Non Dom is Cyprus Golden Ace! But there are some immigration hiccups to pay attention to!

Non Dom is Cyprus Golden Ace! It is the reason why so many wealthy individuals change their tax residency.

However, depending on the country of place of the individual different immigration problems & solutions apply to obtain the non-dom status.

What is the non-dom- brief review

The non-dom or formally "Cyprus Tax Residency but not domiciled, tax status" is a tax incentive introduced by the Cyprus government where someone who has not being living in Cyprus 17 out of the last 20 years and who is currently staying in Cyprus at least 60 days but does not stay anywhere else for more than 180 days (hence not resident elsewhere) can apply for this special tax status to enjoy worldwide tax dividends. Business ties with Cyprus must be proven.

► Read more about the non dom criteria, eligibility etc - Click here.

► Watch Videos on Non-Dom (Video 1, Video 2 ).

One of the main requirements for the non-dom status is to prove that the applicant has significant business ties with the republic.

This is commonly achieved by setting up a Cyprus company and being employed by it. The Cyprus company will provide its goods and services to its clientele globally and this is sufficient to obtain the non-dom status.

The purpose of this article is to examine the immigration aspect of the non-domiciled applications.

Being employed by your Cyprus Company

Is this important for you?

► EU Citizens

Not a problem. If you want to be employed by your Cyprus Company then great!

It is easy obtaining a yellow slip and legalising your paperwork so as to be an employee of your Cyprus company to thus meet the requirements of the non-dom status. A local address of residence is of course needed but there are no other hurdles in obtaining the legalisation of the paperwork for an EU citizen,

The process will entail obtaining Tax Identification Number (TIN) for the person, registering them with the social securities, registering the company with the social securities starting pay in the local payroll taxes evidence which will escort the non-dom application for approval.

Things become a bit trickier when we are dealing with investors from 3rd countries though, as explained below.

► 3rd Country Citizens (non-EU investors applying for non dom)

Becoming an employee of your company can be challenging!

3rd Country Citizens work employment is not so straight forward and we could argue rightly so as the EU wants to protect its workforce; it does so by applying strict requirements to non-EU citizens (irrespective of status) when seeking employment in the eurozone.

A yellow slip is will not suffice as it is not applicable. 

Solution?

Cyprus has introduced specific schemes to attract high calibre workforce such as the BCS, Key Personnel Application & Nomad Visa.

More information about these available schemes can be learned by reading our website information by clicking here. 

These solutions though are mainly targeted for headquarting solutions as Cyprus is a very attractive jurisdiction for it (read relevant article here) or for individuals who will obtain their paperwork via investment such as the permanent residency which requires an investment of Euro 300k. 

In other words these schemes are of a more formal and permanent nature and thus more expensive.

These schemes / options leave individuals who simply want to exploit the non-dom scheme with little options as without the above serious commitment they will not be able to register for social securities (thus being employed by their company, which evidences their stay in the republic, strong economic ties with Cyprus etc - criteria the non-dom application requires).

So what is this solution? Can we obtain the non-dom even if we are not being employed by our Cyprus Company?

So what is this solution?

Can we obtain the non-dom even if we are not being employed by our Cyprus Company?

At this point it is worth reminding you that the non-dom application has no explicit requirements; evidence must be presented to the Ministry of Finance that the investor / entrepreneur has adequate economic ties with the republic. 

From experience this requirement is met with the below set up:

• Incorporation of a Cyprus company
• Director / secretary and 100% shareholder of the Cyprus Company
• Employee (ideal but as explained above not always available for non-EU applicants)*.  [wifes are eu then thre is no issue legalisation of paperwork works]
• Cyprus Tax Number
• Cyprus Tax Return submission
• Payment of NHS (GESY) via dividends.

So what is the catch?

The catch lies with the fact that Cyprus being a fully harmonised EU member applies all EU laws and regulations and when it comes to employment is very strict in allowing non-EU citizens registering with the social securities and granting them with appropriate permits. However, for non-dom purposes, which we remind you is a Cyprus Tax Residency Status being employed by your company can be overlooked. 

In other words, you can get your Cyprus Tax Identification Number (TIN) and apply for the non-dom even if you are not registered with the social securities. By applying for a simpler solution such as Tourist Visa, Visitors Visa, Long Term Residency & Permanent Residency you can go ahead with your non-dom status application without the need to apply for the more costly BCS, Key Personnel Application, Nomad Visa solutions.

Golden Nugget:

Is this legal?

► Yes

We will not be registered with social securities but will I be able to legally avoid paying dividend tax based on the non-dom?

► Yes

 This is because Tourist Visa, Visitors Visa, Long Term Residency & Permanent Residency can escort your non-dom application suffices the legality of your paperwork.

Summary / Conclusion

To obtain a non-dom application you do not necessarily have to be employed by your company but it is strongly advisable.

In the event you are an applicant from a 3rd country, a tourist visa or suffices for the legalisation of your paperwork and maybe requested by the Ministry of Finance. Non-EU Applicants married with EU citizens can become registered with the social insurance via a different application method.

Disclaimer: We would like to stress out that the non-dom application is governed by substance over form principle.

As such there is not an exhaustive checklist of requirements and the granting of the non dom license is subject to the discretion of the examiner. Having said this, to the date of writing this article, all of our applications have been 100% successful.

Want to know more?

Request our immigration matrix - send us a direct email requesting it at kt@cyprusaccountants.com.cy

► Read a more detailed article on immigration

► Read more detailed articles on non dom

► Watch detailed videos on non dom tax status.

► Enquire directly at kt@cyprusaccountants.com.cy

Disclaimer: The information provided in this article is for general informational purposes only and should not be construed as legal or tax advice. Please consult with a professional tax advisor for advice on your specific situation.

About CYAUSE Audit Services Ltd

CYAUSE Audit Services is an Audit & Assurance firm with offices in Nicosia and Limassol in Cyprus. During 2015 we have been awarded by local regulator I.C.P.A.C the A.C.C.A for the Quality of our Audit Services and our Office Procedures.  We incorporate and relocate companies of various sizes regularly and our immigration expertise is required for the successful relocation of their employees and key management.

Our Partnership with  BKR International  (No 10 Global Accounting Network) and ACCACE Circle (European Network) ensures that we are wired and closely connected in all jurisdictions, getting the latest corporate and tax news ensuring our tax planning is accurate and validated before finalisation. Being part of international networks gives us fast access to accurate information for payroll, accounting tax and incorporation.

Feel free to contact us at enquiries@cyprusaccountants.com.cy or call us at +357 22 336 309.