Relocating to Cyprus: How We Helped Four German Entrepreneurs Move to Cyprus and Align Their International Structure

Relocating to Cyprus: How We Helped Four German Entrepreneurs Move to Cyprus and Align Their International Structure

Relocating to Cyprus is becoming increasingly popular for European entrepreneurs, investors and internationally mobile families looking for a combination of EU access, an established legal system, international tax planning opportunities and a practical base for conducting business.

In this case, our Cyprus law firm and relocation specialists assisted four German entrepreneurs who were considering moving to Cyprus while maintaining an existing international business and wealth structure.

Their relocation involved considerably more than obtaining residence permits. It required coordination between Cyprus immigration, personal tax residency, the Cyprus 60 day tax residency framework, corporate structuring, international tax considerations and their existing Liechtenstein arrangements.

The situation

Four German entrepreneurs with an existing international business and wealth structure were considering relocating from Germany to Cyprus and establishing a long term personal and commercial presence on the island.

Their existing arrangements included a Liechtenstein foundation structure, governed by detailed Statutes, By Laws and other constitutional documents, together with an underlying operating company conducting business activities primarily in Germany and Austria.

Liechtenstein foundations, often referred to in German as a Stiftung, are well established within the German speaking private wealth and family business environment and are commonly considered in connection with long term family governance, succession planning and the holding of family or business assets.

The proposed relocation therefore required consideration of how the existing Liechtenstein foundation structure would interact with the entrepreneurs’ move to Cyprus, their future Cyprus tax residency and their proposed commercial presence on the island.

The proposed relocation therefore required a wider review of how their existing arrangements would interact with Cyprus.

This included consideration of:

• Cyprus immigration and residence requirements
• Cyprus personal tax residency
• The Cyprus 60 day tax residency rule
• Cyprus Non Dom status
• Their existing Liechtenstein foundation structure, including its governance, beneficiaries and constitutional arrangements
• The relationship between the Liechtenstein foundation and its underlying corporate structure
• The activities of the underlying operating company
• The establishment of a Cyprus company
• The relationship between their personal relocation and future Cyprus business activities

Because the clients were German entrepreneurs relocating to Cyprus, the engagement also required coordination between advisers in Cyprus and Liechtenstein and consideration of their wider European footprint.

The clients’ goals

The clients wanted to approach their relocation to Cyprus as one coordinated project rather than treating immigration, tax, corporate structuring and their personal move as separate matters.

Their principal objectives were to:

• Relocate to Cyprus and obtain the appropriate immigration status and residence documentation
• Establish Cyprus tax residency and understand the steps required to qualify
• Assess whether the 60 day Cyprus tax residency route was appropriate for their circumstances
• Review their eligibility and position in relation to Cyprus Non Dom status
• Understand how their existing Liechtenstein arrangements would interact with their relocation
• Determine how a Cyprus company could fit within their existing international business structure
• Establish an appropriate personal and commercial presence in Cyprus
• Coordinate the legal, tax, immigration and corporate elements of their move

Cyprus 60 Day Tax Residency for Entrepreneurs Moving to Cyprus

One of the reasons relocation to Cyprus has become attractive to internationally mobile entrepreneurs is Cyprus’ 60 day tax residency framework.

Subject to satisfying the applicable statutory requirements, an individual may be able to become a Cyprus tax resident without spending more than 183 days in Cyprus.

For entrepreneurs and investors who continue to travel regularly for business, the Cyprus 60 day tax residency rule can therefore provide considerably greater flexibility than traditional residence models.

However, becoming Cyprus tax resident under the 60 day framework involves more than simply spending 60 days in Cyprus.

The individual’s days of presence, permanent residence, business or employment connections and other relevant requirements need to be reviewed carefully before relying on the regime.

For this reason, tax residency planning formed part of the clients’ wider Cyprus relocation strategy from the beginning.

Our approach

Our team coordinated the Cyprus aspects of the relocation while working alongside the clients’ existing Liechtenstein trustees, Cyprus tax specialists and other professional advisers.

Our work included:

• Reviewing the clients’ existing Liechtenstein foundation structure and how it fitted within their broader business and wealth arrangements
•  Reviewing the foundation’s Statutes, By Laws and other constitutional and governance documents
• Considering the roles of the relevant governing bodies and beneficiaries
• Reviewing the relationship between the Liechtenstein foundation and its underlying corporate structure
• Considering the activities and operations of the underlying Liechtenstein company
• Assessing how the existing foundation and business interests would interact with the clients’ proposed Cyprus relocation and tax residency
• Considering the proposed Cyprus company within the context of the clients’ wider international structure
• Coordinating with the clients’ Liechtenstein trustees, Cyprus tax specialists and other professional advisers
• Ensuring that the clients’ existing governance arrangements, business interests and future Cyprus activities were considered as part of one coordinated relocation strategy

This was particularly important because the clients were relocating to Cyprus with an established international structure, rather than creating a new structure from the outset.

