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Query:
I’m at the moment employed by a Cyprus-based Russian firm and steadily go to work for our Russian workplace on issues associated to info expertise. My complete revenue consists of three parts: wage I obtain from Cyprus, private allowances paid by my employer for the enterprise journeys to Russia and extra remuneration from the Russian mother or father firm for the work I carry out there.
How will my revenue be taxed in Cyprus and Russia?
Reply:
Thanks in your query.
It seems you’re Cyprus tax resident subsequently your worldwide revenue will probably be taxable in response to the Cyprus Earnings Tax law 118(I)/2002. Moreover, since you are Cyprus tax resident, you can be allowed to use the provisions of the double-taxation settlement between Cyprus and Russia (Tax treaty of 1998).
To begin with, your Cyprus supply revenue (wage and private allowance) will probably be taxed below the progressive tax charges. Nevertheless, it’s doable that you could be qualify for some tax exemption below the “90-days rule” talked about in Artwork.36(5) of the Cyprus Earnings Tax law. In principal, the “90-days rule” states that revenue from salaried providers offered outdoors Cyprus for greater than 90 days in a tax yr will probably be tax exempt offered the service is offered to non-Cyprus resident employer or to a everlasting institution of a Cyprus resident employer. To illustrated, as an instance your Cyprus wage is 60,000 p.a, allowance 10,000 p.a. and also you labored in your Russian workplace for 4 months throughout the fiscal yr. Below the 90-days rule, 4/12 (i.e 20,000) of your Cyprus wage and the 10,000 allowance will probably be tax exempt in Cyprus. The remaining 40,000 of your revenue will probably be taxed in Cyprus below the progressive tax charges.
As regard the funds you obtained from the Russian firm, though you could be withheld tax in Russia in response to Artwork.15(1) of the 1998 Tax treaty, this revenue will proceed to be tax exempt in Cyprus below the “90-days rule”. From pragmatic viewpoint, getting a withholding tax exemption from the Russian tax authorities is preferable as it’s going to prevent time in going by means of the method of reclaiming the tax withheld in Russia.
Lastly, you will need to remember that you should have – in case the Cyprus tax authorities ask – proof that you simply spent over 90-days outdoors Cyprus (boarding passes, border passport management stamps and so forth.) and substantiate your work for the Russian firm.
