I wonder what experts here have to say

[Bvolders]

Hi everyone,

if you don’t like lengthy posts, you might want to skip this one as I tend to get into detail. You’ve been warned!

I found this place while looking for information / planning my future and I hope to learn much more from you. Let me begin by introducing myself. I’m in my early thirties, born and raised in Belgium and I recently started out as a webdesigner and freelancer. It looks like 'profits before taxes' in my first year will be around 30000€. While I’m very pleased to get those results in my first year, truth is it’s barely enough to survive here in Belgium. Belgium is savage when it comes to taxes and paying over 50% is very common. Below is an example of what would remain after taxes.

In a nutshell, I would pay 5866,67€ in social security contributions and 5237,03€ in personal income tax (among other costs) on a pretty small salary. Absolutely nuts! Using the same numbers in the Netherlands, I would have 10000€ more in my pocket at the end of the year (without any tricks and not even using all tax discounts the government provides to starters):

Only 1114€ in social security contributions and 1285€ in personal income taxes! That’s only 8% lost in taxes while getting full social security coverage! At least they recognize poor people in the Netherlands Now when you double that 30000€ things get ugly too:

While paying a little over 25% in taxes still isn’t a disaster (when accustomed to Belgian rates that is), I would like to try and optimize much more than that. So for the next 2-3 years the Netherlands are fine, but I need a long term solution for when my turnover increases.

I’m very interested in Cyprus but I’m struggling to get clarity on a lot of details. I’ve been in touch with accountants but it always ends up in one mail with very basic information and no reply to a second one. What I would like to achieve (if even possible) is getting a non-dom status in Cyprus, register as a sole trader in Cyprus + incorporate in a foreign country. Next, I would like to invoice the foreign company 8500€/year as a sole trader (and pay 14,8% social security contributions on that, about 1258€) while getting the other profits tax free in dividends, as explained in this article:

Now, things have changed since that article was written as Cyprus introduced CFC rules on January 1st, 2019. However, according to Deloitte, CFC rules are not applied to foreign companies with profits under 750000€:

Source: https://www2.deloitte.com/content/d...ax/tax-alerts/CY_TaxAlerts_9_4_19EN_Noexp.pdf

Does this mean I could still manage a UK LTD from Cyprus, get a tax exempt status in the UK because I only have income generated outside the UK and receive the profits in dividends? Deloitte on UK corporate taxation:

Source: https://www2.deloitte.com/content/d...Tax/dttl-tax-unitedkingdomhighlights-2019.pdf

Deloitte on dividend taxation of Cypriot non-dom residents:

Source: https://www2.deloitte.com/content/d...ntivesIndividualsRelocatingtoCyprus_Noexp.pdf

As you may understand by now, my goal is to pay 0% corporate tax, 0% income tax and only a minimum in social security contributions. Would a UK LTD still be possible for this, do I need an LLP for this, or am I dreaming out loud and is none of this even close to possible? I might have to add that I want to start a webshop too so I need to be incorporated in Europe to use my favourite payment processor (Mollie, it’s the only one in Europe that allows CBD products). I won’t be doing anything illegal so no need for anonymity or offshore nominees (although I’m willing to go that far if it’s the only way to get everything tax free). Another thing I might have to add, I will have debt in Belgium soon (court case from the past, marijuana charges), so it’s important they cannot get their hands on my profits.

If you’re still here, thanks for reading all the way and I'm looking forward to your input!

 

[fshore]

First, it might be better to start earning money and then look at this when you earn more. If you optimise now then rules might have changed again in 3 to 5 years when you stay making good money.

One thing you might have missed is that a foreign company is tax resident in Cyprus if it is controlled and managed from Cyprus.

A UK company is tax resident if its incorporated in the UK, unless you can use a tax treaty to show that because of control and management it is tax resident elsewhere. You will have to show a tax residence certificate for the company from Cyprus then.

 

[Tax Cow]

"First, it might be better to start earning money and then look at this when you earn more" - Vouch!

