Cyprus and Malta non-dom status with an Estonian LLC?

[Don]

In general this is correct but you should be very careful with Estonian tax residency if you have some ties to your home country.

https://taxsummaries.pwc.com/estonia/individual/residence

This is true, and thats what makes it beautiful. Structure it right and you can live tax free in EU.

 

[AlexGE]

This is true, and thats what makes it beautiful. Structure it right and you can live tax free in EU.

No way to do that in EU due to PE rules ...

 

[Don]

No way to do that in EU due to PE rules ...

I was referring to individual tax residency or staying non-tax resident. Permanent establishment risk (or 'PE risk'), is the risk that the presence of an enterprise in a foreign country has inadvertently created a 'permanent establishment' in that country. Meaning the enterprise may inadvertently be liable for corporate income tax and any attendant penalties and interest charges.

 

[A1988]

I was referring to individual tax residency or staying non-tax resident. Permanent establishment risk (or 'PE risk'), is the risk that the presence of an enterprise in a foreign country has inadvertently created a 'permanent establishment' in that country. Meaning the enterprise may inadvertently be liable for corporate income tax and any attendant penalties and interest charges.

theres a new shell company act which will come into force this year or from 1st jan next year too, these complex structures will be scrutinized

 

[rainmaker]

If you like the Estonian OÜ approach of corporate tax applied during profit distribution, then setting your legal residency in Estonia is probably the easiest. No need to involve Cyprus in the solution. Estonia considers you a tax resident as long as you have a registered legal residency in Estonia, there's no need to spend any time in Estonia. Just rent a small cheap apartment there and register your residency in it. Maybe stay a couple of months there in the summer, it's beautiful.

It's similar in Latvia, so you could set your legal residency in Latvia and create a Latvian SIA instead. The Latvian corporate tax is an improved version of the Estonian corporate tax that actually allows you to use your company as a tax-free holding to a good extent, since it allows you to sell shares in subsidiaries tax-free at a corporate level after 36 months of holding those shares. And if you are tax resident in Latvia when distributing the profits related to that sale as dividends, you won't have to pay personal income taxes on them either. This may not be relevant if you don't plan to use the company as a holding, but I'd keep an open mind about it. If you were to sell shares of a subsidiary of an Estonian OÜ, you would have to pay corporate income tax on that whenever you distribute those profits as dividends. Also, Latvia seems to be a bit more flexible than Estonia in terms of what can be considered a business expense, and withholding taxes are usually 0%, so there's that too.

Both Estonia and Latvia give you an identity card that you can use to sign government related things digitally, which makes it easy to do things remotely if you are traveling. You can use the Estonian identity card to sign things in Latvia and vice-versa. If you get legal residency in any of these two countries, you will be able to open bank accounts in them very easily.

In any case, whenever you decide to distribute profits from the Estonian OÜ or Latvian SIA as dividends, you will have to pay 20%. There's no way around that, except in that 36-month thing I mentioned before or if those profits come from a subsidiary and have already been taxed there.

I think Latvia has the cheapest and simplest setup in the EU with company, residency and bank account all in the same country. Generally it's not tax free, but in some cases it can be. Estonia is a bit more digital than Latvia, and sometimes you can use English in official documents. In Latvia, not so much, but it's still better than most other EU countries. Also, Riga's airport is better connected than Tallinn's airport. If you are not an EU citizen, getting residency in Latvia is easier than in Estonia.

Alternatively, leave Europe. The UAE is a decent tax-free option if you will be constantly moving around.

In general this is correct but you should be very careful with Estonian tax residency if you have some ties to your home country.

https://taxsummaries.pwc.com/estonia/individual/residence

This is true, and thats what makes it beautiful. Structure it right and you can live tax free in EU.

Let me get this straight. If I create a Estonian company and rent an apartment there all year round I become a tax resident? They really don't care about the 183 days? Can I get a tax certificate after the first year that will be accepted by other countries? Has anyone tried this?

No way to do that in EU due to PE rules ...

I was referring to individual tax residency or staying non-tax resident. Permanent establishment risk (or 'PE risk'), is the risk that the presence of an enterprise in a foreign country has inadvertently created a 'permanent establishment' in that country. Meaning the enterprise may inadvertently be liable for corporate income tax and any attendant penalties and interest charges.

What do you mean? That even if Estonia considers me a tax resident as an individual, working online from another country could trigger PE for the company? Even if I spend less than 183 days in that country? I'm talking about having a company in Estonia as a one man operation by the way. What about CFC rules?

theres a new shell company act which will come into force this year or from 1st jan next year too, these complex structures will be scrutinized

Could you please elaborate? What kind of structures are you referring to?

 

[uplana]

Could you please elaborate? What kind of structures are you referring to?

second that ??

 

[Don]

Let me get this straight. If I create a Estonian company and rent an apartment there all year round I become a tax resident? They really don't care about the 183 days? Can I get a tax certificate after the first year that will be accepted by other countries? Has anyone tried this?

Yes, personal tax certificate you can get immediately. No need for company (tax residency certificate you can get for company too - it just takes 1 minute whenever you need it). You can visit Estonia one time for one day and keep the personal tax residency next 10 years without ever visiting again, as you can do everything remotely anyway with digital services including obtaining such certificates.

 

[GrumpyMess]

By the way, the certificate issued under 60 days rule is not valid internationally (if you are considered a tax resident somewhere else this certificate will not help since it is not issued under the provisions of tax treaties)

Is that really true? Do they get different forms for 183-day and 60-day certificates? Then it takes all the meaning out of this non dom regime

 

[Don]

Is that really true? Do they get different forms for 183-day and 60-day certificates? Then it takes all the meaning out of this non dom regime

If you have tax risk exposure in some other country you shall always first consider the treaties, and only in case no treaty exist you shall refer to the domestic legislation.
There is no reference to 60-days tax residency in the treaty residence tests. From treaty perspective what can help you actually is maintaining a home in Cyprus year-round and other substance.

The tax residency certificate should clearly state the basis of the underlying double tax treaty.

 

[GrumpyMess]

If you have tax risk exposure in some other country you shall always first consider the treaties, and only in case no treaty exist you shall refer to the domestic legislation.
There is no reference to 60-days tax residency in the treaty residence tests. From treaty perspective what can help you actually is maintaining a home in Cyprus year-round and other substance.

The tax residency certificate should clearly state the basis of the underlying double tax treaty.

It's always begins with a residency certificate. If one couldn't provide it, no matter how long he lives in Cyprus, no other country will apply a treaty. Therefore, if Cyprus does not provide a proper certificate, its attractiveness is significantly reduced.

 

[CyprusNonDom]

Hi, I will send you a PM

CyprusLaw can you send me a PM too. I have similar question to ask you.

Yes that is true, and it really differs from provider to provider.


It depends on your actual operations to determine any PE risk. If you would like to discuss it in private kindly let me know and I can PM you.

CyprusLawyer101, can you PM me. I have a similar question to ask you.