Why is Cyprus so attractive for British Tax Payers
UK Non-Domiciled Tax Status
Following the recent change of the UK non-domiciled tax law, which probably dates back 200 years in the UK, in its effort to collect more taxes, the UK government is planning to tax UK non-domiciled persons on their overseas income streams.
Prior to the legislation, UK non-domiciled persons would only be taxed on income / revenue generated in the UK at the applicable tax laws and rates each year. Income from overseas sources such as dividends, passive income (rental income, dividend income, royalties) as well as active income (profits from overseas businesses) would not be subject to the UK tax as typically such income was taxed overseas.
The UK non-domiciled status worked beautifully as businessmen in the UK felt comfortable having the UK as their primary tax place of residency and whilst being UK non-domiciled trade everywhere in the world without having to stress about UK taxes. They were not concerned of paying UK taxes as the non dom tax status was protecting their overseas investments and activities; such overseas gains, profits and dividends were taxed abroad and declared in their UK tax return without any tax implications.
….this implies that it is likely they will be paying UK taxes over and above any taxes paid abroad
Following the change of the UK tax legislation, all UK non-domiciled entrepreneurs and businessmen will be subject to UK tax on their worldwide income. This implies that it is likely they will be paying UK taxes over and above any taxes paid abroad, if overseas taxes are lower than the UK taxes, which is usually the case unless such investments and businesses are set up in very highly developed tax jurisdictions such as the USA, Germany, Luxembourg etc.
It is no wonder why so many high-net-worth individuals want to flee the UK and change their tax residency and this is the reason there is so much hype about it.
So what is the solution to this huge UK tax problem?
Solution for UK Non Domiciled Tax Persons
Switch to a Cyprus Non Domiciled Tax Resident!
Cyprus follows a different non dom tax status than the UK.
The Cyprus non dom requirement is as follows; anyone who relocates to Cyprus for at least 60 days can change their tax status to a Cyprus Tax Resident but non domiciled status. This opens huge new opportunities for such persons as they will be taxed on their worldwide income based on Cyprus personal and corporate tax rates which are amongst the lowest in Europe. Dividend income and passive income is usually tax free and Cyprus has a plethora of double tax treaties (with almost 70 countries) making it impossible for your active or passive income to be double taxed.
Some basic requirements for the Cyprus non domiciled tax status:
- Live in Cyprus at least 60 days in a calendar year (not consecutive)
- Have business ties with Cyprus (usually with the formation and trade of a Cyprus Company)
- Do not live anywhere else for more than 183 days (i.e do not be tax resident elsewhere)
- Proof that you spend at least 60 days in beautiful Cyprus (have some local bills, telephone, rent, electricity)
Read more articles on Cyprus non domiciled tax status
Important advantages of choosing Cyprus
Language
Everyone in Cyprus speaks fluently English and almost all government websites and governmental forms / applications are available in both languages, English and Cypriot. Same applies for the private sector which has the majority of its content in the English language.
International Community
There is a large international community living in all cities with the exception of the capital, Nicosia. Consequently, you will be able to feel comfortable enjoying luxury lifestyle, indulge yourself and enjoy high quality services; as you used to in the UK (ok this might be an exaggeration).
Limassol is currently the city with the most dense international community reaching appr. 120,000 of internationals, majority of which are former USSR citizens. Limassol is also the city with the most expensive office space and accommodation probably in the world together with the highest living standards; the result of this large international community who lives in the city, enjoys the city and of course invests in the city.
Business Centre
There is no need to mention to UK nationals and non-domiciled businessmen how big the Cyprus international centre scene is, nor to brag about the quality of professional services of the local service providers; law firms with barristers from the United Kingdom, audit firms owned by London ICAEW chartered accountants, fiduciary service providers being graduates from the best UK universities.
No need for physical visit
Cyprus has become technologically savvy but in a “siga siga” manner (siga siga means slow). Being an international financial centre ensures that you can conduct business remotely and your physical presence is not really required for any function.
The following services can be performed without the physical presence of the businessman:
- Banking
Bank account set up can be opened remotely without the physical presence of the bank signatory / owner of the bank account. A virtual meeting is conducted by the bank officer.
- Company formation
Company formation is provided remotely by accountants, lawyers and service providers. Just need to provide your KYC documentation and instructions about the composition of the company.
- Accounting Information / processing etc
The entire operation is performed remotely especially following the covid outbreak and time restraints everyone has these days. Records are shared with accountants / auditors who perform their work remotely.
- Consultation
Is usually performed over the phone or via zoom calls not all with international clients but also with local ones; unfortunately due to the time constraints we are all facing in this busy era we are living.
- Visa Requirements
There is no need for visa requirements for UK nationals or any other 3rd country nationals who want to use Cyprus for the non dom application. Our firm offers many solutions to our clients specifically designed for the non dom application. Visa requirements are needed when a UK national want to permanently relocate and work in Cyprus,
Why UK Nationals need a visa?
If you want to become an employee of your Cyprus Company simply because the UK is not an EU member and as such special visa requirements are needed. Unlike the EU nationals which only require a yellow slip (more information here) UK nationals will require a special type of visa that would allow them to work / become registered as employees of their Cyprus companies. As these visa packages change from time to time or lapse in the middle of calendar years it is best to refer to this section (click here) of our website for up to date information.
Conclusion - Cyprus is the solution for UK Non Domiciled People wanting to escape the UK!
What are you waiting for? Cyprus has become a hot spot for high-net-worth individuals, investors, traders who all have 1 thing in common! They are all Cyprus Tax Residents and Non-Domiciled. They are enjoying worldwide tax-free dividends and if applicable they are paying Cyprus taxes on their worldwide income at the most attractive (if any) tax rates.
Let’s not forget that trading of securities has always been outside the scope for tax purposes and dividend income to non-Cyprus tax residents has always been tax free!