Digital Nomad Perpetual Traveler + Apartment in Cyprus = tax ?

[daniels27]

So Seychelles company on IBO that pays me dividends would be protected by DTA?

There is no such DTA between Seychelles and Germany. If there was, you would probably have to go live there in order to be eligible any benefits.

Cyprus tax lawyers alsways tell me Seychelles banking will give you problems. Are they right or just saying that to sell their cyprus limited?

I think both give you problems. Seychelles a bit more as you probably won't even get good banking.

You first need to figure out how many weeks you want to spend in Germany and then where you spend the rest. You can then let me know for good adivce. But spending 5 months in Germany will only lead to the advice to either leave completely or pay taxes there. You may not get caught, but that is not part of an advice.

 

[Hydrox]

You first need to figure out how many weeks you want to spend in Germany and then where you spend the rest. You can then let me know for good adivce. But spending 5 months in Germany will only lead to the advice to either leave completely or pay taxes there. You may not get caught, but that is not part of an advice.

To cover most private relationship needs i would need to spend 3 months in germany (12-14 weeks).

Rest i would like to have somewhat of a base. As said Cyprus is attractive to me for that, also from a quality of life and community standpoint. I can easily stay at that base 5 months and the other 4 months i would travel around.

My money would still be generated by my US LLC, so any structure that helps me get this money in a favorible way why still offering as much protection to questions from german authorities will be appreciated.

 

[daniels27]

To cover most private relationship needs i would need to spend 3 months in germany (12-14 weeks).

Rest i would like to have somewhat of a base. As said Cyprus is attractive to me for that, also from a quality of life and community standpoint. I can easily stay at that base 5 months and the other 4 months i would travel around.

My money would still be generated by my US LLC, so any structure that helps me get this money in a favorible way why still offering as much protection to questions from german authorities will be appreciated.

In this case you need a company with a manager etc. If you work 3 months from Germany and are German, it will most likely be risky.

 

[JustAnotherNomad]

For ordinary residency it’s 183 days.

For « the residence program », the 15k€ one, there is no stay requirement, just don’t spend more than 183 days in another country.

I think it might work then, in theory. But I doubt he wants to pay 15k in tax. And I also doubt that Malta will really defend him if he only has weak ties with them and barely pays any tax. They probably won't want to piss Germany off.

But thank you for sharing! I wasn't aware of the program, great to learn something new!

 

[JustAnotherNomad]

I won´t be only home for christmas, that´s why i would get an appartment and tax residency somewhere else to have as much safety as possible. This coupled with not having any real office / apartment in germany will give some layer of security.

No, not really, like I explained. At least not with Cyprus.
If they are too lazy to really look into you, yes. But then you could also just tell them that you live on the moon or a sailboat in Antarctica.

Cyprus is a legit EU member with normal income tax rates, i dont get why it would be such a red flag compared to Czechia.

Hahahaha!! You literally spoke to CY lawyers who told you you can just use a Seychelles company and not pay tax in Cyprus! How is that a country with regular taxation?
They were literally selling passports until a couple of years ago. Malta and Cyprus are basically Carribean tax haven islands, just right in the center of the EU.
They are MASSIVE red flags to any other tax authority. Yes, they are EU members, so yes, they will have to accept everything IF YOU REALLY LIVE THERE.
Telling them you have moved to Cyprus will basically be like a big: "I HATE PAYING TAXES!! f**k YOU!!!" to them.
Maybe they'll go "Ah, whatever", or maybe they'll go "Oh really? Cyprus, huh? Let's take a closer look at this guy..."

But there's also a chance they won't ask where you've moved - because it's not relevant for them.
Again, it all depends on how much they want to check on you.
The only thing that is relevant for them is that you are really GONE. But you won't be, and that's your problem.

Exactly, this case is realistic. I will have the non-dom and tax certificate way earlier then problems could even arise with germany

I didn't understand this.

This way you however cant profit from low corporate tax like in a limited. So is it still a valid way to put an offshore company inbetween to pay out the dividends from that to cyprus? And just use the sole-prop in cyprus as a way to get the nondom? Maybe make 20k profit as a sole prop to pay some social security tax and then its fully legit?

