Working in own company in Cyprus, sexmånadersregel
I sincerely apologize that I have to write in English as my Swedish is not yet good enough for these sort of topics.
My sambo and who are both residents in Sweden for the last 5 years decided to relocate and open an LTD in Cyprus.
We also own an apartment but will deregister from Sweden/Skatteverket upon departure.
We will have our living and operational base in Cyprus starting from September 2018. The plan is to be paid by our own LTD and get taxed in Cyprus.
The questions that arise are:
-Will the sexmånadersregel be applicable even in the case that we work for our own LTD company?
-Will the sexmånadersregel be satisfied in February 2019, irrespective that the work took place crossing two tax years (2018/19)?
-Will we have to pay tax in Sweden for work performed in CY between Sept-December 2018 and note it in the declaration of 2019?
If yes shall this amount be rebated in the declaration of 2020 since the 6-month rule will long be satisfied by then?
Thanks a million,
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Seems to me that the simple solution is to move prior to July this year. Thn the six month rule will not apply. Alternatively, take a 2 month vacation to eg CY starting June 29 this year till September. Another alternative is to move in September, if this month is magical, but do not pay yourself any salaries 2018 - take it out 2019 instead when you would have permanent residency in CY anyways. But Claes is the expert.
The apartment should not matter, although it might have an impact on the so called ten year rule, which is about capital gains. However, as you only lived in SE for 5 years, it might not apply to you. I think it only applies if you have had residency in SE for over 10 years. In 2019 you will for sure be tax liable in CY - to answer one of your specific questions. Regarding questions 1 and 3, I too am looking forward to Claes answers, although I still think the simle solution is to move in June alternatively to just accumulate profits in LTD and pay it out in 2019.
If you go for the 2 month vacation option, make sure to make a so called address change in Sweden in early June, after which you will receive a notification of changed residency from SE. This should be no problem as I assume you have an address in CY.
Hello Mats ,
Thanks alot for your replies and suggestions.
The June to September Vacation is a good idea. I am wondering though if it's possible to fulfill the sixmonth rule by living in June -December but working only Sep-Dec.
Unless you mean that by getting a 183 day rule residency in Cyprus automatically invalidates the Swedish 6 month rule, which requires you to be working/ taxed for those 6 months abroad.
I am rather sure it is - using your 2 months looking for e.g. an apartment. Also, make sure to register with the local police or whichever authority handles residency issues in CY when you arrive i late June - just to me on the safe side. I do not think you have to be working there for the full six month period. I think moving there to prepare the set up and business of Ltd during July and August will do. But to be sure, let Claes validate that.
He usually shows up in the evening as I think he teaches tax law in Sundsvall I believe. But I think you with a so called address change, which you can find on eg SKVs homepage, will get a paper sent to your new address confirming your change of residency which then should regulate your specific situation. But your question are interesting. I to want to see what Claes says. I also want to see if he has something to say about the 12 month rule in this context, if anything.
Thanks a lot for the input,
I am keeping my fingers crossed that Claes will confirm that the Cypriot 183day rule overrides the Swedish requirement that you have to be taxed for 6 months.
In that case, we can move there in June and fulfill the Cypriot requirement by the end of the year.
You are welcome. I can add that no matter what, you will need to get a local TIN number, which is usually issued by the local tax station where you move. This for things like opening bank account, car purchase, car and other insurance etc.Here, in HR where I live, they were most willing to issue such with much ado )))) By the way, how did you know my name?
I will research a bit how to get the TIN before we get there, it shouldn't be too hard I reckon :) I could tell your name from the signature :)
For the sixth month rule to applicable it is enough if you work abroad more than six months, it is not necessary that you work six months during 2018. If you start in September, you must work and live in Cyprus until February 2019.
The same applies for the one year rule except that you have to work in the same country.
