Cyprus company + Skrill

[momordica]

Hello,

I have questions regarding this possible set-up.

I want to start a Cyprus company. I am providing my customers with trading consultations / mentorship. They pay me through Skrill/Neteller. Most of my customers are EU based from a single country with 20% VAT. Cyprus VAT is 19%. What rate I will charge them? Considering, neither of them is a Cyprus citizen and I do not conduct any business in Cyprus, my corporate income tax rate will be 0%? And the last but not least. A Cyprus company + Skrill. Will it work? I know Skrill is rejecting some countries with "bad reputation". Thank you.

 

[negon]

A Cyprus company + Skrill. Will it work

yes works fine

You have to charge the VAT rate that apply in Cyprus i.e. 19% but only if the company is registered for VAT which I doubt since you say the corporate tax is 0% means it is registered non resident right?

 

[momordica]

It is not registered at all, I am just planning to do so. I am EU citizen, and most of my customers are from the same country like I am. I will open a Cyprus non-resident company and I do not have to charge VAT on EU customers (bc I can not) + do not have to pay any corporate income taxes (bc I do not any business in Cyprus)? Do I understand it correctly? Should not I be concerned about VAT/tax department in my domestic country then? We do not have any CFC laws in my country. Thank you.

 

[JohnLocke]

Do I understand it correctly?

That's correct, however, some will say it's not legal to do so. But at the end of the day I would not worry about doing it.

We do not have any CFC laws in my country.

So I would not worry at all. Nice country you live in, do you mind telling where that is?

 

[KJK]

VAT laws in Europe are pretty complex, it depends on where you are, where your customers are and where the service is actually provided - and no that doesn't mean "the internet", it means some country.

Theoretically what you suggest could work but just make sure you will be registered everywhere where necessary. Cyprus may be low tax but it's not exactly a country which doesn't require any reporting and no documentation. Skrill with a Cyprus company works fine, there are many Cypriot companies having accounts with Skrill afaik but be prepared to give them ridiculous amount of documentation, even more than a bank would require.

 

[momordica]

That's correct, however, some will say it's not legal to do so. But at the end of the day I would not worry about doing it.


So I would not worry at all. Nice country you live in, do you mind telling where that is?

Thank you. Slovakia. A parliament discussed this last year, but did not pass. Nor right-wing or left-wing parties seemed interested in passing this law for private individuals, so we do have CFC rules only for business entities that owns 50% (or more) of shares in an off-shore company. The only change is, raised dividends income tax for individuals from 0% to 7%, which is still fairly low in the EU.

 

[momordica]

VAT laws in Europe are pretty complex, it depends on where you are, where your customers are and where the service is actually provided - and no that doesn't mean "the internet", it means some country.

Theoretically what you suggest could work but just make sure you will be registered everywhere where necessary. Cyprus may be low tax but it's not exactly a country which doesn't require any reporting and no documentation. Skrill with a Cyprus company works fine, there are many Cypriot companies having accounts with Skrill afaik but be prepared to give them ridiculous amount of documentation, even more than a bank would require.

Well, I do understand that it is a standard EU country, so accounting and fillings is normal, but from what I understand, as a non-resident company I can not register for VAT. That is why I am asking, if I should register in my domestic country (where my customers are located) for this purpose, but if Admin mentioned it should work without... why not.

 

[KJK]

That is why I told you to study the law. It may be the case that you are legally required to register, you will be paying zero but you still must be registered and possibly fill out some reports.

VAT is not something to play with, it is very well reported and controlled (often even more than income tax I'd say) and if there are some discrepancies, you'll have to do the exlaning.

 

[David97255]

If I understand well from Cyprus you want to sell in another European country?
If yes you will charge no V.A.T. , it s an export sale
You will still have to fill intra-declaration even if it s zero rated.
Your customers will have to pay to his country customs the respective V.A.T in his country.
Depends of the European country, your customer will have between one and three months to pay it.

 

[Spinat]

That is why I told you to study the law. It may be the case that you are legally required to register, you will be paying zero but you still must be registered and possibly fill out some reports.

VAT is not something to play with, it is very well reported and controlled (often even more than income tax I'd say) and if there are some discrepancies, you'll have to do the exlaning.

I totally agree if you read and study the law or if you are a tax professional you will have to worry a lot about VAT regulations.

Personally I have run a Cyprus company for more than 10 years by now! I have an online shop which I never have charged a single € VAT at I also didn't registered for VAT anywhere and the company is registered non resident.

So we have 2 sides of this story!

