus

Can you explain what⁠ this means? If my home country dont challenge it and I only stay 60 days⁤ then I am a Cyprus tax resident for that year? is that correct?

 

[Marzio]

Yes, but if your home country doesn't challenge your tax residency what's the point⁠ of taking Cyprus residency?

There could be better options depending which is your home country.⁤

 

[5K1PP3R]

Declared income. In my case especially banks‍ can ask the source of funds which is my company dividends but additionally can ask⁠ for tax declaration. So far I didn't have that experience but this may happen. Banks⁤ don't work with self proclaimed tax nomads afaik.

 

[Don]

You have to‍ check the exact treaty. Not every DTT has 183 day test.

 

[Marzio]

Don't taking Cyprus tax residency doesn't mean being nomad, simply⁤ means being resident somehere else.

It all depends on DTT between his home country and⁣ the future residency country.

 

[Konstanz]

I heard from my lawyer that if you get TRC certificate under this 60 day‌ rule, this certificate mentioned that it's not valid for double tax treaty.
So, it can‍ be problematic to some people.

You have to stay more than 180 days to get⁠ normal TRC

But I cannot confirm that 100%

 

[Mr Gus]

How about the HNWI program in Georgia? Do︄ you still have to be present 183+ days?

 

[Don]

Both of these (CY 60day and GE hnwi) are certificates issued based on domestic law‌ and they will be disregarded for the purposes of double tax treaties, which have their‍ own tests for determining tax residency.
As noted with 60 days rule in Cyprus you⁠ would lose tax residency of you are tax resident somewhere else - the fact that⁤ the cyprus service providers often fail to mention.
Valid tax certificates for treaty purposes are⁣ always issued based on the tax treaty and this will be clearly mentioned on the⁢ TRC.

 

[JohnJ81]

https://www.taliadorosaudit.com/ima...dency-Certificates-under-the-60-days-rule.pdf
here is an example and doesn't mention anything about the tax treaty not being‌ valid

 

[Marzio]

Really?

This.

I do understand why they⁢ do that and i think in this forum we are doing a great divulgation job.︀

 

[Don]

To further expand‍ on this:

A double tax treaty (DTT) is an agreement between two countries intended to⁠ relieve taxpayers from being taxed twice for the same income. These treaties not only protect⁤ against double taxation but also aim to prevent tax evasion and determine the taxation rights⁣ between two countries.

The mechanism of DTT is based on international law, which supersedes domestic⁢ law to some extent. This occurs in accordance with the legal principle known as "lex︀ posterior derogat legi priori" or "the later law repeals the earlier one". In other words,︁ if there is a conflict between a national law and an international treaty that a︂ country has signed and ratified, the provisions of the treaty prevail.

Thus, even if under︃ domestic law an individual could be considered a tax resident in two countries, the DTT︄ would provide a mechanism to determine the individual's tax residency for the purposes of the︅ treaty, superseding the domestic law.

 

[JohnJ81]

To receive my full dividend, I need a tax resident certificate from the foreign country.‌ The Cyprus tax office also need to stamp my dividend form and then I need‍ to present both to my home country tax authorities. They will have freedom of information⁠ within the EU to fully check my presence in Cyprus and will clearly know I⁤ am only in Cyprus 60 days.

I will be in my birth country for maybe⁣ 5 days only in the full year. I do not have a vacant property available⁢ to me there and I have no family there. I also do not receive a︀ salary. I own properties there that are all fully rented.

I am pretty confident, that︁ my home country will not say I am a tax resident there.

However they will︂ see the 60 day on the tax certificate so it will be clear to them︃ I am only in Cyprus 60/70 days per year yet still benefitting from the Tax︄ Treaty. Cyrus consider me a tax resident but is my home country going to get︅ pissed off and challenge it? The witholding tax will amount to about €500,000 each year︆ so it is not huge but it is not tiny either. So will they be︇ happy with the 60 day tax cert? I am depending on the tax treaty with︈ this structure as the tax treaty allows the dividend 0% witholding tax.

So to be︉ clear...

I will be in Cyprus for 60 days and claiming my tax residence is︊ in Cyprus
I will not be 183 days in any country
My home country ties︋ are very limited or none at all
No other country outside my home country will︌ try to claim tax residence
I am using the 60 day Tax Cert to avail︍ of the treaty dividend exemption.