Daniel Andersson är skattejurist hos Skattepunkten AB
NP. You should make sure to get a local social security number. There is a form that Försäkringskassan issues. But I think there is less hurry with that. Here, they take tine though. But FR in SE was fast once I realized what form was needed. Before leaving though, just order a EU insurance card from SE Försökringskassan - i.e. soon. This will then cover you for 1 year as they do not issue it for longer periods. If something happens you have some insurance. But you should regulate this in CY too. Here, I went to the local station a few times with a good book after which it was eventually solved within the 12 month period. But your CY TIN or what they call there, should be fast (but they will want a local adress, temporary or not, which will probably be fast).
After TIN, also needed for Ltd I would guess, residency card (local adress and EU passport), and thereafter local health insurance card you will all be set and SKV can then say nothing ! If you are English, hurry up before Brexit. New rules might apply then and the process will not be as easy if you are a UK citizen - which is my guess.
Thank you both very much for the answers.
Daniel, if we fulfill the 6m rule by February, but the tax return that we are filling in April 2019 is regarding the tax year 2018, will we still pay tax on Sept-December since the rule has still not had been met by December 2018? If so we are going to be rebated in 2020?
You're right , Brexit is looming and we are in a hurry :)
Are you sure about the six month rule Daniel? If they even want to CY just to retire, does it not apply as well ? Do they need work income in CY at all after June, or is it not only where you reside ? That the SKV wants to tax whater laborincome they have had before July is likely though. But do they really need work income if they do a clean move and then set up a CY Ltd this fall or even in 2019?
Sorry for typos and poor spelling, it is dark at where I type. But I do not think you need CY labor income if you move prior to July to avoid future SE taxes, as long as you make it clean in CY. Am I wrong Daniel ?
And as long as you stay in CY for 5 years.
Also, residency cards are typically issued for 5 years. But no, Daniel, I am really not sure they need any labor income in CY in 2018 to have moved tax residency. Let us say that Jess moves in June establishes a Ltd in CY in September, accumulates profits in the fall and winter of 2018, why would SE be able to tax him ? Or even if he just moves there, does everything right locally and just pay capital income taxes in CY such ie meager interest income, how could SE tax except what was earned prior to move?, Am I wrong Daniel and then why? Skateflyktslagen ? But then EU law would be violated if he just intends to move there as ie an enterpreneur - failed or not?
You know Jess, I think it is just to move before June, do what you must in CY such as getting a TIN, health card, new address (but watch out for your SE apartment though, you might have to sell), and to be on the sure side move all your asets from SE and lay low for 5 years. Ltd does not really impact, neither CY labor income? Am I wrong Daniel?
You can move all your financial assets to eg Saxo Cyprus. Can they maintain an apartment Daniel - and note they have only lived in SE for 5 years ? And then acept CY taxes on future capital and labor income and move before July? And accept SE taxes on all income earned before that ?
Also Daniel, what hapens with the 10 year rule if they leave before July and have only lived in SE for 5 years - and in eg July 2019 tax out all capital gains accumulated while for 5 years in Sweden ? Tax in CY or SE? The partment if you decide to sell, which might be smart considering the SE bubble, where do they tax? One again they have only livedin SE for 5 years (although I think this is regulated in DTA as well as capital gains of other nature and it is my experience that SE always want to tax capital gains of for example apartments in SE, DTA or, not, even vs the US). ! Otherwise Jess, just move bofre July, accept SE taxes before, move your SE securities to Saxo CY with old entry values, read the DTA and tax it out when the DTA has moved tax right to CY - which in your case might be immediate as you only lived in SE for 5 years. SE apartment Daniel ? Can they maintain that ?