Tax planning is a cumbersome activity and it occupies your mind, taking away focus from your main activity. From the standpoint of time-waste/benefit, you shouldn't care much about taxes before you reach 6-digits. If you want to be efficient from the start, relocate to a no-tax country and work remotely.

Where do we start? Your planning efforts are adorable, but as someone who is not trained in these matters, by minimum, you should save up a few hundred euros to get help from a tax law student who is in her late puberty. The odds of her coming up with a legal solution for modest tax savings are much better than your brute force.

Rest assured, your 0% PIT, 0% CIT plan has some weak points in it.

Belgian client (Belgium-source income) -> Unsubstantiated UK Ltd invoices for contract -> Artificial invoice from a Cypriot Sole Trader who happens to be a director of that unsubstantiated UK Ltd -> Modest Social Security tax is paid in Cyprus where the contractor does not live.

In lack of a better word, it is ClusterFickenScheissePlan! Zero legal tax savings, quadruple paperwork.

If a miracle happens, you will be given tax credit for tax paid in Cyprus and you will pay all the tax saved plus interest in Belgium. If a miracle does not happen, you will also get a substantial fine and a government-sponsored small studio apartment for a few years (if your drug incident alone is not enough to get you there).

 

[fshore]

I read it like OP would be leaving Belgium.

 

[Bvolders]

First, it might be better to start earning money and then look at this when you earn more. If you optimise now then rules might have changed again in 3 to 5 years when you stay making good money.

"First, it might be better to start earning money and then look at this when you earn more" - Vouch!

Tax planning is a cumbersome activity and it occupies your mind, taking away focus from your main activity. From the standpoint of time-waste/benefit, you shouldn't care much about taxes before you reach 6-digits. If you want to be efficient from the start, relocate to a no-tax country and work remotely.

I do understand this and sort of agree with it, I've spent many hours looking at a solution which could have gone to expanding my business. But at the same time I'm the type of person that worries way too much / overthinks everything (which is a time waster too) and I really need a plan for peace of mind. I'm just not motivated to scale/grow if only to give away my precious earnings to a greedy government. I don't think I will ever get to 6 digits and if I did I would probably use the extra time I have left to enjoy life instead of trying to earn even more. Trying to be efficient from the start looks like the better option to me. While I don't have much left from that 30k here in Belgium, there are lots of places in Europe where I can thrive with that amount of money. Also, that 30k is kind of a guarantee as I've been contracted by a Belgian company for remote work at 2500€/month, so me leaving Belgium will not have an impact on it.

One thing you might have missed is that a foreign company is tax resident in Cyprus if it is controlled and managed from Cyprus.

A UK company is tax resident if its incorporated in the UK, unless you can use a tax treaty to show that because of control and management it is tax resident elsewhere. You will have to show a tax residence certificate for the company from Cyprus then.

It seems I have a really hard time understanding this. If I incorporated in the UK and went for the non-dom status in Cyprus I would be tax resident there so I could use a tax treaty for the UK LTD right? Then why would I have to pay corporate tax in Cyprus when foreign companies are exempt from that if profits are under 750000€ (according to Deloitte at least, which I feel is a trusted source)?

Are you saying by using the tax treaty the UK LTD is no longer a UK LTD but a Cypriot LTD? If so why do CFC rules even exist, if it's not possible to manage a foreign company from Cyprus, but you have to make it a Cypriot company instead?

So basically all information in my screenshot 'easy non-dom status for every budget' is false? I'm a bit shocked as that person is offering pretty expensive consulting at 500€/session.

Where do we start? Your planning efforts are adorable, but as someone who is not trained in these matters, by minimum, you should save up a few hundred euros to get help from a tax law student who is in her late puberty. The odds of her coming up with a legal solution for modest tax savings are much better than your brute force.

Rest assured, your 0% PIT, 0% CIT plan has some weak points in it.

