Question Dividends as non dom in cyprus

[heliotrope]

What the point of Cyprus if you have to pay tax? Many countries have tax free minimums.
It's also an Island. I don't really see the advantages of Cyprus comparing to UAE

The circa 25% tax is strictly on salary.

It's a common practise to e.g. take a foreign dividend (on which you will pay 2.65%).

And to pay some kind of salary, on which the tax will be higher, but which will establish economic ties to the island and enable you to benefit from healthcare etc., if that's what you want.

Bear in mind that there are all kinds of possible users here, some older, some younger, some with pre-existing health conditions, some without, etc. Cyprus is a particular package of benefits and drawbacks.

The obvious problem with the UAE is that if you're running any kind of servicing company into Europe, the UAE has the stink of a tax haven. But that won't matter if you're doing other kinds of business.

I wonder why it's so hard to grasp the concept that one size doesn't fit all.

 

[CyprusLaw]

The circa 25% tax is strictly on salary.

It's a common practise to e.g. take a foreign dividend (on which you will pay 2.65%).

And to pay some kind of salary, on which the tax will be higher, but which will establish economic ties to the island and enable you to benefit from healthcare etc., if that's what you want.

Bear in mind that there are all kinds of possible users here, some older, some younger, some with pre-existing health conditions, some without, etc. Cyprus is a particular package of benefits and drawbacks.

The obvious problem with the UAE is that if you're running any kind of servicing company into Europe, the UAE has the stink of a tax haven. But that won't matter if you're doing other kinds of business.

I wonder why it's so hard to grasp the concept that one size doesn't fit all.

Just to clarify a few things about Cyprus:

(a) With respect to the health system, all Cypriots pay this percentage from their salary and/or dividend (as applicable), so any foreign investor will have to pay the 2.65% on the dividend but will benefit of the same treatment as any other Cypriot. i.e. Free visits to your GP, and visits to special doctors, or other types of examinations, treatment etc for free or for a very small amount. For example you can take blood tests for about 5 euro if you are contributing to the GHS.

(b) With respect to salary there are bands, which I set out below. But in any event you would also need to be Social Insurance of 15.6% and GHS on the salary. I note that it is not necessary for a shareholder/director to register as an employee. So he could simply be paid by dividend.

up to €19.500	zero
€19.501 - €28.000	20%
€28.001 - €36.300	25%
€36.301 - €60.000	30%
€60.000 - €100.000	35%
€100.000 +	35%

 

[ShillGates]

so any foreign investor will have to pay the 2.65% on the dividend

On a maximum of 180k EUro charge, so about 5k you pay in return for healthcare. Same as you would pay for a health plan in the UAE, dont really get the issue here?

 

[tomvan20]

Just to clarify a few things about Cyprus:

(a) With respect to the health system, all Cypriots pay this percentage from their salary and/or dividend (as applicable), so any foreign investor will have to pay the 2.65% on the dividend but will benefit of the same treatment as any other Cypriot. i.e. Free visits to your GP, and visits to special doctors, or other types of examinations, treatment etc for free or for a very small amount. For example you can take blood tests for about 5 euro if you are contributing to the GHS.

But there has to be some minimum tax to be paid I would think?

If I have only listed stock market shares of say Apple, worth 300.000 euro, and I get 2% dividend on them, this is 6.000 euro per year.
2.65% Gesy on that would be 159 euro.

It can't be possible that you get the same healthcare benefits as normal employees for this 159 euro per year?

 

[ShillGates]

No that is it.

If you only work 10 hours a week - likewise taking into account tax free allowance etc.

That’s the beauty here. For 5k a year max you get healthcare and a European island

True the banking sucks over here but for enjoyment of money earned else where it is great

 

[metronic]

No that is it.

If you only work 10 hours a week - likewise taking into account tax free allowance etc.

That’s the beauty here. For 5k a year max you get healthcare and a European island

True the banking sucks over here but for enjoyment of money earned else where it is great

personal banking is honestly okay, yes not the best but it's chill.

the hack for business banking that sucks in Cyprus (good luck with any online business) is to just have your company outside Cyprus as a subsidiary so that you can transfer dividends tax-free.

you might end up paying a little more (or less in Hungary, Poland, Croatia) corporate tax but I see it as a fee for stability.

hope that helps someone!

 

[frosty]

the hack for business banking that sucks in Cyprus (good luck with any online business) is to just have your company outside Cyprus as a subsidiary so that you can transfer dividends tax-free.

you might end up paying a little more (or less in Hungary, Poland, Croatia) corporate tax but I see it as a fee for stability.

hope that helps someone!

Could you please elaborate on why and how the corporate banking "sucks"?

Would I have trouble accepting payments from other countries for instance? Problem sending dividends or payments to other European banks? Are many banks on shaky foundations and could go bankrupt any day now? Accounts being freezed for strange reasons? What exactly should I worried about?

