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Cyprus company 0% tax on foreign income question?

#21
You quote from something 2,5 years ago! Things change, we live in an ever changing world!!
 
#22
Admin said:
You quote from something 2,5 years ago! Things change, we live in an ever changing world!!
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Thanks for your answer. I thought this isn't so much time that things change this significantly...

My tax accountant set up a Belize firm with a nominee director for me and said this will work. I was skeptical from the beginning.

So as we are in 2021, it seems I should just liquidate the company because it makes no sense?

Would appreciate your opinion.
 
#24
space said:
Hi

I wanted to clarify if I understood correctly the Cyprus tax rates on companies. If I setup an offshore company in Cyprus with all income earned outside Cyprus would the company be exempt from corporate tax in Cyprus? Do I have to setup a specific company in Cyprus for this or will any company formation work this way?

I run an ecom business online with all income generated in US and EU (except Cyprus) and I'm a UK citizen. Cyprus is good for me because I can use an Revolut EMI for a bank.

Thanks
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Hi there,

A Cyprus non tax resident company is taxed at 0% corporate tax.

The type of company is the same as a normal limited company, you just have to demonstrate "management and control" outside Cyprus by having the Directors of the company based outside Cyprus.

If you appoint yourself as director, being a UK resident, Cyprus will not tax you but UK has a right to tax you instead on the same basis ( place of management and control).

You could appoint a nominee director which is based in a country which does not have the management and control test or is subject to 0% tax. This may not fully eradicate the taxing rights of the UK if they can prove management and control in the UK, or the creation of a permanent establishment ( taxable presence ) but makes a challengeable and rather solid structure.

Further please note that you will still have to assess VAT considerations in the country from where goods are shipped and in the country where goods are shipped to. Similar VAT implications should still be examined if the company is providing services.

Hope this helps.

Good Luck
Lawyer101
 
#27
Sols said:
Cyprus non-resident companies aren't as useful nowadays as they were years ago. I'm sure there are use cases, but nowadays it's generally all about establishing legitimate tax residence.
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I agree with Sols on this one. There is no real point in setting up a Cyprus non resident company, noting that you may not be taxed in Cyprus but you would be taxed at the jurisdiction where the management and control of the company lies. Also this kind of structure could lead to issues with banking services.
 
#28
marzio said:
Yes but since it's not tax resident it will not have a EU tax id that's needed if you want to sell to EU.

Also don't know how easy it will be to open a bank account for a non resident cyprus company
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Hi - yes you do get a Tax Identification number upon incorporation and you still have to submit a tax return, where you explicitly state the tax status of the company as non resident for tax purposes. You may need a VAT registration number in the jurisdiction you sell to or buy from depending on the actual operation you are setting up and meeting the necessary thresholds, but such requirement would have been the case anyways.

The riight consultant would get you a bank account.
 
#29
CyprusLaw said:
I agree with Sols on this one. There is no real point in setting up a Cyprus non resident company, noting that you may not be taxed in Cyprus but you would be taxed at the jurisdiction where the management and control of the company lies. Also this kind of structure could lead to issues with banking services.
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I wont argue with what you are saying, but this option may be one of the only remaining and viable alternatives which reminds of old days of the usages of traditional offshore jurisdictions like the BVI/Belize/Seychelles.

With reference to establishing management and control, let me just say that not all jurisdictions apply the management and control tax residency test while others apply taxation on territoriality or have 0% tax.

Banking services would sometimes pose an issue but if you look to carefully satisfy the banks' requirements as they reflect your company's operation opening an account for such a company is rather doable.
 
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#30
Hi all, I have a similar question to OP but a slightly different scenario so I will ask here instead of creating a new thread.

I have been reading up on the subject of being a resident in Cyprus with a offshore company in a low tax country, mainly looking at Malta due to its incredibly low company tax (5%). I have read some articles that apparently mention this as a possibility, but also that Malta has been "cracking down" on these type of offshore companies. The basic premise of these articles I guess you could say, is that because you only pay the 5% corporate tax in Malta, then get say private health insurance when living in Cyprus for sub 10% "tax" expenses if that makes any sense (it does sound a bit too good to be true).

I do imagine some of the info I have found is outdated judging by how fast things can change..

It would be great if someone could just give me a brief rundown of the information that could be relevant to me. I have read this thread quite thoroughly but I don't quite understand everything.