 

[momordica]

Question n. 11 Electronic service delivery by a foreign entity from other EU country to Slovak nationals.
A foreign entity with a German residency provides electronically supplied services to Slovak residents (private individuals). This foreign supplier is identified for the application of the special provision for electronic services in Germany. Is this foreign supplier obliged to register for VAT in Slovakia?

Answer:
A foreign supplier is not obliged to register for VAT purposes in Slovakia despite the place of delivery of service is Slovakia (a place of delivery is an address where a client has permanent residency). A foreign supplier will admit and pay tax through tax return in the EU country, where he is identified for VAT purposes.

I totally agree if you read and study the law or if you are a tax professional you will have to worry a lot about VAT regulations.

Personally I have run a Cyprus company for more than 10 years by now! I have an online shop which I never have charged a single € VAT at I also didn't registered for VAT anywhere and the company is registered non resident.

So we have 2 sides of this story!

What is the approx. annual turnover of the online shop, if you mind sharing? I mean, maybe there is some threshold until they do not care. Do not want to finish in a jail bc of VAT. I am not trying to avoid the VAT, I am ready to pay those 20%, but to understand it properly, and not do any mistake. Normally, I would open a ltd. company in my country, but 20% VAT + 21% corporate tax is too much. 20% VAT and no corporate tax would be good.

 

[David97255]

Let's make it clear:

A company A based in an European country sell to a company b based in another European country.
The company A sells without VAT , it s the basis of an export sales.
The company B Wich bought and received the goods must pay in his country the VAT taxes Wich is applicable there.
The company A must declares his sales, even if it s a zero vat sales, it s called the intra community declaration and you do it online.
Because of this rules , born the vat fraud. How? The company b that received the stock got depends of the country , between 1 and 3 monthes to pay the vat. So the company sells in his own country to another company , price+ vat . Abracadabra you made a 20% profit in a second. And of course the company B will never pay the VAT.
Enjoy

 

[Spinat]

well to avoid charging VAT has been a competition point.. so if you want to go strict the legal route here you may do so.. otherwise reconsider your situation and how big your volume is that you put through the company in turnover

 

[momordica]

Let's make it clear:

A company A based in an European country sell to a company b based in another European country.
The company A sells without VAT , it s the basis of an export sales.
The company B Wich bought and received the goods must pay in his country the VAT taxes Wich is applicable there.
The company A must declares his sales, even if it s a zero vat sales, it s called the intra community declaration and you do it online.
Because of this rules , born the vat fraud. How? The company b that received the stock got depends of the country , between 1 and 3 monthes to pay the vat. So the company sells in his own country to another company , price+ vat . Abracadabra you made a 20% profit in a second. And of course the company B will never pay the VAT.
Enjoy

My transactions will be b2c and not b2b.

 

[David97255]

Ok in this case It s more difficult to answer you.
It depends of the type of product, for example, electronic tronic products or mobile phone got special rules.
Services depending , each European country got a different threshold for application for the special scheme.
The vat applicable can be yours or the customer's one. If you want to do it well you will need a consultation from a specialist

 

[momordica]

Thank for all help so far.
I do not want to start a separated thread, what about this. Charging my customers with Debit/Credit cards through a Bahrain company owned by a UK company. There is no corporate income tax in Bahrain, and VAT is 5% (from October 2018). The place of supply is where a recipient of provided services is. Logically, I should register in the EU and charge 20% VAT (is it possible as a Bahrain company?), but if I will charge only 5% and pay them in Bahrain. What is the chance or an ability of the EU country to do some action against the company?

 

[negon]

There is no chance what so ever. Would you mind to tell us the expected turnover per month ?

 

[momordica]

30k-50k EUR.

 

[negon]

30k-50k EUR.

with that amount I wouldn't worry to much about al lthis. Anyway, you can simply setup a company where the VAT is the lowest and then charge the VAT rate for this applicable country. So everything is fine.

 

[Macky]

out this. Charging my customers with Debit/Credit cards through a Bahrain company owned by a UK company. There is no corporate income tax in Bahrain, and VAT is 5% (from October 2018). The place of supply is where a recipient of provided services is. Logically, I should register in the EU and charge 20% VAT (is it possible as a Bahrain company?), but if I will charge only 5% and pay them in Bahrain. What is the chance or an ability of the EU country to do some action against the company?

My understanding is, if you sell B2C inside EU you MUST charge VAT for your clients if you exceed the minimum threshold VAT turnover per year. But your clients will pay the VAT included in the price not YOU. You just collect the VAT and send it to your Tax office. Check the VAT threshold based on the country where is your company...it depends on where your company is registred. Each country is different.

If you decide NOT charge VAT to your clients then establish a company outside EU and forget VAT but bear in mind it is illegal so be careful.