Belgian client (Belgium-source income) -> Unsubstantiated UK Ltd invoices for contract -> Artificial invoice from a Cypriot Sole Trader who happens to be a director of that unsubstantiated UK Ltd -> Modest Social Security tax is paid in Cyprus where the contractor does not live.

In lack of a better word, it is ClusterFickenScheissePlan! Zero legal tax savings, quadruple paperwork.

If a miracle happens, you will be given tax credit for tax paid in Cyprus and you will pay all the tax saved plus interest in Belgium. If a miracle does not happen, you will also get a substantial fine and a government-sponsored small studio apartment for a few years (if your drug incident alone is not enough to get you there).

I wouldn't be looking for advice if I had it all covered Maybe it wasn't clear from my first post but I will leave Belgium anyway. With the fine I've been given and the huge interest rates, it will grow instead of shrink over years if I don't pay 500€/month. Also, they will try to confiscate my stuff all the time which will make my freelance activity next to impossible. There's no way to protect me against that so it really is game over in Belgium. If I stay here I will be poor and broke for the rest of my life, unable to chase my dreams. If I take a fresh start and can save some money on taxes, I might be able to get things fixed in Belgium later on in life. My 'incident' is not an obstacle when moving to another EU country, with my Belgian citizenship I am allowed to live and work freely anywhere in Europe. If I want to move outside of the EU however, this could become a problem.

To get back to my issue, is there no other way to get my income tax free when being a non-dom tax resident of Cyprus (please note there's a difference with regular tax residents / non-dom tax residents)? For example I see people on this forum using a LLP with offshore nominees. I get the feeling they choose that route mainly because of anonymity and fraudulent activity instead of tax efficiency, but if there's nothing illegal about that construction maybe it could work for me?

It doesn't really have to be Cyprus either. It's not that I want to live there, I just need a good tax residency. In fact I wouldn't spend more than the two months required to keep the non-dom status.

 

[fshore]

It seems I have a really hard time understanding this. If I incorporated in the UK and went for the non-dom status in Cyprus I would be tax resident there so I could use a tax treaty for the UK LTD right? Then why would I have to pay corporate tax in Cyprus when foreign companies are exempt from that if profits are under 750000€ (according to Deloitte at least, which I feel is a trusted source)?

Are you saying by using the tax treaty the UK LTD is no longer a UK LTD but a Cypriot LTD? If so why do CFC rules even exist, if it's not possible to manage a foreign company from Cyprus, but you have to make it a Cypriot company instead?

If you use the tax treaty that will make the UK company tax resident in Cyprus, and should pay Cyprus taxes.
Even without a tax treaty the UK company might be tax resident in Cyprus if it's considered managed from Cyprus. I'm not sure exactly how strict they handle this in Cyprus, but the laws are quite clear. It might be that they don't enforce it for a small one man company owned by non dom. Or that they have inefficient rules that would let you have a directors meeting outside to enable the company not being run from Cyprus. But apart from that, a foreign company that you work for in Cyprus could have a PE in Cyprus. You can read more about it here, but it doesn't say much to define management and control.
http://taxsummaries.pwc.com/ID/Cyprus-Corporate-Corporate-residenceSomeone else might have more experience with Cyprus, but often people will say that something works because they have not yet been caught. It doesn't mean it's compliant and safe for the future.
There are many other countries that doesn't enforce this for foreigners, typically places like Thailand etc.

CFC laws differ between countries, I'm not familiar with Cyprus CFC rules, but generally they are used when a company is not local tax resident. For example if you are an owner of a foreign low tax company or in other ways are entitled to profits from a foreign company.

The quote you have above might refer to a UK LLP that would not pay taxes in the UK. But a LLP doesn't pay dividends, it's pass through income. Another company like Gibraltar could pay dividends, but you still have the same problem with management and control.

 

[Tax Cow]

Okay, I'll tell you what I'd do.

You can work remotely from anywhere, and Cyprus is not the cheapest - your 30K is not that much. Furthermore, it's just another member state of the EU which makes it seamlessly easy for Belgium to cooperate and collect anything you owe in taxes or fines for years to come.