Sorry if I seem ignorant, I have almost no prior experience with doing things like this as this is my first start up experience.
 
#31
broogie26 said:
Hi all, I have a similar question to OP but a slightly different scenario so I will ask here instead of creating a new thread.

I have been reading up on the subject of being a resident in Cyprus with a offshore company in a low tax country, mainly looking at Malta due to its incredibly low company tax (5%). I have read some articles that apparently mention this as a possibility, but also that Malta has been "cracking down" on these type of offshore companies. The basic premise of these articles I guess you could say, is that because you only pay the 5% corporate tax in Malta, then get say private health insurance when living in Cyprus for sub 10% "tax" expenses if that makes any sense (it does sound a bit too good to be true).

I do imagine some of the info I have found is outdated judging by how fast things can change..

It would be great if someone could just give me a brief rundown of the information that could be relevant to me. I have read this thread quite thoroughly but I don't quite understand everything.

Sorry if I seem ignorant, I have almost no prior experience with doing things like this as this is my first start up experience.
Click to expand...
Hi, I assume that at the moment you have not relocated to Cyprus yet? In Malta you basically pay 35% corporate tax and upon receipt of a dividend, shareholders of a Malta company may claim a refund of around 6/7 of the tax paid. This is how the number ends up at 5%.

You would however need to pay administration fees for the company as you would need to show management and control in Malta. Having in mind that you want to live in Cyprus, have you considered setting up a company only in Cyprus? You would have a non dom status and any dividend payments would be tax exempt and corporate tax in Cyprus is 12.5%. It is worth considering, especially having in mind that the fees for the administration of the company in Malta (directors, sec, address etc) are generally quite higher than in Cyprus.
 
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#33
CyprusLaw said:
Hi, I assume that at the moment you have not relocated to Cyprus yet? In Malta you basically pay 35% corporate tax and upon receipt of a dividend, shareholders of a Malta company may claim a refund of around 6/7 of the tax paid. This is how the number ends up at 5%.

You would however need to pay administration fees for the company as you would need to show management and control in Malta. Having in mind that you want to live in Cyprus, have you considered setting up a company only in Cyprus? You would have a non dom status and any dividend payments would be tax exempt and corporate tax in Cyprus is 12.5%. It is worth considering, especially having in mind that the fees for the administration of the company in Malta (directors, sec, address etc) are generally quite higher than in Cyprus.
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We have not relocated yet as at the moment we are still trying to figure out the most tax effective course of action. Regarding Cyprus-Malta business connection, fair enough, I somewhat expected something like this to pop up.

When it comes to setting up a business in Cyprus as non dom, it is definitely something to consider. Are there any specific rules when it comes to paying out dividends? For instance, if I were to purely pay me and my business partner in dividends, only having to pay corporate tax of 12.5%, wouldn't this be red flagged by the government? Would say paying each other a minimum wage salary and then in addition pay each other dividends work? Would paying each other minimum salary mean we would benefit from things like health insurance and other benefits we get by paying income tax on our salary, or would private health insurance be something to look into?

Cheers.
 
#34
broogie26 said:
We have not relocated yet as at the moment we are still trying to figure out the most tax effective course of action. Regarding Cyprus-Malta business connection, fair enough, I somewhat expected something like this to pop up.

When it comes to setting up a business in Cyprus as non dom, it is definitely something to consider. Are there any specific rules when it comes to paying out dividends? For instance, if I were to purely pay me and my business partner in dividends, only having to pay corporate tax of 12.5%, wouldn't this be red flagged by the government? Would say paying each other a minimum wage salary and then in addition pay each other dividends work? Would paying each other minimum salary mean we would benefit from things like health insurance and other benefits we get by paying income tax on our salary, or would private health insurance be something to look into?

Cheers.
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No it would not be red-flagged as it is something that you are allowed to do, you would be compliant with the relevant laws. With respect to structure I suggest you discuss this with a Cyprus legal advisor and a financial advisor, so that you get advised as to the best structure and also be presented with the relevant fees for this.
 
#35
CyprusLaw said:
No it would not be red-flagged as it is something that you are allowed to do, you would be compliant with the relevant laws. With respect to structure I suggest you discuss this with a Cyprus legal advisor and a financial advisor, so that you get advised as to the best structure and also be presented with the relevant fees for this.
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Thanks for your time. Do you have any recommendations for legal advisors I could contact?
 
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