Recently, the outcome of a poll hreld by the Dutch business union VNO-NCW amongst Netherlands based entrepeneurs (large, mid- and small size) resulted in a staggering 1 out of 5 that seriously consider leaving the Netherlands, mostly due to red tape combined with unworkable and unfavourable new Netherlands rules, not only for their business but also for their investments such a Dutch private investment real estate.
We are expert in selecting the best jurisdictions for persons considering a new home for their business and themselves, both within and outside the EU.
One of the main EU jurisdictions to consider in this regard is Cyprus
Cyprus, with its history, more than 300 sunny days per annum , stunning beaches, beatiful cities and national parks, is much more than barren rock in the Mediterrenean.
Cyprus is home to over 1.2 million people, including a major expatriate community. Strategically located at the crossroads of Europe, the Middle-East, Asia and Africa, Cyprus offers very good flight connections through its two international airports.
The island has wonderfully diverse residential options from modern sea-view apartments in bustling cities (Limassol; little Dubai) to serene cottages in picturesque villages. Cyprus is known for its safety, good educational institutions, rather robust healthcare system, and a cost of living that is often lower than many other popular destinations.
In addition to lifestyle benefits, Cyprus offers an attractive Non-Domiciled tax regime. While Non-Doms are generally taxed on worldwide income, several exemptions make it a very favourable destination. Foreign Salaries, Dividends, interest, and capital gains are exempt from personal income tax, even when remitted to Cyprus, allowing you to enjoy your wealth locally. See further below. Cyprus, as an EU member, provides access to EU initiatives and over 60 double tax treaties, including recently: the Netherlands.
Migrantic is currently writing the Commentary on the Cyprus-Netherlands tax treaty for SDU/NDFR; one the largest Dutch tax literature publishers.
For EU citizens, relocating to Cyprus is straightforward with no visa requirements. Non-EU citizens can benefit from several favourable residency routes, such as establishing a Foreign Interest Company (FIC), which allows directors and key personnel to apply for residency and work permits for themselves and their families. Cyprus also has one of the shortest presence requirements in Europe to be considered a tax resident, with options as short as 60 days under specific criteria.
Cyprus Business benefits
Corporate tax is among the lowest in Europe with only 12.5%, encouraging more and more people to start a business in Cyprus. . Also, a conditional Notional Interest Deduction can be applied to new equity of a Cyprus company (currently as high as 8.25% on the equity). Furthermore, corporations are excluded from paying taxes on the sale of securities, dividends, and, in some situations, capital gains. Cyprus has a territorial tax system, which means it only taxes revenue generated locallyAs a result, through agreements on double taxation, starting a business in Cyprus can lead to significant tax reduction. Moreover, Cyprus has less bureaucratic red tape for companies compared to continental Europe, especially the Netherlands.
Cyprus Personal Income Tax benefits
Cyprus tax residents are generally taxed on their worldwide income. However, a special taxation regime is available for Non-Domicile individuals. This Non-Domiciled regime is available for 17 years from the first tax year you become tax resident.
Individuals who qualify under the Non-Domicile regime are exempt from taxation for example from the following sources of income:
- Interest;
- Dividends (including from your closely held company in the Netherlands);
- Capital gains (apart from Immovable Property in Cyprus – subject to a partial exemption on newly acquired property);
- Capital sums received from pension, provident and insurance funds;
- Remuneration from salaried services rendered outside Cyprus for more than 90 days in a tax year to a non-Cyprus resident employer.
Non-Doms are also entitled to an income tax exemption equal to 50% on their local salary provided their job is their first form of employment in Cyprus and they earn over €55,000 a year.
The above exemptions are subject to 2.65% contribution to the General Healthcare System (GHS). The contributions to GHS are capped at € 180,000 of total annual income – therefore a maximum annual contribution of € 4,770.
Apart from the benefits of your potential new home, careful Dutch emigration advice is necessary in these cases as the Netherlands can levy severe exit taxes absent any advance tax planning.
Please contact our partner Leon van Baal for an initial 30-minute consultation, free of charge!