An entrepreneur moves his fiscal residence to Cyprus (EU) and becomes a Cyprus Tax Resident (CTR).
A private non-Cypriot individual with a tax domicile in Cyprus enjoying Non-Dom status is exempt from taxation on dividend and interest income.
Peter G relocates his residence with his family to Cyprus (Non-Dom).He sets up a company there and thus becomes a Cyprus Tax Resident. As an employee of his own company in Cyprus, Peter G gets paid an annual salary of 19,500 Euro (no personal income tax applies – tax free amount EUR 19,500 p.a.). He/the Cyprus company pays social insurance contributions and obtains a personal CY tax number.
Peter G’s foreign companies distribute dividends, whenever appropriate, and Peter receives the dividends free of tax.
Income from employment is not taxed up to an annual amount of EUR 19,500. Salaries above EUR 100,000 per year are taxed at only half of the regular tax rate.
All dividends received from the Cyprus entity, as well as all other dividends from domestic and international sources, are not taxed at all – they remain tax free.
A wealthy private individual moves its residence to Cyprus
Thomas W has several international personal bank accounts. Terms such as EU-FATCA and OECD are well known to Thomas Was advised by his financial advisers and bank RM (relationship manager).
Thomas decides to relocate his residence (Non-Dom) to Cyprus. He sets up a company and gets employed by his Cyprus company. Thomas obtains therefore fiscal residence in Cyprus and becomes a Cyprus Tax Resident (CTR) – see case study (1).
As a second step - for asset protection purposes - which is completely in line with the Cypriot tax law (EU) - he presents his new fiscal residence address to his banks. As a result and in line with the international exchange of information regulations, the banks now report foreign bank accounts and interests to the Cyprus tax authorities. Thomas receives interests free of tax.
Interests received in Cyprus as a Non-Dom are exempt from taxation for 17 years. Due to his strategically wise decision - the company setup in Cyprus and employment contract due to the new legislation in Cyprus – Thomas W receives a a tax free income of EUR 19,500 including all social insurance benefits, as well as the tremendous advantage of nil taxation on all privately received dividends.
Entrepreneur creates layers of security for assets and basis for tax benefits
Per L is an entrepreneur and owns several businesses. His income, his savings and his dividend income from entrepreneurial activity are highly taxed in his home country.
Per L moves his residence to Cyprus, restructures his company on the mere payment of dividends and acquires the advantage of non taxation according to Non-Dom regulations in Cyprus.
Apart from the fact that the weather in Cyprus is all year round almost perfect, Per is also motivated by the excellent international flight connections, the good and healthy Mediterranean life in Cyprus, the low cost of living and much more.
Per is also a savvy businessman. He knows that it is always wise not to have all eggs in one basket. He establishes - apart from a company in Cyprus - yet another company in the United Arab Emirates with a business account in Dubai. Per created several layers of asset protection at one of the most financially sound and probably safest bank locations in the world. The Dubai bank itself opened for Per a second and third account with its offshore branch in Singapore and Jersey. He also enjoy sin addition to the weather and the high quality of life, the significant Non-Dom tax benefits and is also flexible enough now to respond to further changes in the global economy.
There are countless examples we could bring to your attention. The benefits are always similar, the possibilities nearly unlimited and the individual imagination can run freely to achieve the ultimate results. However, the basic requirement is relocation, the only legal way to succeed in the daily financial and political maze.