# Income Tax - Non-dom UK or Cyprus?



## SteveFerry (Apr 3, 2016)

Hello,

My wife and I are moving to Pafos soon. I have a business in UK and will be going back every so often to work. All work is carried out in the UK. The business is a partnership with my wife being the (not so) silent partner and me being everything else. We are VAT registered in UK. I'm only 56 but I took my Mineworkers pension as soon as I turned 50 before the government could change the age limit to 55.

OK, the crux of the question is that I would prefer to pay my tax in Cyprus but can I? I will be in Cyprus more than the required 183 days. Bev will be staying in Cyprus while I work so she will have far more days there.

Is anyone in the same position as me and what did you do? can you put me in touch with the accountants who sorted out your affairs?

I would really appreciate your advice on this.

Thanks, Steve


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## expatme (Dec 4, 2013)

Here is an accountant who will be able to help you; White & Georgiou Expatriate \Services.

emails;[email protected]


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## expatme (Dec 4, 2013)

Just to add that she is very busy doing TAX returns at the moment so she may not reply straight away. Tel Mobile for her 00357 99 923 424 Answer machine; 00357 26 911 508

Good luck.


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## Baywatch (Mar 30, 2014)

SteveFerry said:


> Hello,
> 
> My wife and I are moving to Pafos soon. I have a business in UK and will be going back every so often to work. All work is carried out in the UK. The business is a partnership with my wife being the (not so) silent partner and me being everything else. We are VAT registered in UK. I'm only 56 but I took my Mineworkers pension as soon as I turned 50 before the government could change the age limit to 55.
> 
> ...


I will follow this with interest, hope you report the answer. I have a friend who want to be tax resident in Cyprus but they don't let him because he work around the world 9 months per year, so the result is that he is not tax resident anywhere and pay no tax.


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## PeteandSylv (Sep 24, 2008)

Baywatch said:


> I will follow this with interest, hope you report the answer. I have a friend who want to be tax resident in Cyprus but they don't let him because he work around the world 9 months per year, so the result is that he is not tax resident anywhere and pay no tax.


I thought there is a difference between being tax registered and tax resident. To work here you need to be tax registered and therefore pay tax. To be a tax resident here you need to be a resident and registered for tax regardless of whether you are working when you will be taxed in Cyprus on worldwide earnings.

It seems rather unlikely that your friend cannot be registered for tax anywhere and therefore not pay any. That sounds like evasion.

Pete


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## Baywatch (Mar 30, 2014)

PeteandSylv said:


> I thought there is a difference between being tax registered and tax resident. To work here you need to be tax registered and therefore pay tax. To be a tax resident here you need to be a resident and registered for tax regardless of whether you are working when you will be taxed in Cyprus on worldwide earnings.
> 
> It seems rather unlikely that your friend cannot be registered for tax anywhere and therefore not pay any. That sounds like evasion.
> 
> Pete


Ofc he can regiser for tax here but that does ofc not mean that any other EU country will accept it. The general rule is 183 days or more in one place, and you should pay tax there. No one has thouught about the group of people who work in different places in the world and can not get 183 days.

My friends wife owns a house in Spain where she lives when my friend is out in the world. He also lives there about 2 months a year. The taxman in Spain now want to tax my friend also because of this. 

This is where Cyprus come in the picture. They lived here 20 years ago and now want to move here again. Why? Because Cyprus has a special tax scheme for this group. If you are tax resisdent in Cyprus but work for a foreign employer and spend more than 90 days per calendar year outside Cyprus you pay no income tax in Cyprus

But will Spain accept that he pay tax here?


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## PeteandSylv (Sep 24, 2008)

Baywatch said:


> Ofc he can regiser for tax here but that does ofc not mean that any other EU country will accept it. The general rule is 183 days or more in one place, and you should pay tax there. No one has thouught about the group of people who work in different places in the world and can not get 183 days.
> 
> My friends wife owns a house in Spain where she lives when my friend is out in the world. He also lives there about 2 months a year. The taxman in Spain now want to tax my friend also because of this.
> 
> ...



What a confusing reply!!!

First you say he cannot register anywhere and now you say Spain wants him to pay tax, therefore he can register in Spain.

Then you say he is in a group that does not pay tax in Cyprus but you ask will Spain accept that he pays in Cyprus.

You also say no one has thought about the group who work in different places in the world but then you quote the Cyprus regulation that matches this group.

It seems there may also be a confusion between paying tax and being registered for tax. To pay tax you must be registered but being registered does not mean you will have tax to pay. It is the tax return that determines this.

Pete


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## Baywatch (Mar 30, 2014)

PeteandSylv said:


> What a confusing reply!!!
> 
> First you say he cannot register anywhere and now you say Spain wants him to pay tax, therefore he can register in Spain.
> 
> ...


OK we take this again. Will Spain accept that he is registered to pay tax in Cyprus? To be registered to pay tax here does as you said not mean that you have to pay tax here. I am registered but don't pay tax. The question is where he can be tax resident. If he could be tax resident here, Spain has no argument for claiming tax from him. Their argument is that his wife own a house there and live there most of the time. But my friend does not. So to defuse the claim they now leave Spain and move here

But the registration to pay tax here is of no use if he can't be tax resident here. So that is the big issue.