This is pure magical thinking. "When they come for me... I'll pull out my magical paper and the German taxman will turn into dust!"
Do you really think they don't know there's a 60-day tax residency certificate in Cyprus?

There was a famous case with Lufthansa pilots some years ago who all declared that they had moved to Dubai or Thailand.
This is quite similar to your case - they surely also only spent little time in Germany, they were pilots after all. Google it.

Tax is about facts. Your center of vital interests will still be Germany if you spend up to 5 months there. They won't care about your magical paper.
Your whole strategy is built on the hope that they won't check you. And yet you still want to pay tax in Cyprus.

 

[JustAnotherNomad]

In this case you need a company with a manager etc. If you work 3 months from Germany and are German, it will most likely be risky.

Yes, if they find there is a PE. If he was ordinarily tax resident in another EU country, then work as an employee of a foreign country would be protected under the tax treaty, Germany wouldn't be allowed to tax this.
But yes, there is a PE risk, especially if there are German clients.

 

[JustAnotherNomad]

Rest i would like to have somewhat of a base. As said Cyprus is attractive to me for that, also from a quality of life and community standpoint. I can easily stay at that base 5 months and the other 4 months i would travel around.

You will not have protection under the treaty with such a setup, you would have to spend 183+ days in Cyprus for that.
Basically, your situation would be the same as if you had moved to a non-treaty country like the UAE.
So you'll just have to hope that the German tax office either doesn't investigate you, or that they come to the conclusion that you don't have habitual abode in Germany.
Of course, staying 5 months in Cyprus and having an apartment there is something that would help your case ("How could I have habitual abode in Germany when I don't have an apartment there and I spend MORE time in my apartment in Cyprus?!") - but it's not relevant. Since there is no treaty to protect you, they only have to look at the time you spend in Germany.

I can't tell you how high that risk is in practice, maybe 5 months in Cyprus, receipts from Cyprus etc. are enough for them to back off. I think it's not impossible, could even be likely.
But formally, there is no guarantee. Because if they say you are still tax resident in Germany, the treaty won't apply to you.

 

[JustAnotherNomad]

How much money are we talking about by the way? You work as a freelancer? How much do you even make per year?

 

[daniels27]

Yes, if they find there is a PE. If he was ordinarily tax resident in another EU country, then work as an employee of a foreign country would be protected under the tax treaty, Germany wouldn't be allowed to tax this.
But yes, there is a PE risk, especially if there are German clients.

No Germany clients, but if he is working from Germany, he probably would have to be hired as marketing guy or something to pay taxes while he is in Germany.

 

[daniels27]

You will not have protection under the treaty with such a setup, you would have to spend 183+ days in Cyprus for that.
Basically, your situation would be the same as if you had moved to a non-treaty country like the UAE.
So you'll just have to hope that the German tax office either doesn't investigate you, or that they come to the conclusion that you don't have habitual abode in Germany.
Of course, staying 5 months in Cyprus and having an apartment there is something that would help your case ("How could I have habitual abode in Germany when I don't have an apartment there and I spend MORE time in my apartment in Cyprus?!") - but it's not relevant. Since there is no treaty to protect you, they only have to look at the time you spend in Germany.

I can't tell you how high that risk is in practice, maybe 5 months in Cyprus, receipts from Cyprus etc. are enough for them to back off. I think it's not impossible, could even be likely.
But formally, there is no guarantee. Because if they say you are still tax resident in Germany, the treaty won't apply to you.

The DTA reads:
https://www.bundesfinanzministerium...men-DBA-Gesetz.pdf?__blob=publicationFile&v=3

he shall be deemed to be a resident only of the State in which he has a permanent home available to him; if he has a perma- nent home available to him in both States, he shall be deemed to be a resident only of the State with which his personal and economic relations are closer (centre of vital interests);

But this only applies to passive income. For active work, no matter what you need to pay tax in the country the work is performed as the PE rules are quite broad. Of course, they won't bother you if you spend your 6 weeks holidays there and take some phone calls or check emails on your phone.

