You are right that the tax residence certificate based on domestic law is quite worthless in protecting you against taxation in other jurisdictions.
However, if there is a conflict between the provisions of a DTT and domestic law, the provisions of the DTT will usually prevail.
The DTT primarily helps determine which country has the right to tax a particular source of︀ income.
To access DTT you will need to inform the tax authorities of both jurisdictions.︁ This is usually done through a formal process where you declare that you are a︂ resident for tax purposes in one of the countries under the treaty, and you are︃ claiming the treaty benefits.
Different countries have different procedures for claiming treaty benefits. You may︄ need to fill out specific forms or provide additional documentation.
For example, In the U.S.︅ non-resident aliens typically need to complete form W-8BEN to claim treaty benefits.
Estonia issues automatically︆ tax residence certificates based on DTT-s, which you can then present to tax authorities in︇ other jurisdictions.
Cyprus and Spain have their own forms and procedures.
Once you have filled︈ out the appropriate forms, you need to submit them to the relevant tax authority. This︉ might be as part of your annual tax return, or it could be a separate︊ process.
The second issue is the corporate tax. The mere fact that a company is︋ incorporated in Cyprus and pays taxes in Cyprus on its worldwide income (and therefore able︌ to obtain a Tax Residence Certificate from the Cyprus Tax Authorities) is no longer sufficient︍ for a business to guarantee that a Cyprus company can access the full treaty benefits︎ offered through the expanding and favourable DTT network that Cyprus has to offer. Most tax️ jurisdictions will now examine whether the Cyprus company claiming tax benefits has substance, and is not just a shell company set up merely for tax purposes.