Cyprus Immigration and Residence Planning

On the personal side, our Cyprus relocation specialists reviewed the immigration position of the entrepreneurs and the practical steps required for their move.

The relocation process included reviewing:

• Residence and immigration requirements
• Appropriate Cyprus immigration permits and registrations
• Cyprus tax residency requirements
• The 60 day tax residency framework
• Cyprus Non Dom considerations
• Residential arrangements in Cyprus
• Cyprus company and business requirements
• The documentation required to establish their Cyprus presence

The objective was to ensure that the immigration, tax and business aspects of moving to Cyprus were considered together.

Considering Cyprus tax residency? Click here  and find out how the Cyprus 60 Day Tax Residency works, the requirements you need to meet and the steps involved in obtaining your Tax Residency Certificate

Cyprus Tax and International Structuring

The clients already had an established international structure before deciding to relocate.

It was therefore important that Cyprus was not considered in isolation.

We coordinated with a specialist Cyprus tax advisory partner where additional tax analysis was required and worked alongside the clients’ Liechtenstein advisers.

This allowed the Cyprus personal tax position, the existing Liechtenstein arrangements and the proposed Cyprus company to be reviewed as part of the same overall structure.

We also assisted the clients in considering the appropriate framework for establishing their Cyprus corporate presence, taking into account their existing business activities, governance arrangements and future plans.

Establishing a Cyprus Business Presence

For entrepreneurs relocating to Cyprus, forming a Cyprus company can often form part of the broader relocation process.

However, the company needs to have a genuine commercial purpose and its role should reflect the activities actually intended to be carried out from Cyprus.

For the four German entrepreneurs, the Cyprus company was therefore considered as part of the wider international structure rather than simply as a standalone company formation exercise.

The review considered the relationship between:

• The entrepreneurs personally
• Their Cyprus tax residency
• Their existing Liechtenstein arrangements
• Their operating activities in Germany and Austria
• Their proposed Cyprus business activities
• The ownership and governance of the Cyprus company

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Already operating internationally? Click here and how to establish company substance in Cyprus, including management and control, directors, offices, employees, banking and operational presence.

Outcomes to date

Our team has supported the clients throughout the Cyprus relocation process, including immigration and residence matters, Cyprus tax residency planning and the practical steps associated with establishing themselves on the island.

We have also acted as the coordinating point between the clients, their Liechtenstein trustees, Cyprus tax advisers and other professional advisers.

This has allowed the legal, tax, immigration and corporate elements of the relocation to be considered together rather than through several disconnected processes.

The clients are also being supported with their wider Cyprus set up, including the establishment and structuring of their commercial presence as their relocation progresses.

The engagement remains ongoing, with our team continuing to support the entrepreneurs as their personal and business arrangements transition to Cyprus

Moving to Cyprus from Germany, the UK and Northern Europe

While this case involved German entrepreneurs relocating to Cyprus, we regularly assist entrepreneurs, investors, executives and families considering moving to Cyprus from Germany, the United Kingdom, Sweden, Norway and the Netherlands.

Each country presents different considerations.

A person relocating from Germany may have different tax residency, corporate and exit considerations from someone moving to Cyprus from the UK, Sweden, Norway or the Netherlands.

For this reason, relocation planning should normally consider both the Cyprus position and the individual’s existing country of residence before the move takes place.

Our work can include coordination between foreign advisers and Cyprus professionals so that the transition is approached as one international relocation project.

Planning to move to Cyprus? Click here and explore our complete Cyprus relocation services for entrepreneurs, investors, families and internationally mobile individuals.

How Our Cyprus Law Firm and Relocation Specialists Can Assist

KIKLON Partners and AM MALLAS LLC assist international entrepreneurs, investors, families and businesses with relocation to Cyprus.

Our work can include:

• Cyprus immigration and residence permits
• Cyprus 60 day tax residency planning
• Cyprus 183 day tax residency
• Cyprus Non Dom applications
• Cyprus company formation
• Corporate structuring
• Cyprus banking assistance
• Personal tax registrations
• Coordination with Cyprus tax advisers and accountants
• International corporate and ownership structuring
• Property acquisition and residential arrangements
• Business relocation to Cyprus
• Family relocation
• Ongoing corporate and administrative support

For clients with existing international structures, we can also coordinate with foreign trustees, lawyers, accountants, tax advisers and other professionals.

The objective is to provide one coordinated process for moving to Cyprus, rather than requiring the client to manage immigration, tax, legal and corporate matters separately.

Considering Relocation to Cyprus?

If you are an entrepreneur, investor or family considering relocating to Cyprus from Germany, the UK, Sweden, Norway, the Netherlands or elsewhere in Europe, the structure of the move should ideally be considered before establishing Cyprus tax residency or changing your existing international arrangements.

Our Cyprus law firm and relocation specialists can assist with the legal, immigration, corporate and practical elements of the relocation while coordinating with specialist tax advisers where required.