 

[JustAnotherNomad]

That's the wrong article. You have to look at the article for employment income - and potentially the article for business profits.

Business Profits (Article 7):
The profits of an enterprise of a Contracting State shall be taxable only in that State unless the enterprise carries on business in the other Contracting State through a permanent establishment situated therein.

Income from Employment (Article 14):
[...] remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State if:
a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in any twelve month period commencing or ending in the fiscal year concerned [...]

All EU-countries have such rules in their treaties. Otherwise the bureaucracy would be crazy. Imagine a McKinsey consultant who works in 10 different EU countries - is he supposed to file a tax return in each of them?

 

[daniels27]

Yes, and then, they just claim the income to be derived from a PE as the guy has a room with good desk in his mother's house where he normally works from.

the remuneration is not borne by a permanent establishment which the employer has in the other State.

 

[JustAnotherNomad]

Like I said, there is a PE risk, especially if there are German clients. Can't say how big the risk is.

 

[daniels27]

Like I said, there is a PE risk, especially if there are German clients. Can't say how big the risk is.

No German clients, he could try it.

But it remains risky unless he can somehow justify the time spent there to be only for personal issues and not work.

 

[JustAnotherNomad]

His biggest issue right now is that he has no treaty protection anyway...

 

[daniels27]

His biggest issue right now is that he has no treaty protection anyway...

I think at his income level just flying under the radar may be best. Maybe, he can go live in Réunion and pay some small tax there while travelling.

 

[Nw1]

To cover most private relationship needs i would need to spend 3 months in germany (12-14 weeks).

Rest i would like to have somewhat of a base. As said Cyprus is attractive to me for that, also from a quality of life and community standpoint. I can easily stay at that base 5 months and the other 4 months i would travel around.

My money would still be generated by my US LLC, so any structure that helps me get this money in a favorible way why still offering as much protection to questions from german authorities will be appreciated.

The long term solution if you are willing to move is to basically obtain citizenship or long term business visa in a 0 tax country. And once you have all things fixed in place renounce your German citizenship. You can still get stuff you want done in Germany through your family members or friends.

 

[daniels27]

The long term solution if you are willing to move is to basically obtain citizenship or long term business visa in a 0 tax country. And once you have all things fixed in place renounce your German citizenship. You can still get stuff you want done in Germany through your family members or friends.

Why give up his citizenship?

Can I come to your country and get citizenship there?

 

[Hydrox]

How much money are we talking about by the way? You work as a freelancer? How much do you even make per year?

100k profit 2024. Before that it was way less (below 30k). Not a freelancer, real online business.

May i ask what your structure is?

Yes, and then, they just claim the income to be derived from a PE as the guy has a room with good desk in his mother's house where he normally works from.

What if i destroy the desk everytime i leave and then get a new one when i arrive? Jokes aside how would they ever know that?
How would they even know i worked in the time being in germany? Business could be handled by freelancers abroad...

No German clients, he could try it.

But it remains risky unless he can somehow justify the time spent there to be only for personal issues and not work.

I have no german clients. Only outside EU clients.

I think at his income level just flying under the radar may be best. Maybe, he can go live in Réunion and pay some small tax there while travelling.

What is "live in Reunion"

 

[JustAnotherNomad]

100k profit 2024. Before that it was way less (below 30k). Not a freelancer, real online business.

Sounds like you will have to pay exit tax...
Just move to Bulgaria, pay 10%, done. Bulgaria is a Schengen country.

May i ask what your structure is?

Not really comparable.

What if i destroy the desk everytime i leave and then get a new one when i arrive? Jokes aside how would they ever know that?
How would they even know i worked in the time being in germany? Business could be handled by freelancers abroad...

They don't have to know, they can just claim something, and then it's up to you to prove them wrong.

I have no german clients. Only outside EU clients.

Probably very little PE risk then.

What is "live in Reunion"

He meant you can move to the island of Reunion.