company in home country invoices Cyprus company to get the funds to home country?

[charlemagne]

I want to get the money in an offshore Cyprus company to a company in my home country (EU). I planned on sending an invoice from company in home country to the offshore corporation for "services".
I am not talking about getting the money in my own name, it will be a company to company transaction.

At first I wanted to avoid any connections (money trail, banking etc) from the offshore corporation to my home country corporation. But then I suspect that the tax authorities in my home country will want to check payments going out to the offshore corporation, now we are talking about payments coming in from the offshore corporation.

Is this a good idea at all? Are there any alternatives to get the money from Cyprus company to my company in my high tax home country?

 

[Spinat]

It doesn't really matter what you set up. If the Cypriot company is in your name and the tax authorities can get that information, then you can stand on your tongue and you will be fully taxed on the money you withdraw home. The tax authorities do not recognize such transactions unless you can prove that they are 100% legal and that on the other end there is a 100% legal company with office space, employees and all that.

 

[charlemagne]

The money will end up in my company in the home country. So it will be taxed in my home country, this is not the problem.
What I want to accomplish is to move funds from Cyprus company to home country company, not to private account.
Cyprus corporation sending money to home country corporation.

What I worry about is that I will open a can of worms when I start sending money between these two companies (offshore company to home company) because of visible money trails. And then home country can get funny ideas and start to ask questions about the offshore company, something I want to avoid.

 

[Narco]

You need a tax lawyer or this could end up costing you prison. Anything in EU is dangerous.

Or you can do the following, get some btc account with debit card and withdraw in your home country.

 

[Tax Cow]

Is there a visible beneficial ownership overlap on the public record?

You could make it a regular work capital raising exercise. Sell shares or issue a loan. Then default on the loan, or buy back shares at a lowball price few years later. Or just let the cypriot company hold on to shares but don't pay it any dividend it has a claim to.

Everything I mentioned is high risk and illegal. But perhaps a little more higher in the food chain than the over-used fake invoice/phony service fee tricks.

 

[charlemagne]

You need a tax lawyer or this could end up costing you prison. Anything in EU is dangerous.

Or you can do the following, get some btc account with debit card and withdraw in your home country.

Btc debit card is not an option, I do not want to withdraw the money privately. I want the money to end up in my home country company's bank account. This way I will be able to use the money for investments through my home company. Yes I will pay home country corporate tax, I can live with that.

Is there a visible beneficial ownership overlap on the public record?

You could make it a regular work capital raising exercise. Sell shares or issue a loan. Then default on the loan, or buy back shares at a lowball price few years later. Or just let the cypriot company hold on to shares but don't pay it any dividend it has a claim to.

Everything I mentioned is high risk and illegal. But perhaps a little more higher in the food chain than the over-used fake invoice/phony service fee tricks.

Yes the beneficial owner is the same for both offshore and home country.

I understand what all you guys are saying but I find it strange that this would be a problem. I understand that trying to send money from home country to offshore is a problem because my local tax authorities will start asking questions why I pay offshore invoices.

But in this case I am talking about the reverse thing! I want to send money from offshore to my home country.
So what I will do is bring more money to my home country. My tax authorities should love me!

I bring more money to my home country corporation which will get taxed at the corporation level in my home country.

Did I misunderstand all of you nice fellas or did you misunderstand my question? *honest question*

 

[Tax Cow]

@charlemagne

but there's a contradiction in regards to your goals between this and your OP:

At first I wanted to avoid any connections (money trail, banking etc) from the offshore corporation to my home country corporation.

If you intend to pay CIT, keep in mind that you may have to reverse charge VAT too for purchasing those phony services. If meaningful sums are involved, I'm assuming that both entities are registered for VAT, and then reverse charge VAT must be paid on top of 0% rate invoice value in your home state.

Either go fully legal: take out capital/dividend/salary from cypriot company, pay PIT if its due, inject it to company in your home country. Or don't pay any tax at all. Paying CIT, but getting caught with a fake invoice could be an embarassing encounter.

Considering your situation of public beneficial ownership overlap, the darker routes through the EU banking system are not optimal for your scenario. Too much risk. By minimum, get a non-CRS bank account for both companies outside the EU for any shadier deals. Then remit funds back through an account in the name of a 3rd party forex broker or similar.

 

[JohnLocke]

The question is decided in which country two live in and how the military perceives your local firm's relationship with the Cypriot. In theory, everything can be done, borrow the model described here, invoice in between companies, use "nominees" and believe you can stay hidden. In practice, it is something else you need to talk to a tax attorney to avoid problems.

 

[JimBeam]

The way I see it - you need a middle man. Some company in between that's not owned by you. The problem is finding it and someone you can trust - and it's not going to be without costs...

 

[reesek]

I agree with Jim. Looks like a brokerage company could fill that gap but will charge for that

 

[NicolasMaduro]

If you intend to pay CIT, keep in mind that you may have to reverse charge VAT too for purchasing those phony services. If meaningful sums are involved, I'm assuming that both entities are registered for VAT, and then reverse charge VAT must be paid on top of 0% rate invoice value in your home state.

Wait what?

Europe company sent invoice of 100.000 EUR (0% VAT) to Cyprus company. Cyprus company reports the VAT but
dont pay any VAT because Cyprus company reports both purchase and sales VAT.

Thats the point of reverse VAT. No VAT on the 100.000 EUR is paid anywhere.