1. Pick a non-EU low-tax/no-tax country as your base, at least for the first 2-3 years.
2. Before you leave the EU, open a personal bank account in Germany (or any other nearby EU member state where you're not a tax resident)
- Under CRS, your account will be reported, but assuming you open the account today, you have until September 2020 before Belgium finds out about your new bank account via automatic information exchange. You can use that account for on-going expenses until you've settled in your new country. Do not make any direct payments to it from your Belgian bank account, or they will find out about it sooner.

3. Take a bus/train/car trip to non-EU country near you, like Switzerland, and from there, hop on a 1-way flight to a country near your new base, but not the country itself. From there, take bus/train/car to your actual new base.
- If you book through BRU, it's a little too easy for authorities to check where you've gone. If they're motivated, they can still find you through Interpol, but unless you owe significant sums, or are deemed a criminal, the odds of them pursuing you are low.

Once you have a country in mind where you want to go, either post here, or send me a PM. Then we can think about how you can invoice your clients while minimizing the risks. For your first 2-3 years, Caucasus (Armenia, Azerbaijan, Georgia), Balkans (Macedonia, Serbia, Montenegro) are some good options to consider - low or no tax structures, low living costs, relative banking privacy (information exchanged only upon request).

 

[daxbr]

Okay, I'll tell you what I'd do.

You can work remotely from anywhere, and Cyprus is not the cheapest - your 30K is not that much. Furthermore, it's just another member state of the EU which makes it seamlessly easy for Belgium to cooperate and collect anything you owe in taxes or fines for years to come.

1. Pick a non-EU low-tax/no-tax country as your base, at least for the first 2-3 years.
2. Before you leave the EU, open a personal bank account in Germany (or any other nearby EU member state where you're not a tax resident)
- Under CRS, your account will be reported, but assuming you open the account today, you have until September 2020 before Belgium finds out about your new bank account via automatic information exchange. You can use that account for on-going expenses until you've settled in your new country. Do not make any direct payments to it from your Belgian bank account, or they will find out about it sooner.

3. Take a bus/train/car trip to non-EU country near you, like Switzerland, and from there, hop on a 1-way flight to a country near your new base, but not the country itself. From there, take bus/train/car to your actual new base.
- If you book through BRU, it's a little too easy for authorities to check where you've gone. If they're motivated, they can still find you through Interpol, but unless you owe significant sums, or are deemed a criminal, the odds of them pursuing you are low.

Once you have a country in mind where you want to go, either post here, or send me a PM. Then we can think about how you can invoice your clients while minimizing the risks. For your first 2-3 years, Caucasus (Armenia, Azerbaijan, Georgia), Balkans (Macedonia, Serbia, Montenegro) are some good options to consider - low or no tax structures, low living costs, relative banking privacy (information exchanged only upon request).

Good and practical info, just... the choice of locations, bit on chilly side.

 

[Tax Cow]

Good and practical info, just... the choice of locations, bit on chilly side.

If our Belgian OP has yellow fewer or a bias for "dat a*s", there are obviously better options in warmer countries

@Bvolders what kind of women do you like?

 

[Bvolders]

If you use the tax treaty that will make the UK company tax resident in Cyprus, and should pay Cyprus taxes.
Even without a tax treaty the UK company might be tax resident in Cyprus if it's considered managed from Cyprus.

I think I'm finally starting to get it, making use of double tax treaties or not will determine where my company is tax resident. If I don't apply for it, I will pay corporate tax in the UK and I could receive dividends in Cyprus, but if the Cypriot tax man finds out, I'm in trouble. If I do the right thing and register a PE in Cyprus, my company will be regarded as Cypriot and I will need to pay corporate tax there. Like @xzars mentioned earlier, it would indeed be silly to choose option one. More paperwork, more expensive and not legal.

