Tax-Free Dividends for EU Expats: Your Ground Zero Advantage

ProACT Sam Orgill discusses how dividends can be a tax payers friend across the EU.

Dividends are movable form of income for tax purposes, but still there’s a real tax cost for expatriates, investors and business, living or working abroad that should be fully considered in their choices when relocating or setting up working. 

INCOMING TAX

Income tax was introduced over 300 years ago and gradually different forms of tax have been added to that. In Cyprus these different types of tax are still distinctly different, so too in the UK.

If a purpose of government is to tax and spend taxpayers money, then progressively the governing classes have sought to find new ways to raise taxes to spend on developing an investing in the country with benefit of the community.  

Depending upon your political views, this approach is either high tax and high spending on community projects and layers of government or lower tax and low spending on community projects and government services. 

NEW TAXES 

This has led over the years to new creative taxes to be introduced for savings, interest, dividends, capital gains on your savings and property investments, corporation tax on the business that you build, VAT taxes on what you spending & consume and more recently a push to introduce wealth taxes, at a flat rate on all income or capital gains worldwide, by the G20. 

Before Trump was elected.

In liberation day we see a challenge to that world order and a changing world. 

In this article we are focusing on the opportunities with diversity of approach with dividend taxes.

EU PEAKS 

In the EU, the highest rate of dividend taxes is 51% in Ireland. There may be lower irish taxes elsewhere for a corporation tax and income taxes but if your income is highly geared towards dividends than Island is not the place for you. 

Depending upon the make up of your income and wealth you can pay up to 39% dividend tax in the UK.

In the middle of the EU countries like Germany and Spain are charging around 26% dividend tax. 

The EU average for dividend taxes is around 20%. 

EU LOW SPOTS 

At the extremes of the EU dividend tax move towards 0% but with a catch.   

Greece has 5 % for example. 

Malta has 0% dividend tax but only when offset against the corporation tax rate of 35% so this may not suit all investors or business people.

The hidden EU gem is Cyprus that also has dividend taxed at 0% but only for Expats, not the natives. It’s a special non-dom tax designed to attract overseas investment in Cyprus business property and residence from the EU and around the world.

TAXED AT ZERO

A tax resident in Cyprus pays dividend taxes on receipt of dividend income. 

A Tax entity in Cyprus could be an individual, a property, an investment, a business, or a family trust. 

Have a mind that a business has to pay corporation tax before a dividend can be paid. So if you’re a businessman, there are additional issues to be addressed if you want to save corporation tax and dividend tax in Cyprus. 

If you have retained profits in your overseas company, then those shares could be owned by a Cyprus tax entity and pay 0% dividend tax. 

If you want a tax residence at ground 0% there are ways to enjoy Living and Working Abroad in Cyprus. 

ProACT Know How 

To find out more how to best organise you investment and business in cyprus tax residency contact us  for Free Review meeting or call with a the ProACT tax saving expat expert. 

📩 For tailored advice on your tax, residency and options, contact ProACT today.