 

[NicolasMaduro]

Also whats the point of this? You do realise by taking the money from Cyprus to your home country you suddenly have to pay Corporate taxes in your country + Capital Gains taxes when you payout the money to yourself?

 

[Tax Cow]

@NicolasMaduro

On the VAT expense front, all is good if the service buyer has enough VAT-taxable sales to pass on this cost to end-consumer. Not all businesses have enough "buffer", and that ultimately depends on what business you're doing and your revenue sources.

You're taking too much risk with you original plan. Either go legal, swallow the tax, or dig deeper to make risks more reasonable. But I'm not likely to derail you here. Good luck anyway

 

[NicolasMaduro]

@NicolasMaduro

On the VAT expense front, all is good if the service buyer has enough VAT-taxable sales to pass on this cost to end-consumer. Not all businesses have enough "buffer", and that ultimately depends on what business you're doing and your revenue sources.

You're taking too much risk with you original plan. Either go legal, swallow the tax, or dig deeper to make risks more reasonable. But I'm not likely to derail you here. Good luck anyway

B2B intra EU if both have VAT number Is 0% VAT. What you are saying is not correct. No one pays or is refunded any VAT.

 

[Tax Cow]

B2B intra EU if both have VAT number Is 0% VAT. What you are saying is not correct. No one pays or is refunded any VAT.

I don't know if you're a troll or an arrogant one-man ceo/accountant/workhorse. Your understanding of VAT rules lacks severely.

Cross-border VAT rates in Europe - Your Europe

EUROPA - VAT charging and refunds when selling goods and services inside and outside the EU. VAT rates in Europe, selling to businesses and consumers, exemptions

europa.eu

Locate: I want to know more about cross-border VAT

Bullet point: when selling services to another business

If you sell services to businesses based in another EU country you don't usually need to charge your customers VAT. Your customers will pay VAT on the services received at the applicable rate in their country (using the reverse charge procedure).

You may still deduct the VAT that you paid on related expenses, such as for goods or services purchased specifically to make those sales.

Ex:
You issue 100K B2B service invoice to another business in another EU state.

The VAT rate on invoice must be 0%

If the service buyer, for example, has 20% VAT rate in its country of operation, then the total cost for buying service is 100K + 20K VAT. Total 120K EUR

 

[NicolasMaduro]

I don't know if you're a troll or an arrogant one-man ceo/accountant/workhorse. Your understanding of VAT rules lacks severely.

I Think you are misunderstanding the concept of reverse vat

Locate: I want to know more about cross-border VAT

Bullet point: when selling services to another business

Ex:
You issue 100K B2B service invoice to another business in another EU state.

The VAT rate on invoice must be 0%

If the service buyer, for example, has 20% VAT rate in its country of operation, then the total cost for buying service is 100K + 20K VAT. Total 120K EUR

Nope. Reverse VAT is nothing else that reporting.

Maybe this can help you understand better:


“When a transaction is subject to Reverse Charge, the recipient of the goods or services reports both their purchase (input VAT) and the supplier’s sale (output VAT) in their VAT return. These two declarations offset each other from a cash payment point of view, but the authorities have full visibility of the transactions.“

 

[NicolasMaduro]

If the service buyer, for example, has 20% VAT rate in its country of operation, then the total cost for buying service is 100K + 20K VAT. Total 120K EUR

The service buyer will report 20k EUR sales tax and also 20k EUR purchase tax.

What is 20k minus 20k?

 

[Tax Cow]

Don't paste unofficial opinions from partly-correct 3rd parties found on Google you do not understand. I gave you an official source, and I expect the same for a counter-opinion.

If the service received is not an integral input to the output service that the receiving company provides, there's no automatic "nilling". VAT tab must be assessed.

Assuming that the receiver buys accounting and management services worth 100K, the services received are not integral to an output service, unlike a monthly invoice covering translation fees for subscriptions-based SaaS translation software that the receiver in turn sells. Those management and accounting fees would be just like any other regular business expense that may, or may not, eventually lead to sales of goods and services.

If the buyer does not consequently provide goods or services which result in at least 20K of VAT paid by its clients before the quarter ends (or relevant VAT return period in that country), this 20K, or the net difference, will be their cost to swallow. Altough, that 20K will eventually get tax credit as business expense against CIT, should they turn a profit anyhow.

 

[NicolasMaduro]

Don't paste unofficial opinions from partly-correct 3rd parties found on Google you do not understand. I gave you an official source, and I expect the same for a counter-opinion.

If the service received is not an integral input to the output service that the receiving company provides, there's no automatic "nilling". VAT tab must be assessed.

Assuming that the receiver buys accounting and management services worth 100K, the services received are not integral to an output service, unlike a monthly invoice covering translation fees for subscriptions-based SaaS translation software that the receiver in turn sells. Those management and accounting fees would be just like any other regular business expense that may, or may not, eventually lead to sales of goods and services.

If the buyer does not consequently provide goods or services which result in at least 20K of VAT paid by its clients before the quarter ends (or relevant VAT return period in that country), this 20K will be their net cost to swallow. Altough, that 20K will eventually get tax credit as business expense against CIT, should they turn a profit anyhow.

Thank you for explaining.

Do you know how "integral to an output service" is defined? So bookkeeping services for example is not included and would give the buyer an extra +20% bill in VAT,
but what about for example Advertising services? Would that mean that the buyer could both report 20k sales tax and 20k purchase tax?

 

[NicolasMaduro]

I´ve checked again, and I can´t see how anything you write is correct.