Cyprus non-dom + non tax resident offshore company

[dziter]

Hello,

I have looked at many threads but did not find answer to my questions.

Context:

- Cyprus non-dom
- Director/Secretary of a Cypriot company
- Living in Cyprus "full-time" since 1.5 year
- Main activity: IT with EU clients outside Cyprus only

I am currently building a SaaS. I have started to work on it "under" my current CY company.
My idea was: When it will smell good and get profitable, I will create another company to separate this new activity from my current IT activity + trying to take advantage of the IP Regime box (lower taxation for SaaS business).

However, I heard from my accountant that I have started to build IP under my current company and could not request it for a new further company then.
So it seems better if I switch my main IT activity into a new company and keep the current company to get IP for this "next SaaS business".

Based on that situation + taking into consideration that is it not-easy to bank with CY company + "high maintenance" fees to maintain/run this company, I am wondering if there is a cheaper and respectable jurisdiction where I could incorporate a second company?

I am aware about CFC & PE rules.
So I guess the best scenario is to achieve having this company considered non-tax resident in CY? (I will probably, indeed, continue to live mainly in Cyprus for some time)

Is renting an office and having a local director and/or employee on site the only way to make a company non-Cyprus tax resident?

"Exceptions
The CFC rule does not apply to non-Cyprus tax resident companies (or exempt foreign PEs):

• with accounting profits of no more than EUR 750,000 and non-trading income of no more than EUR 75,000, or"

Source: Cyprus - Corporate - Group taxation

I see few times people mentioning setups with HK, BVI etc.
Feel free to bring any setup or jurisdiction to my attention. I like to dig into setup and brainstorm about things.
@CyprusLaw @CyprusLawyer101 @Fred : I always like to read you, in case you have anything in mind to discuss, I would be happy to hear from it.

Thanks in advance.

 

[Fred]

Honestly speaking we have a lot of clients based in Cyprus using our Dubai Company Setup to mainly faciliate international non-EU business - some of them just want to reduce there bureaucracy, some of them have the fealing getting to many questions asked from local Cyprus based banks, again others using it to faciliate a Crypto Business where they claime to have to much headache with accounting in Cyprus.

Almost non of them has the "usually" required substance in accordance with the lately introduced CFC rules in Cyprus and even there different accountants telling different stuff and at the end of the day they are all right because there is a big difference in written law and law enoforcement in Cyprus - if not the biggest in the whole EU.

Just telling you here what we see in practice.

About the international company - the Dubai based setup we provide gets you covered in all matters, no tax, no audit, no accounting and decent reliable retail Business Banking with one of the major local banks - 2.5m$ daily online banking transfer limit, SWIFT GPI Tracking, Own Correspondence Bank in US (USD clears in 1-3 hours), up to 8 currencies in one account and so on.

While BVI and HK would endup getting banked on EMI's only in 2022 - you need to know it will be a proper business or just a side hustle as the mentioned jurisdictions are basically the "initial" cheap solutions compared to Dubai which quickly turn out to be a hole without a bottom in terms of fees:

Bank for BVI with low fees

I own a BVI company with nominee shareholder and directors. But the transaction fee is 50-60 US dollars for each transaction. After looking through our Year Report of 2021 i realized we spend more than 22.000 dollars in transaction fees + annual and maintaining fees. which banks can you...

www.offshorecorptalk.com

Just had today a conversation someone tried telling me he gets a better deal with a 1k$ BVI company - well banking anywhere? And if you get banking done it's either with expensive and not at all transactional offshore banks in the caribbeans or some Lithuanian or UK based EMI - charging you 100s if not 1000s of $ for account opening and something between 0.1% and 0.25% in incoming and outgoing transaction fees.

 

[RealDude]

Honestly speaking we have a lot of clients based in Cyprus using our Dubai Company Setup to mainly faciliate international non-EU business

Why don't they use it for EU business as well?

 

[Fred]

Why don't they use it for EU business as well?

They keep using CY Ltd to keep the CY tax man happy - general speaking a lot of guys across the EU in CY, MT etc. using our Dubai Setup to conduct business on the global stage and have there EU structure for the business they really need an EU structure which is almost none.

 

[RealDude]

In this case, would it make sense to open a holding company in Dubai, bring
1. the Cyprus consulting company
2. a new Dubai company to be established for the (worldwide) SaaS business
into the holding company?

 

[Marzio]

@Fred do you have experience with CY transfer pricing for those clients that use CYsub + UAE holding to reduce CY taxation with some profit shifting awesomeness?

 

[Fred]

In this case, would it make sense to open a holding company in Dubai, bring
1. the Cyprus consulting company
2. a new Dubai company to be established for the (worldwide) SaaS business
into the holding company?

Just setup as the Dubai based subsidiary company of the CY company or keep them on the paper completely separate to not run into compliance issues with local UAE based banks - they simply don't get the holding company thing.

@Fred do you have experience with CY transfer pricing for those clients that use CYsub + UAE holding to reduce CY taxation with some profit shifting awesomeness?

Absolutely not we do and we can only cover the UAE side of things however CY based DLS Dubai community already exist and they exchange themselves again.

 

[dziter]

About the international company - the Dubai based setup we provide gets you covered in all matters, no tax, no audit, no accounting and decent reliable retail Business Banking with one of the major local banks

In the case of CY CFC/PE updated rules?
Or by taking into account that the law is not enforced?

They keep using CY Ltd to keep the CY tax man happy

Is it a problem if I use mainly the UAE setup for my profits rather than CY in your opinion?
I did not get the problem.

My IT activity is straightforward. Freelancing with around 100k€ turnover.

For the SaaS, it’s important the company is the current CY one (IP) but also for my target customers.

I am not sure my customers would be super happy to see I invoice them with a UAE company. Any way to hide it a little bit with a « cheapest » setup option on top?

Regarding the cost to setup the company, maintenance and renewal, can you give me some information please?
Feel free to PM me @Fred

 

[Fred]

In theory the Dubai based company would be taxed like a CY Company without any proper substance due to updated CFC rules however in practice that's not enforced which just make sense considering the fact that 3 years ago you could manage at 0% Tax a Seychelles or Belize Company out of CY - they had of course to go down on the knees in Brussel and adopt a nowadays EU standard however there are countries like CY, MT and Portugal under the special program where they don't care and not bother you.

Bottom.line would be to get proper Residence Director and Office which we provide you anyway but that's something I'm telling our existing clients I would only do when CY really makes problems which is not the case from what I have seen from our mainly German speaking based CY clients.

Send you PM shortly.

 

[cyprustoomuch]

@Fred I live in cyprus too and would like to build a small "team" in dubai. Could you DM so we can see how to target this together?

 

[Fred]

@Fred I live in cyprus too and would like to build a small "team" in dubai. Could you DM so we can see how to target this together?

Did sent you PM.

 

[GrumpyMess]

What common company and banking setup can be used beside UAE/HK for this? Is this possible with BVI/Seychelles company + EMI? Is nominee director required?