I guess it would be possible to have the bank outside of Cyprus right, but maybe it's hard to open an account for a Cypriotic company in other European countries?

br,

frosty

 

[CyprusLaw]

Could you please elaborate on why and how the corporate banking "sucks"?

Would I have trouble accepting payments from other countries for instance? Problem sending dividends or payments to other European banks? Are many banks on shaky foundations and could go bankrupt any day now? Accounts being freezed for strange reasons? What exactly should I worried about?

I guess it would be possible to have the bank outside of Cyprus right, but maybe it's hard to open an account for a Cypriotic company in other European countries?

br,

frosty

Corporate banking in Cyprus is perfectly fine, as long as you tick the KYC requirements they may take their time but Cyprus bank are still a safe and trustworthy option

 

[Verbatim]

Corporate banking in Cyprus is perfectly fine, as long as you tick the KYC requirements they may take their time but Cyprus bank are still a safe and trustworthy option

Is there a way for a non-dom in Cyprus to do crypto trading tax-free? e.g. by having a foreign company in a zero tax jurisdiction and receiving income as dividends, therefore tax-free? Because usually I see the recommendation to do crypto trading in Cypriot company with 12.5% corporate tax. Which means that the above mentioned scheme would not work. I understand that only stocks etc have an explicit exemption so trading crypto as a private person is totally out of the question. But I suppose things are changing in Cyprus with CFC rules, exit tax etc.

 

[CyprusLaw]

Is there a way for a non-dom in Cyprus to do crypto trading tax-free? e.g. by having a foreign company in a zero tax jurisdiction and receiving income as dividends, therefore tax-free? Because usually I see the recommendation to do crypto trading in Cypriot company with 12.5% corporate tax. Which means that the above mentioned scheme would not work. I understand that only stocks etc have an explicit exemption so trading crypto as a private person is totally out of the question. But I suppose things are changing in Cyprus with CFC rules, exit tax etc.

Each case is considered on its merits and then the best structure for tax optimization is suggested. Happy to PM you to discuss this.

 

[Verbatim]

Each case is considered on its merits and then the best structure for tax optimization is suggested. Happy to PM you to discuss this.

Please do

 

[anotherone]

Hello,
I d like to add my two cents:

In Cyprus, it looks like self employed individuals must only pay pay Gesy (4%) and social contribution (15,60%). SO before hitting 19400 euros revenue the global tax is 15,60% + 4% =19,60%

They don't need to pay

Social cohesion Fund		2%
Redundancy Fund		1.2%
Industrial Training Fund		0.5%
Holiday Fund (if not exempt)		8%

So, after reading this thread, I think that the best would be to declare a minimal revenue as self employed gross revenue to benefit from Health insurance and then, pay yourself via dividends.

Dividend tax from a Cyprus company would (12,5% corporate tax + 2,65% gEsy= 15,15%) - Since the tax rate is lower on dividends, you want to declare the highest amount of dividends possible.

My question is: what is the minimum gross revenue a self employed individual can declare to benefit from the Cypriot health system?

From what i understood the gesy paid on dividends does not allow to benefit from cypriot health system, am it right?

 

[CyprusBusiness]

Hello,
I d like to add my two cents:

In Cyprus, it looks like self employed individuals must only pay pay Gesy (4%) and social contribution (15,60%). SO before hitting 19400 euros revenue the global tax is 15,60% + 4% =19,60%

They don't need to pay

Social cohesion Fund		2%
Redundancy Fund		1.2%
Industrial Training Fund		0.5%
Holiday Fund (if not exempt)		8%

So, after reading this thread, I think that the best would be to declare a minimal revenue as self employed gross revenue to benefit from Health insurance and then, pay yourself via dividends.

Dividend tax from a Cyprus company would (12,5% corporate tax + 2,65% gEsy= 15,15%) - Since the tax rate is lower on dividends, you want to declare the highest amount of dividends possible.

My question is: what is the minimum gross revenue a self employed individual can declare to benefit from the Cypriot health system?

From what i understood the gesy paid on dividends does not allow to benefit from cypriot health system, am it right?

Regarding GESY (national health system):

Eligibility to become a beneficiary of the system:
Primarily, you must reside in the areas that are controlled by the Republic of Cyprus. If you are a resident of the government controlled areas you are a GHS beneficiary if a) you are employed, or b) you have acquired permanent residence status, or c) you have been granted refugee or supplementary protection status, or d) you are a member of the family of a beneficiary or e) you are insured in another EU Member State.

It depends on your status. I would urge you to read all details here:

https://www.gesy.org.cy/sites/Sites...port/20190402-enrolment-guide-noncy-final.pdf

 

[CyprusLawyer101]

Regarding GESY (national health system):

Eligibility to become a beneficiary of the system:
Primarily, you must reside in the areas that are controlled by the Republic of Cyprus. If you are a resident of the government controlled areas you are a GHS beneficiary if a) you are employed, or b) you have acquired permanent residence status, or c) you have been granted refugee or supplementary protection status, or d) you are a member of the family of a beneficiary or e) you are insured in another EU Member State.

