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Cyprus VS Gibraltar - VAT for online subscriptions?

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escapeskysun

Offshore Agent
Jan 21, 2013
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#1
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I'm about to setup a Seychelles IBC and a Cyprus or Gibraltar company for EU the presence. The EU entity will be used for our billing services (Both merchant account and 3rd party EU billing) and the low company taxation is important. The Seychelles IBC is primary for anonymity.


I know this setup is pretty cookie cutter. But how does Cyprus and Gibraltar compare? It seems everyone is going to Cyprus, but why?


It's important to keep the running yearly costs as low as possible and I read that auditing isn't required in Gibraltar for 'small' companies and I would qualify for this.


Also what's the best route to not having to pay VAT on the EU subscription sales? :help:


Thanks!
 
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#2
For better or worse, Gibraltar is not an EU jurisdiction when it comes to customs and taxes (like VAT).


I know many EU companies use Gibraltar subsidies to reduce or eliminate VAT.
 
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#3
Zqq:


Interesting! - I found this:


"Is Gibraltar the member of the EU VAT scheme?


Gibraltar enjoys special treatment from the European Union. Being a European territory for whose external relations Britain bears responsibility, Gibraltar has entered the European Union under Article 227 (4) of the EEC Treaty. By Article 28 of the 1971 UK Assession Treaty Gibraltar is not part of the common Agricultural policy, turnover taxation schemes, in particular VAT, or the Customs Union allowing local Government to set import duties and be exempt from the EU VAT structure. "


Since Gibraltar has this pseudo EU presence. Do you know if it can disqualify the jurisdiction in regards to acquiring a merchant account for it, compared to e.g Cyprus?
 
#4
I once discussed this with two major acquiring banks in the UK and they both said they would accept a Gibraltar company. However, this was with banks I have a long relationship with, so no guarantee that they'd do it for everyone. Just ask a couple of banks and see what they say. Banks focus more on what you sell and to whom you sell rather than from where you sell it.


Have you looked at Malta? I have established acquiring relationships between Maltese companies and several acquirers in the EU.
 
#5
You can use ANY European company to apply with a European Merchant Account Provider - MAP it is actually not difficult to do so. Even if some countries (if not all European countries)require you to apply VAT on your sales you can simply avoid it by entering a non EU address on your website an camouflage the transactions.
 
#6
Thank you Zqq and jpay,


I have been investigating the last days and what I have been thinking about is to just open a simple UK LTD as dormant shell company for the IBC (identical name) and use that for the EU presence, this would be very cheap and easy. It almost seems to good to be true. Can you let me know if i'm missing something? Most of the discussed/offered IBC structures include an EU incorporation like Cyprus/Gibraltar but I haven't been able to figure out why this extra expense is actually needed?
 
#8
There are VAT workarounds in these countries. You can also make it even better, you find a credit card processor that not require you to charge VAT so you use a offshore company at the front of your website i.e. Seychelles or Belize are perfect for this, then the customer think he is doing business with a offshore corp that does not has to charge VAT.

This is also good towards your competition it means you can offer your services between 12,5% - 30% cheaper than your competition that has to charge VAT, for hosting companies, SEO firms and other small business it can be a real customer killer to charge VAT!
 
#11
Cyprus means that you have to register for VAT moss and gather Eu vat for the 28 jurisdictions from zero euros on digital goods. There is no other ways for that.
Cyprus has a public company register as well.
I don't see the point of an onshore company for you. You could also incorporate a Seychelles company with a bank with a euro bank account.

Gibraltar is not part of the EU VAT zone.
 
#12
Well, while there are many other offshore jurisdictions around Cyprus has still much to offer. For instant they have a public registry but Nominees are allowed so you can stay away from any public records. It is part of the EU but you can register offshore so you can't apply for VAT but still it is part of the EU and therfore earn more trust by consumers and business partners. It has the lowest possible business tax 15% in the EU but if you register offshor 0% tax to be paid.

Sometimes if you read and operate strictly after the book one will limit themself :)
 
#13
Hi, could you elaborate what register offshore mean in this case? I was thinking setting up in Cyprus and thought tax was 12.5% plus part in VAT(MOSS) so not so good, but ok if 0% tax as offshore? How can Cyprus company be offshore? I want one if thats the case
 
#14
There are several threads about to register a Cyprus company offshore it's just something you ask your agent to do when you incorporate your business in Cyprus. Actually a straight forward process. You can't register the company for VAT if it's abroad.
 
#16
I have done some researchs and i have found that Cyprus is better.

Both in Gibraltar and Cyprus you can go for IBC.
Small companies don't need an audit in Cyprus but it is true the threshold is low (70,000 euros i think)

It is almost impossible to open a bank account in GIbraltar. Still today, Gibraltar banks are not interested in billing companies. Their fees are very high for transactions. They are made to gather money of royalties and licenses and investments. Not for billing.

In Cyprus everyone here knows the banks can do everything & from that point of view Cyprus is the new UK.

Everyone who do distant sells to a EU country has to register to VAT moss. For instance, a Gibraltar company could register in Spain, Bulgaria or France to gather VAT of the 28 countries depending if the company exceeded the threshold of the goods sold in that country. For instance, you don't need to pay VAT to Cyprus if you sell less than 35,000 euros of E products to cypriot customers.



Comparison between Cyprus & Gibraltar:
If you put Gibraltar on an invoice, everyone knows that you do offshore because no one can go there and live there, it is too small.
If you put Cyprus on an invoice, no one can think you do offshore because it is a real country in the mind of people. It is often linked to a holiday destination.

If you provide consulting services, and if you say your company is located in Cyprus. It is plausible as an onshore company.
IF you provide consulting services and if your company is located in GIbraltar, everyone knows you are there for offshore activities.

If you need to hire people someday, you can find people in Cyprus to do a job.
If you need to hire people in Gibraltar. No way.

If you need to go somewhere as a fiscal resident that would be Cyprus because there are still really cheap rent there and everything you need.

If you want real anonymity Gibraltar is better because there is no public records.
In Cyprus you have to have a nominee directory and shareholder.

If you need merchant account, Cyprus is accepted everywhere from every kind of payment methods, bitcoin payment gateways like COINBASE, Adult payment gateways like ccbill, Skrill...etc...etc..
There are less merchants for Gibraltar.

The future of Cyprus is politicially stable.
The future of Gibraltar is uncertain because they were part of Europe thanks to UK. If UK leaves Europe with article 5, so do Gibraltar. What will happen to Gibraltar??? Good question.
 
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#17
@dotbloup nice work as always ;)

I never thought of Gibraltar to be one of the offshore jurisdictions to consider for my business. However I have read in the past it was very popular to incorporate a business there because of the tax benefits.

Since I incorporated my business in Cyprus in 2011 I have been happy with my decision and never regret nor did I noticed any trouble when I opened a merchant account for the company with WireCard and later on GlobalPay.
 
#18
dotbloup good informtion, I looking to get a company in Cyprus for my online business and ofc with bank account. reading a lot of good information in this forum but sure will need a agent for this. I am Swedish but live in Asia so it do creat a bit extra work but hope to find a good agent that are well connected with banks that can help me out.
 
#19
If you keep your setup in Cyprus it's going to be easy to get both company and bank account setup there. You just need to prepare the documents required. I.e passport copy and utility bill not older than 3 months. The bank will also require a business description and CV for your person.
 
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