Dubai resident and Cyprus tax resident opens Dubai company account outside Dubai. CFC+CRC?

[5K1PP3R]

I am Dubai resident and Cyprus Tax resident. From what I understand CFC (controlled foreign corporation) Cyprus laws mandate me to pay Cyprus corporate profit tax on my foreign company's profit. So as long as Dubai bank considers me local resident and doesn't report me to CRS, I am safe. But if I open a business account for my Dubai company in some European EMI, they will ask for my tax residency and will report my company account to Cyprus tax authorities. So although CFC system is technically not enforced, it may work through the CRS system.

Am I getting it correctly? Meaning I should not open business bank account for my Dubai company outside Dubai?

 

[Martin Everson]

5K1PP3R said:
But if I open a business account for my Dubai company in some European EMI, they will ask for my tax residency and will report my company account to Cyprus tax authorities.
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Which residency will you be opening it with? If everything is opened with Dubai residence details and you leave no indicia to indicate you are resident off Cyprus then why you think it will be reported to Cyprus tax authority?

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[5K1PP3R]

Martin Everson said:
Which residency will you be opening it with? If everything is opened with Dubai residence details and you leave no indicia to indicate you are resident off Cyprus then why you think it will be reported to Cyprus tax authority?
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Some EMIs now ask tax residency. I agree if they ask just normal residence, shouldn't be an issue

 

[Martin Everson]

So your not really living in Dubai then? You just have the right to residency there but are living in Cyprus? 😕

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[5K1PP3R]

Martin Everson said:
So your not really living in Dubai then? You just have the right to residency there but are living in Cyprus? 😕
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I live in Cyprus 60 days per year and use their 60 days tax residency program, I have their TIN. They also set a condition that I don't live in any other country longer than 180 days which I do. So you can say in simple terms "I live in Cyprus".

 

[Martin Everson]

5K1PP3R said:
I live in Cyprus 60 days per year and use their 60 days tax residency program, I have their TIN. They also set a condition that I don't live in any other country longer than 180 days which I do. So you can say in simple terms "I live in Cyprus".
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Ok I see. So honest is always best policy. So you should tell any bank you are a tax resident of Cyprus and yes it will be reported which is normal. You can then work with a tax advisor to muddle through this all.

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[5K1PP3R]

Martin Everson said:
Ok I see. So honest is always best policy. So you should tell any bank you are a tax resident of Cyprus and yes it will be reported which is normal. You can then work with a tax advisor to muddle through this all.
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I wanted to confirm here because it's a bit of a complex question, but my opinion that if I open a bank account for my Dubai company in a non Dubai EMI/Bank being myself tax resident of Cyprus, I am exposing myself to a CRS and CFC. I can play with luck, but I will owe 12.5% from my Dubai company profits to Cyprus government, so the whole Dubai setup becomes pointless.
But I wanted to hear others' opinions.

 

[Martin Everson]

5K1PP3R said:
I can play with luck, but I will owe 12.5% from my Dubai company profits to Cyprus government, so the whole Dubai setup becomes pointless.
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You've not explained too much about your UAE setup and whether it has any economic substance. You may owe tax anyway if your Dubai company has no substance in UAE. UAE automatically reports such entities already to Cyprus, whether the company has a bank account or not.

https://www.offshorecorptalk.com/th...es-with-no-substance-with-ubos-country.36103/
You have to weigh up whether saving the 12.5% is worth it. The Dubai company is a clear CFC and you are tax resident in Cyprus so I would say the setup is pointless indeed.

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[5K1PP3R]

Martin Everson said:
UAE automatically reports such entities already to Cyprus, whether the company has a bank account or not.
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Not if my Dubai company has Dubai bank account and I am Dubai resident. In this case local bank considers company's UBO (me) local and don't report to CRS. That's the whole point of this thread

 

[Martin Everson]

5K1PP3R said:
Not if my Dubai company has Dubai bank account and I am Dubai resident. In this case local bank considers company's UBO (me) local and don't report to CRS. That's the whole point of this thread
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Company ESR reporting is not CRS. It is in addition to CRS and is totally different. See link in my previous post also.

https://home.kpmg/ae/en/home/servic...conomic-substance-regulations-in-the-uae.html

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[5K1PP3R]

Martin Everson said:
Company ESR reporting is not CRS. It is in addition to CRS and is totally different. See link in my previous post also.

https://home.kpmg/ae/en/home/servic...conomic-substance-regulations-in-the-uae.html
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OK got it, CRS reporting to passport country defeats the purpose for the most. In my case though even if Dubai bank reports to Russia (which Fred says they won't do), I will tell in Russia that I am tax resident in Cyprus and show them my TIN and my tax declarations

But from your post: ESR in Dubai is applicable when "beneficial owners are non-resident"

Last edited: Jun 1, 2022

 

[Martin Everson]

CRS has nothing to do with your passport. It is about your residencyonly. If it had something to do with passport than the 80% and more foreigners living in Dubai would all be reported.