It depends on your status. I would urge you to read all details here:

https://www.gesy.org.cy/sites/Sites...port/20190402-enrolment-guide-noncy-final.pdf

Thank you for this breifing.

 

[anotherone]

Hello,
I d like to add my two cents:

In Cyprus, it looks like self employed individuals must only pay pay Gesy (4%) and social contribution (15,60%). SO before hitting 19400 euros revenue the global tax is 15,60% + 4% =19,60%

They don't need to pay

Social cohesion Fund		2%
Redundancy Fund		1.2%
Industrial Training Fund		0.5%
Holiday Fund (if not exempt)		8%

So, after reading this thread, I think that the best would be to declare a minimal revenue as self employed gross revenue to benefit from Health insurance and then, pay yourself via dividends.

Dividend tax from a Cyprus company would (12,5% corporate tax + 2,65% gEsy= 15,15%) - Since the tax rate is lower on dividends, you want to declare the highest amount of dividends possible.

My question is: what is the minimum gross revenue a self employed individual can declare to benefit from the Cypriot health system?

From what i understood the gesy paid on dividends does not allow to benefit from cypriot health system, am it right?

I realized that I made a major mistake in my post. It is dangerous to declare yourself as a self employed of Cyprus company in Cyprus. If you get a tax inspection someday, the authorities may reclassify you as an employee and they may ask you to pay the difference because self employed people pay a bit less social contribution than employees. The right approach is being an employee of a cyprus company to declare part of your income as employee and part of your income as director dividends.
this is due to the fact that if tax authorities see that your income comes from a unique source of revenue (your cyprus company), they will say that you are an employee, not a self employed. the same problem exists in Croatia, Czech republic, France and many other countries.

Hopefully I calculated that the social contribution of self employed is 19,60% and the employer/employee total social contribution is 21,50%
So, if you did it and if you are caught, they will ask you to pay this 1,9% difference. It is quite low. it is 400 euros every year when you earn 19500 euros gross revenue.

 

[Sols]

You do not need to be an employee. Sure, it's a way to take out around 19,000 EUR/year from the company without paying income tax and lowering the company's taxable base. But what most expats moving to Cyprus to set up a one-person company do is just pay the 12.50% corporate income tax and then pay the remainder as dividends, which for you as a non-domicile resident are tax free. Of your dividends, you have to pay 2.65% Gesy. This is capped at 4,770 EUR/year so if pay yourself more than 180,000 EUR per year in dividends, there is no further Gesy tax.

This website has pretty good calculators: Cyprus Tax Calculators - Easy, Quick and Accurate - MyCyprusTax©

 

[anotherone]

You do not need to be an employee. Sure, it's a way to take out around 19,000 EUR/year from the company without paying income tax and lowering the company's taxable base. But what most expats moving to Cyprus to set up a one-person company do is just pay the 12.50% corporate income tax and then pay the remainder as dividends, which for you as a non-domicile resident are tax free. Of your dividends, you have to pay 2.65% Gesy. This is capped at 4,770 EUR/year so if pay yourself more than 180,000 EUR per year in dividends, there is no further Gesy tax.

This website has pretty good calculators: Cyprus Tax Calculators - Easy, Quick and Accurate - MyCyprusTax©

But then, can they benefit from the national health care system if they only pay the 2,65% Gesy?

 

[Sols]

But then, can they benefit from the national health care system if they only pay the 2,65% Gesy?

No, they usually get a private health insurance. If you want access to the GHS, the easiest option is to pay yourself the 19,500 EUR/year salary.

 

[AndyAresa]

No, they usually get a private health insurance. If you want access to the GHS, the easiest option is to pay yourself the 19,500 EUR/year salary.

Thanks, does the salary have to be at least 19,500 Euro? Can it be less?

 

[luap]

Regarding GESY (national health system):

Eligibility to become a beneficiary of the system:
Primarily, you must reside in the areas that are controlled by the Republic of Cyprus. If you are a resident of the government controlled areas you are a GHS beneficiary if a) you are employed, or b) you have acquired permanent residence status, or c) you have been granted refugee or supplementary protection status, or d) you are a member of the family of a beneficiary or e) you are insured in another EU Member State.

It depends on your status. I would urge you to read all details here:

https://www.gesy.org.cy/sites/Sites...port/20190402-enrolment-guide-noncy-final.pdf

I inquired with the GESY service in Cyprus regarding using to the public health system, and they informed me that as a resident paying GHS tax, I still will not get access to the health service until I've acquired permanent residency status in addition to paying the social insurance.