CFC laws differ between countries, I'm not familiar with Cyprus CFC rules, but generally they are used when a company is not local tax resident. For example if you are an owner of a foreign low tax company or in other ways are entitled to profits from a foreign company.

This helped me a lot in understanding CFC rules. For a moment I forgot that some people own companies and have employees to manage it, now I get why those rules exist.

Does it make a difference if I only spend 2 months a year in Cyprus? I mean they can't really claim I manage it from Cyprus if I'm only there for a short amount of time, right? It's very easy to check for them as Cyprus has guarded borders and they keep data on people entering/exiting (unless those people use the occupied north for traveling).

And what about an LLP with 2 offshore nominees (like this)? How can they prove I'm managing the company from Cyprus? For all they know I have employees doing the work and I only receive dividends from a company that I own but don't work for.

Okay, I'll tell you what I'd do.

You can work remotely from anywhere, and Cyprus is not the cheapest - your 30K is not that much. Furthermore, it's just another member state of the EU which makes it seamlessly easy for Belgium to cooperate and collect anything you owe in taxes or fines for years to come.

1. Pick a non-EU low-tax/no-tax country as your base, at least for the first 2-3 years.
2. Before you leave the EU, open a personal bank account in Germany (or any other nearby EU member state where you're not a tax resident)
- Under CRS, your account will be reported, but assuming you open the account today, you have until September 2020 before Belgium finds out about your new bank account via automatic information exchange. You can use that account for on-going expenses until you've settled in your new country. Do not make any direct payments to it from your Belgian bank account, or they will find out about it sooner.

3. Take a bus/train/car trip to non-EU country near you, like Switzerland, and from there, hop on a 1-way flight to a country near your new base, but not the country itself. From there, take bus/train/car to your actual new base.
- If you book through BRU, it's a little too easy for authorities to check where you've gone. If they're motivated, they can still find you through Interpol, but unless you owe significant sums, or are deemed a criminal, the odds of them pursuing you are low.

Once you have a country in mind where you want to go, either post here, or send me a PM. Then we can think about how you can invoice your clients while minimizing the risks. For your first 2-3 years, Caucasus (Armenia, Azerbaijan, Georgia), Balkans (Macedonia, Serbia, Montenegro) are some good options to consider - low or no tax structures, low living costs, relative banking privacy (information exchanged only upon request).

Thanks for the offer, I appreciate it! The only issue is I don't really want to leave Europe. Most countries expect you to be present 183 days a year to qualify for tax residency and having to spend that much time in Georgia would feel like a punishment Cyprus has the major advantage that one has to spend only 60 days a year there, social security is great plus it's a beautiful country too!

I'm not really trying to hide from Belgium either, I will always have to report my new location if I want to be able to renew my passport etc.

Right now I'm living in a Fiat Ducato converted to a camper, my cost of living is between 600-700€. There's 2 reasons why I'm doing this, the first being my income after taxes (1400€ a month) is nearly enough to cover rent and cost of living, the second is that by not having a fixed address it's harder for bailiffs to harass me and my chances of getting a payment plan are much bigger. If I get that plan and keep to it, they are not allowed to take anything from me. If I don't get that plan or refuse to pay it, there's still the option of dark bank accounts or bank accounts in family members name to protect my funds. I already have a N26, Transferwise and Revolut account.

I'd love to live in the Netherlands. If rules weren't as strict I'd buy a property in the Netherlands next year, keep it when I officially move to a tax friendly country and secretly still spend 50% of my time in the Netherlands, while offcourse paying 0% taxes there. Unfortunately it's not that simple. Yes I could claim I don't have an income in the Netherlands or don't spend enough days there to be taxed, but when you have a property it changes things. They will always claim your 'centre of interest' (don't know how to translate it properly) is in their country (same for Belgium) and it's up to you to prove them wrong.

If our Belgian OP has yellow fewer or a bias for "dat a*s", there are obviously better options in warmer countries

@Bvolders what kind of women do you like?

I do have some yellow fever yes But I feel I'm not ready (yet) to move to the other side of the world.