This question has been discussed both with a tax lawyer here and mine and Veronicas accountant and neither of them have a solution if the Cyprus tax authorities don't want to register him as TAX RESIDENT.
Then the only solution is to be domiciled in Cyprus but to be that you must have been resident here 17 of the last 20 years before the application

To inform you about the special tax scheme for this group I copy what the tax law states

The following are exempt from income tax:

"Remuneration from salaried services rendered outside Cyprus for more than 90 days in a tax year to a non-Cyprus resident employer or to a foreign permanent establishment of a Cyprus resident employer"


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## PeteandSylv (Sep 24, 2008)

Thanks, Anders. That makes it a lot clearer.

What's difficult to understand is why he can't register for tax here. I thought that anyone could wander in to the tax office and register for tax. Part time workers here for just the summer, say, can and have to register (if they are paid legitimately) so can non-working pensioners such as myself.

Why has this guy been singled out for special treatment?

Pete


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## Baywatch (Mar 30, 2014)

PeteandSylv said:


> Thanks, Anders. That makes it a lot clearer.
> 
> What's difficult to understand is why he can't register for tax here. I thought that anyone could wander in to the tax office and register for tax. Part-time workers here for just the summer, say, can and have to register (if they are paid legitimately) so can non-working pensioners such as myself.
> 
> ...


He can and will be registered for tax here, but to be tax resident is a whole other ballgame. And only if he is tax resident here, no other country can claim income tax
The general rule for tax residency is 183 days or more. But what if you live 4 months per year in 3 different countries.


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## PeteandSylv (Sep 24, 2008)

Baywatch said:


> He can and will be registered for tax here, but to be tax resident is a whole other ballgame. And only if he is tax resident here, no other country can claim income tax
> The general rule for tax residency is 183 days or more. But what if you live 4 months per year in 3 different countries.


If those are the rules then it suggests to me that he has to register for tax in each country and pay tax on the earnings related to the country there.

By the way I don't think it necessarily correct to say that if he is tax resident here no other country can claim income tax. I think that would not be the case for a country outside the EU that did not have a double taxation agreement with Cyprus.

Pete


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## bencooper (Mar 20, 2013)

PeteandSylv said:


> If those are the rules then it suggests to me that he has to register for tax in each country and pay tax on the earnings related to the country there.
> 
> By the way I don't think it necessarily correct to say that if he is tax resident here no other country can claim income tax. I think that would not be the case for a country outside the EU that did not have a double taxation agreement with Cyprus.
> 
> Pete


Even if you are "not resident for tax purposes" in UK, for example (and UK being a country having a double taxation agreement with Cyprus), doesn't mean you are not liable for UK tax for certain income arising in UK (for example, rental income on UK property; and UK State pensions (!) which are normally exempted by the Revenue in absence of other UK qualifying income). The UK revenue will take into account any tax doubly-paid in Cyprus but the excess UK tax element is still payable. 
It is best of course to seek advice from a professional.


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## Baywatch (Mar 30, 2014)

PeteandSylv said:


> If those are the rules then it suggests to me that he has to register for tax in each country and pay tax on the earnings related to the country there.
> 
> By the way, I don't think it necessarily correct to say that if he is tax resident here no other country can claim income tax. I think that would not be the case for a country outside the EU that did not have a double taxation agreement with Cyprus.
> 
> Pete


I stand corrected, I meant EU member state. Now is it so wise so he is employed by a company in a country that has no income tax. 

The general rule for this group is that you pay income tax in the country where you live 183 days or more and social contributions in the country where you are employed.
However for this group of workers, they might be equipment installers railroad or tunnel builders etc there are no public benefits available like healthcare unemployment benefits etc, instead, their salary must include also the cost of private insurance

I don't think it would be possible to register in each country even if you worked four months in each place and only in EU. For my friend, he is Brit btw, it is totally impossible. He can be 2 weeks in Belgium, then 1 month in Turkey, then 3 months like just now in Mexico, then 1 month in Oz then... then....


This is what the Cyprus tax law state

"Basis of taxation. All Cyprus tax resident individuals are taxed on all chargeable income accrued or derived from all sources in Cyprus and abroad. Individuals who are not tax residents of Cyprus are taxed on certain income accrued or derived from sources in Cyprus.
An individual is tax resident in Cyprus if he spends in Cyprus more than 183 days in any one calendar year."


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## Baywatch (Mar 30, 2014)

bencooper said:


> Even if you are "not resident for tax purposes" in UK, for example (and UK being a country having a double taxation agreement with Cyprus), doesn't mean you are not liable for UK tax for certain income arising in UK (for example, rental income on UK property; and UK State pensions (!) which are normally exempted by the Revenue in absence of other UK qualifying income). The UK revenue will take into account any tax doubly-paid in Cyprus but the excess UK tax element is still payable.
> It is best of course to seek advice from a professional.


These rules are the same in Cyprus

Something that has changed in Cyprus is the so called Defence tax on interest and dividends. This tax now has to be paid by those who are domiciled in Cyprus. All to attract investments


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## Baywatch (Mar 30, 2014)

Baywatch said:


> These rules are the same in Cyprus
> 
> Something that has changed in Cyprus is the so called Defence tax on interest and dividends. This tax now has to be paid by those who are domiciled in Cyprus. All to attract investments


I see a word or two are missing. The tax is paid ONLY by the domiciled. Before it should be paid by all residennts


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