Have you informed the bank in Dubai that you are tax resident in Cyprus on your Self Certification form? You will receive a fine of AED 20,000 if you gave inaccurate information to the bank and they find out?

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[5K1PP3R]

Martin Everson said:
CRS has nothing to do with your passport. It is about your residencyonly. If it had something to do with passport than the 80% and more foreigners living in Dubai would all be reported.

Have you informed the bank in Dubai that you are tax resident in Cyprus on your Self Certification form? You will receive a fine of AED 20,000 if you gave inaccurate information to the bank and they find out?
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I will be opening my account in a week.
CRS is residency but it was discussed here multiple times that banks can also report based on passport country and even telephone number

 

[aage]

Yeah it's not just like that any longer. You may stay in Dubai with 0% income tax rate.

 

[Martin Everson]

5K1PP3R said:
I will be opening my account in a week.
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Ok cool then I hope you let bank know about your Cyprus tax residency.

Before opening an account there read the following gov faq doc fully so you don't make any mistakes thu&¤#.

https://www.mof.gov.ae/en/StrategicPartnerships/Documents/CRS ENGLISH.pdf

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Please note my posts should not be taken as financial or tax advice. Please seek professional advice in that respect.

 

[Thomas67]

I guess that in Cyprus you also have a permanent residency (rental/property) right?

Yes, I agree with Martin. It also depends on the requirements imposed by Dubai banks in order to open a bank account; you might be interested to ask the bank upfront.

And yeah, if you don't stay more than 183 days in UAE you won't be considered as tax resident in UAE obviously, as you mention in your first post, which means your revenues generated in UAE would be taxable in Cyprus - so I don't really see the interest of setting up a business/company in Dubai unless it's for visa purposes.

 

[fortunespeculator]

Stay in Dubai for more than 183 days and dont stay in cyprus for more than 60 days.Why do you want to claim residence in Cyprus ? When you have a setup for staying in Dubai with zero tax?I didnt quite understand you actually.Why will one try to not utilize the benefits of zero tax when it is available.The benefits of Dubai go away by staying in Cyprus is what i understand( I am actually researching the two setups for myself)

 

[Thomas67]

fortunespeculator said:
Stay in Dubai for more than 183 days and dont stay in cyprus for more than 60 days.Why do you want to claim residence in Cyprus ? When you have a setup for staying in Dubai with zero tax?I didnt quite understand you actually.Why will one try to not utilize the benefits of zero tax when it is available.The benefits of Dubai go away by staying in Cyprus is what i understand( I am actually researching the two setups for myself)
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Cyprus has some advantages too aside taxation (which is already interesting)

 

[fortunespeculator]

Thomas67 said:
I guess that in Cyprus you also have a permanent residency (rental/property) right?

Yes, I agree with Martin. It also depends on the requirements imposed by Dubai banks in order to open a bank account; you might be interested to ask the bank upfront.

And yeah, if you don't stay more than 183 days in UAE you won't be considered as tax resident in UAE obviously, as you mention in your first post, which means your revenues generated in UAE would be taxable in Cyprus - so I don't really see the interest of setting up a business/company in Dubai unless it's for visa purposes
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Thomas67 said:
Cyprus has some advantages too aside taxation (which is already interesting)
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Would you care to elaborate.As even i am looking at both of these(Dubai and Cyprus) options.

 

[Sols]

5K1PP3R said:
I live in Cyprus 60 days per year and use their 60 days tax residency program, I have their TIN. They also set a condition that I don't live in any other country longer than 180 days which I do. So you can say in simple terms "I live in Cyprus".
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The rule isn't just that you can't live 180 days anywhere else. There are four conditions you must meet:

1. Resident in Cyprus for at least 60 days per year.
2. Not resident anywhere else for more than 183 days per year.
3. Not tax resident anywhere else.
4. Have ties to Cyprus.

If you through some other mean qualify as tax resident somewhere else, you are not tax resident in Cyprus.

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This is the probably the answer to your question.