 

[fshore]

Does it make a difference if I only spend 2 months a year in Cyprus? I mean they can't really claim I manage it from Cyprus if I'm only there for a short amount of time, right? It's very easy to check for them as Cyprus has guarded borders and they keep data on people entering/exiting (unless those people use the occupied north for traveling).

And what about an LLP with 2 offshore nominees (like this)? How can they prove I'm managing the company from Cyprus? For all they know I have employees doing the work and I only receive dividends from a company that I own but don't work for.

I wouldn't think they would say that a company is managed and controlled from Cyprus if you're only there for 2 months. But if you're only there for 2 months, what will Belgium say?

LLP - of course they might not find about it or investigate. Still doesn't change the legality of it.
But as mentioned, a LLP doesn't pay dividends, it is pass through income. So you couldn't benefit from that tax free dividend as a non dom.

 

[TurnedToRobot]

If you want the company to be controlled and managed in Cyprus you will have to setup a real office which you can get for cheap somewhere in Nicosia, it's really not a problem. You also need to get a electricity connected so it generate invoices / expenses. If you have the office you can do the rest with a good company structure and nominees. They need to be real person nominees.

 

[Sols]

If you relocate to Cyprus and qualify as a non-domiciled resident (which foreigners normally do) and incorporate a local company, you can usually get away with only paying 12.50% CIT and no tax applicable to dividends you pay to yourself in this case. I'm not your tax adviser so confirm this with someone who is — but it's common practice for foreigners.

If you're pulling in 30,000 EUR a year (26,250 EUR after 12.50% CIT), that's enough to live a comfortable but not luxurious life in Cyprus if you avoid the highest-cost areas. Focus on growing your business.

Some law firms offer as a service to rent out a part of their office to your company and hire someone (part-time) to establish an actual presence in Cyprus. But if you plan to move to Cyprus anyway, that's not necessary.

You can get it down to 0% CIT and PIT if you establish an overseas company that's tax resident there. Isle of Man, Jersey, and Guernsey are fairly common for those seeking to use a local nominee director to qualify for tax residence there. Quite costly though (easily at least 5,000 EUR all in all to set up). But a lot of people in Cyprus just incorporate offshore companies and take in money from them, which is probably technically not by the book, but still very common.

In reality, the Cyprus tax authority doesn't check too closely, especially on foreigners. The government is a relaxed, bureaucratic mess.

 

[AND2]

Move to Andorra, pay 10%. Short drive to France and you probably speak French already. Short drive to Spain for beaches. Long drive to Belgium to visit family and friends.

 

[AND2]

Ops, forgot to mention to check double taxation treaties so you don't relocate to Andorra and later find out you are still a Belgian tax resident. Yes crazy, but real. So check that out.

 

[gmbh]

You can get it down to 0% CIT and PIT if you establish an overseas company that's tax resident there. Isle of Man, Jersey, and Guernsey are fairly common for those seeking to use a local nominee director to qualify for tax residence there. Quite costly though (easily at least 5,000 EUR all in all to set up). But a lot of people in Cyprus just incorporate offshore companies and take in money from them, which is probably technically not by the book, but still very common.

In reality, the Cyprus tax authority doesn't check too closely, especially on foreigners. The government is a relaxed, bureaucratic mess.

Do you know if this still works, especially with higher amounts of profits (several hundred thousand/year)?

And do you know what the consequences are if the Cyprus tax authority checks you and decides the company is managed from Cyprus? Do you have to pay 12,5% then like a Cyprus limited or do they even tax you with the income tax which would be 35%?

 

[troubled soul]

"There ain't no such thing as a free lunch"

Trust Me company formation and these all circus worth it When You have more money .You have to pay for service and license other invisible charges. same as tax . It is worth when you earn a more.
If you are in 30s , Focus on earning more not on this stupid things.

Dubai and Monaco is tax free country .There is no personal tax.
If you are web developer freelancer , You move to this country there will no tax no vat nothing.
But the living cost is higher.both place minimum 150k plus are just the basics you get.


