Our client, a high-net-worth software architect based in Central Europe, operated a cross-border consultancy generating over €250,000 in annual profit. Facing rising local tax pressures and complex social security contributions, the client sought a legally compliant EU-based structure that would offer tax efficiency without requiring a full-year physical presence in a single country.
The Challenge
The primary challenge was “Tax Residency entrapment.” The client traveled frequently for business and leisure, making it difficult to satisfy the traditional 183-day rule in most jurisdictions. Furthermore, they required a solution that would be recognized by international banks to ensure seamless B2B transactions.
The Solution: The Cyprus 60-Day Rule & Non-Dom Status
TaxRelocate designed a transition plan centered on the Cyprus 60-Day Residency Rule (introduced as an amendment to the Income Tax Law).
Corporate Restructuring: We assisted in incorporating a Cyprus Private Limited Company. This allowed the client to benefit from a 15% corporate tax rate (with potential further reductions via IP Box or Notional Interest Deduction).
Personal Residency: By proving the client did not stay in any other single country for more than 183 days and maintaining a permanent residence in Cyprus (rented), we secured Cypriot Tax Residency under the 60-day provision.
Non-Domicile Status: We successfully applied for the Non-Dom status, which grants a 17-year exemption from the Special Defence Contribution (SDC).
The Result
Tax Efficiency: The client’s effective tax rate on dividends dropped to 0%.
Social Security Optimization: By structuring a modest director’s salary, the client significantly reduced mandatory social contributions while maintaining full EU health insurance coverage (GESY).
Compliance: The client received a Tax Residency Certificate (TRC), providing a solid defense against potential “center of vital interests” inquiries from their former home country.