The question related to potential social insurance registration in relation to the activity of trading in financial instruments on a personal capacity. In relation to the tax exemption, this is clear and has already been discussed above in detail.
Yes, your understanding about taxes is correct. From an income tax prespective these are tax exempt.
Is it harder to get a brokarage account for a Cyprus LTD compared to any other european onshore company ?
Not necesarily. Most brokers would on board a Cyprus company. Are you having trouble finding a brokerage to onnboard you with a CY co? Maybe I can help.
Hello
What is the rule to be considered as a financing vehicle?
Does a rule exists to know when an individual is falling in this category?
Do you confirm?
Thanks for a detailed answer. What is the base for soc ins and NHS calculation? E.g. a person has started investing via a broker by allocating part of his salary, e.g. 5k Eur each month, to purchase shares. So in one year he has a portfolio with acquisition price of 60k Euro. Is there any obligation to pay soc ins and NHS yet? He has not made any gains yet. Then he decides to liquidate 100% of his portfolio and receives funds of 85k EUR to his account. What amount in Eur is subject to soc ins / NHS in this case?
The companies are liable to pay 30% on interest income ? for example if you are trading throught your company and lending,(for example on defi, or on tradfi, or a loan) you could be liable of 30% ?
The only official guidance from the tax office was a circular issued in 2008 and stipulated that the method to determine whether the company is a financing vehicle, was if the interest income of the year in comparison with the total income exceeded 60% and also if total interest bearing assets exceeded 60% of the total assets of the company. However, in practice this is more of a subjective judgment. For formal opinion we suggest requesting a tax ruling from the Tax office.
There are no clear guidelines and each case must be determined on its own facts. Having purely an active day trading activity as source of income and be tax resident of Cyprus would evidently be considered as a budge of trade.
Yes this is correct. You need to declare in the IR1 (personal tax return) any income/gains from trading in financial instruments. Although tax exempt, they are subject to a 2.65% NHS deduction with a cap on 180k income per annum
In this case as the person in the example above, is a salaried person, he/she is already registered for tax and social insurance as an employee. As I assume, the remuneration from his/her salary exceeds 5k Euro per month this means that for social insurance purposes he/she already contributes the maximum amount (there is a CAP at €5.005 salary per month). Thus no additional social insurance contributions will be imposed.
Yes, 30% special contribution for defence applies on the company level on any interest income. DeFi is not considered a lending activity per se, as there is no formal position on the categorization of cryptos, and as such are not considered either legal tender or financial instruments. The tax position in Cyprus at the moment, relating to crypto is that they are considered barter transaction and both crypto to crypto and crypto to fiat trasnsactions are taxed on normal trading route (that is 12.5% corporation tax on company level and progressive tax bands on personal level)
No this is not true. Remember we are talking about passive interest income which in comparison with the rest of the company's activities is considered modest.
The problem is that there is no clear law on whether it is taxable or not. Some accountants/lawyers in Cyprus argue that Cryptos should be treated like securities (which are exempt from tax), but the majority now argue that it is taxable like forex trading. It mainly depends on a list of criteria to determine whether you trade actively or not but not on whether the transaction is crypto-to-crypto vs crypto-to-fiat:
if you are requalified for trading under your own name and got to pay social insurance, it will also be 15.6% capped to 5005 per month ? So a max risk of 9369.36 euros whatever the amounts ?
So if the company is doing some lending (for example p2p lending on real estate project, ...) it would be liable 30% on these interests.
doing p2p lending is better as an individual? is it tax free as non dom or is there a risk it could be deemed as an professional activity ? (treated then like question 1)
if the main activity of the company is the manage assets and lend it here and there, still the 30% could apply ? (if the interest is lower profit than the trading)