Cyprus Offshore Substance Setup

[eurobundance]

Currently living in NL

I wanna setup a SaaS company in Cyprus and benefit of IP-Box, so corporate tax will be as low as 2.5-5%

I'm gonna create the substance for it, i.e.:

1. Management, important meetings and key decisions will be in Cyprus done by a local director and not me, all of this will be well documented (But I will be the one making the decisions through secure messaging)
2. t's own (rented or owned) office space/premises / physical address;
3. Qualified and knowledgeable directors and managers who are located and employed in Cyprus;
4. Other employee/s with relevant experience residing in Cyprus;
5. Employer status of the company and registration with the Cyprus Department of Social Insurance where directors and/or other staff are employed (not only nominated);
6. Its accounting records maintained in Cyprus and the accounting work performed by local accountants;
7. Operative local bank accounts, with local resident signatories/counter-signatories;
8. Relevant assets located in Cyprus (i.e., staff, equipment, and all other necessities which are normally required for doing business);
9. The substantial involvement of local staff in the operations of the entity;
10. An independent local email address and/or website;
11. An independent telephone and fax line.

If this is bullet proof and if we fall under IP Box regime we will avoid the high corp tax of 26.9% in NL.
Will this work with the Netherlands authorities? Does anyone have experience with it.

 

[Don]

Yes, it can work

 

[EliasIT]

Yes that will work, but get yourself some professional assistance, so you do it right.

 

[Forester]

I agree with @Don and @EliasIT completely. (A professional assistance is strongly recommended, really; in fact it is a must.)

 

[sergeylim88]

how will you protect your self from the director which will have signatories power over bank account?
in theory he can take your money

 

[Don]

I agree with @Don and @EliasIT completely. (A professional assistance is strongly recommended, really; in fact it is a must.)

Specifically for IP box matters I recommend to work with a qualified and experienced auditor.

 

[CyprusLaw]

Provided that you structure it so as to be deemed qualifying income and qualifying assets this will work.

 

[yngmind]

The product should be built in Cyprus. The already working product won't qualify for an IP box.

 

[CyprusLaw]

The product should be built in Cyprus. The already working product won't qualify for an IP box.

The Cyprus company can purchase it and show R&D towards improving the product or modifying it to fit anither purpose for example.

 

[northwest]

Specifically for IP box matters I recommend to work with a qualified and experienced auditor.

dm me please

 

[Forester]

how will you protect your self from the director which will have signatories power over bank account?
in theory he can take your money

Well, I think @CyprusLaw or @CyprusLawyer101 are more competent to comment on this, nevertheless:
In theory, he can. But Cyprus is a civilized country; the potential risks / gains ratio for a director is so high that we do not observe this problem.

 

[CyprusLaw]

Well, I think @CyprusLaw or @CyprusLawyer101 are more competent to comment on this, nevertheless:
In theory, he can. But Cyprus is a civilized country; the potential risks / gains ratio for a director is so high that we do not observe this problem.

You should only work with licensed law firms/aministrative service providers. We are regulated, and therefore this ensures your security when using a nominee.

 

[Forester]

You should only work with licensed law firms/aministrative service providers.

Of course, it's natural. However, I was pointing at the fact that in some countries, unfortunately, just working with the licensed providers does not protect you against fraud reliably.

 

[CyprusLaw]

Of course, it's natural. However, I was pointing at the fact that in some countries, unfortunately, just working with the licensed providers does not protect you against fraud reliably.

My reply was going towards Sergeylim and was actually agreeing with your posti essentially. In Cyprus our profession is fully regulated (or overregulated if I may say).

 

[Don]

how will you protect your self from the director which will have signatories power over bank account?
in theory he can take your money

You can use some technical and legal controls to limit the powers.

Its also worth noting that in the recent decision of the Supreme Court of Cyprus in the case of Criminal Appeal No. 323/2015 Attorney General of the Republic v Solomonidi, the Cypriot Court adopted a similar approach with that expounded in English case law, and stated that:

‘’There are no formalistic directors of a legal person. From the moment a person is appointed as a company director he has all the responsibilities and obligations of a director, as those are determined by the Companies Act (Cap 113), any relevant applicable legislation and case law on the matter.’’

What these decisions further show, is that a nominee director will not avoid liability by claiming that his role was only that of a so-called ‘’rainmaker’’ and that he had no real knowledge of the affairs of the company and/or any contracts entered into by the company.

Furthermore, due to the fact that it has been established that a nominee director does not differ in terms of duties and liabilities from any other company director, it means that like any director he can be found liable to compensate an outsider for harm suffered by the company. This is particularly easy if a claim in deceit has succeeded against the person controlling the company (‘’the director’’), in which case there is no need for the court to consider whether it is appropriate to pierce the corporate veil. (Dadourian Group International Inc v Simms [2006] EWHC 2973 (Ch))