I can tell you Jess that I once moved to the USA, first for studies at NYU then for work for 12 years for inter alia McKinsey, the World Bank, etc. Fort the first 3 years I rented out my apartment in Stockholm to an old frined from SSE, at cost. Then I sold it to him. At that date, despite the fact that I had had a green card and wwas working for MckInsey, they never asked me a question. However, they taxed the bank accounts I maintained in SE at 30 percent, but the sums where not enough to care about. After sale, I just moved the moneys over to the US, and bought a house there. No questions asked. I am sure I could just have moved all other liquid means over to the US too, no questions asked. I now live in HR since 5 years and think I can do the same. The banking system sucks, as it does in CY, but Saxo has filial here, run from CY jurisdiction. I could move all my money from SE and stop bothering with filing in SE too, where taxes are set to 0 according to DTA. I wish I had done so from day 1. I should also have closed my KF ie Capital Insurance at Avanza before moving and moved it to Saxo as SKV will continue taxing it claiming it is not you. ISK they will convert at move to a normal brokerage account which means it will be taxed out in SE at 0 percent after which you can move. Liquid funds on bank accounts you can move, but will have to declare taxes in SE for 2018 for H1, if any, for 2018. Alternatively, just wait for SKV to send you your tax form 2019 and accept the little you will have to pay for interest H! 2018. Then then let SKV go fuck themselves !
This time when I moved, i sold the apartment long before, although I liked it. And I had been living in Se for over 10 years. I taxed for it in SE, but did not move the funds, which should not matter within EU. And in your case I am not sure you need to sell because you only lived in SE for 5 years, although it is often better be be safe than sorry with SKV. But this is a Daniel question. A quick move between SE and CY they will not accept. But if you do this for 5 years, sell, move assets, and **** SKV! And never contact them. I moved to HR more than 5 years ago, made a so called self correction believing the tax bill would be 1.2 mn (*** text removed by forum administrator **), was sent a tax bill of 2 mn, which I would have accepted, then filed to EBM who said no, fined 550 K by SKV for which I had paid ** a huge sum of money to process correctly. So my suggestion is, just move and let your funds move with you. If you need some SE advice, talk to eg Daniel, and just duck the SKV. Now 5 years has passed, and this is paid but appealed. A story that if I do not win will have costed me ca 2.7 million or some 1.5 mn more than I thought to be. So just liquidate your assets prior to July, move them to eg Saxo CY, forget about SE taxes prior to July, do things right in CY and then ignore SKV. Daniel might be able to give some advice, they are not evil here.
Also, do not put furniture in rented storage in SE. There are even horror cases about this. But now you got more advice than you asked for. So over and out.
Hi Jess and Mats,
You could show Skatteverket that you are still living on Cyprus and since you pay tax during 2018 they should understand that you also pay tax during 2019.
The six-month rule only applies on salaries but not pension, sickness income, a-kassa etc. The six-month rule is only of interest if you are unlimited taxable in Sweden, if you are limited taxable only incomes from working in Sweden from a Swedish company is taxable. If you have only lived in Sweden for five years it is harder for Skatteverket to claim that you have close ties to Sweden compared if you have lived your whole life in Sweden. This is something that should probably be investigated closer.
If you have an apartment left in Sweden it is taxed in Sweden if you sell it.
I think that was answer for all your questions.
Daniel Andersson är skattejurist hos Skattepunkten AB
Yes, that was an answer about the six month rule assuming move in September for labor taxes and similar. But not about if he moves prior to July nor the apartment which i think you should thoroughly investigate beforehand Jess. But if on the safe side, sell it in eg May and pay your 22 percent. The market will crash ! And if you have a gain you can now since ca 2016 save it and reinvest it eg CY tax free, paying some nominal rate to SKV. Then it will be tax deferred until you sell in CY. If you have large amounts of assets in SE, sit down and specify your situation in detail, then with the problem being how to minimize SE taxes and SKV problems, with detailed questions if you can see them themselves, and then let Daniel take you though it. Otherwise, just liquidate what you can, move your assets to eg Saxo CY, accept the raxes you paid in SE H1 2018, sign May 1 2019 and then fuck SKV ! And if they bother you thereafter, get a lawyer. Most likely they will not and you will come out much better !
Thank you both for the library of info you've given me about this situation.
I will note down everything and plan for the future move to CY soon.
Matts + Daniel, Regards to both,