Real Client Enquiry: 60 Days Rule and how it applies to his personal circumstances

Client Enquiry

I’m a managing director of a UK-based business delivering IT services through its US subsidiary (registered in Florida) to US-based customers (in the USA only). The parent company extracts the profits from its subsidiary via dividends. The directors of the UK business are UK & EU nationals; most of the profits re extracted via dividends in the UK (we are UK tax residents for now… but we were not born in the UK). In addition, we are looking to buy property in Cyprus to spend our summers on the island and enjoy the sun… as such we will spend at least 60 days in Cyprus in any given year.

Please advise me on how I can optimize corporate and individual taxation for both directors?

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Hi dear Client,

This is great news! The 60 day rule is truly amazing. We can provide you with a 3 hour consultation (not at once) at Euro 300 + VAT.

Kindly let me know if you are ok to proceed and i am at your disposal anytime today until 15:00 or tomorrow onwards.

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Hello Kyriakos,

Thank you for your reply. I'm pretty busy today and most of tomorrow as we are flying out to the USA in a couple of days. How does your availability look for the rest of the week beyond today? 

Invoicing either the UK or USA company will not be a problem. Do you accept credit cards? What info do you need to create the invoice? 

Now, I very close to forming another company, this time in Gibraltar... I wonder if that could be part of the tax efficient revamp we are about to discuss? On the other hand I wonder if the same could be achieved in Cyprus only as I deal with IT services and not security training etc. The goal is to pay least amount in taxes in any jurisdiction. 

Would I need to form a company in Cyprus to qualify for the personal tax exemption on dividends received from overseas businesses if we buy the house in Cyprus? 

Cheers 

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Dear Mr. Client, 

Nice to e-meet you ! 

Please transfer the amount of Euro 300 to our bank account (bank details are attached) as discussed with Mr. Kyriakos. 

Once we receive the funds, we will issue the relevant invoice and we will call you to arrange a call or a  zoom meeting.

At your disposal, 

Thank you in advance, 

CYAUSE Support Team

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CYAUSE Advice to Client

You can set up a Cyprus company for your IT services to EU clients --> all EU sales will be taxed via Cyprus at 12.5% but effective tax would be lower as the company will have expenses etc (our income tax office is relaxed) + take out dividends tax free (we will make you non dom). Since you will also buy a property this move is supported and can not be disputed by any other tax jurisdiction.

If you do the above and spend at least 60 days in Cyprus and less than 6 months anywhere else, you would be taxed on your worldwide income in Cyprus as a person for all global dividends earned --> since we will make you non dom (60 days rule) --> your worldwide dividends will be tax free in Cyprus (unless they are taxed abroad - in this case we can not get rid of the overseas tax but it is what it is).

If this suffices there is no need to proceed with Gibraltar company where it will generate banking issues for you in the future + excess costs because it is classified as a tax haven with what else this entails.

More to be explained over the phone.

Give me your thoughts and available time slot for a phone call.