Moral of the story is focus on earning more that on this things.You still in 30s.

If you still want to do this ,
Cheapest way is move to Thailand ,Malaysia or any other country where expat foreign income does not taxed.
But the visa cost and living charges will be same as a tax you pay in your country.

It is your choise.
Find country where visa and living cost is cheap and start living there .
There will be the best option.


any case You have to pay 15K one way or other way.

If you find any cheap solution do tell me .
I am also curious .

My journey in offshore world ,I learn that the cheap and easy things are very dangerous in long run.

When I am new comer in this field i come up with this bank europacbank.com. very easy and simple bank account opening .
Now you can see what happen to that bank.
If I have bank account in that bank I am in trouble today.

Hope you get my point.

Cheers.

 

[gmbh]

"There ain't no such thing as a free lunch"

Trust Me company formation and these all circus worth it When You have more money .You have to pay for service and license other invisible charges. same as tax . It is worth when you earn a more.
If you are in 30s , Focus on earning more not on this stupid things.

Dubai and Monaco is tax free country .There is no personal tax.
If you are web developer freelancer , You move to this country there will no tax no vat nothing.
But the living cost is higher.both place minimum 150k plus are just the basics you get.


Moral of the story is focus on earning more that on this things.You still in 30s.

If you still want to do this ,
Cheapest way is move to Thailand ,Malaysia or any other country where expat foreign income does not taxed.
But the visa cost and living charges will be same as a tax you pay in your country.

It is your choise.
Find country where visa and living cost is cheap and start living there .
There will be the best option.


any case You have to pay 15K one way or other way.

If you find any cheap solution do tell me .
I am also curious .

My journey in offshore world ,I learn that the cheap and easy things are very dangerous in long run.

When I am new comer in this field i come up with this bank europacbank.com. very easy and simple bank account opening .
Now you can see what happen to that bank.
If I have bank account in that bank I am in trouble today.

Hope you get my point.

Cheers.

I would like to ask again because maybe you read over it, but do you know if Nominee Directors are still "accepted" by the Cyprus tax authorities. I make significant amounts of money and I think the same like you "There ain't no such thing as a free lunch" and "I learn that the cheap and easy things are very dangerous in long run." because of this I think this Nominee Director thing is too easy and good to be true...

 

[Sols]

Do you know if this still works, especially with higher amounts of profits (several hundred thousand/year)?

It still works, yes. It's happening a lot and there are no significant signs of it changing.

And do you know what the consequences are if the Cyprus tax authority checks you and decides the company is managed from Cyprus? Do you have to pay 12,5% then like a Cyprus limited or do they even tax you with the income tax which would be 35%?

To my knowledge and from talking to several advisers/lawyers, this hasn't happened yet or at least not in a way that's a matter of general practice.

However, if it were to happen, you would likely only have to pay 12.5% CIT and maybe some late penalties. After that, the remainder would be considered dividends paid to yourself which as a non-domiciled resident is tax free. You would do well to document the income as dividends.

But even if it were to be construed as personal income, there are several tax benefits you can get as a foreigner in Cyprus. The most common one is 50% reduction on income tax if you earn more than 120,000 EUR/year (not sure that's the exact number but somewhere around there).

 

[gmbh]

Thanks for your answer!

Would you specify the profits of the offshore company in your personal tax return?

And if the Cyprus tax authorities don't care, what can I do with the profits later (if I move to another country for example)? I would have no proof of funds, wouldn't I?

I would appreciate very much if you could look into this thread and post your opinion.

https://www.offshorecorptalk.com/threads/profits-from-offshore-company-blacklisted.31900/
I talked to 3 accountants now and 2 said me Nominee Directors still work, 1 said it will not work, but even the first 2 were not really clear...

My common sense tells me that the Cyprus tax authorities don't care if one makes small profits but will look in detail if one makes huge amounts of money to get their share of the cake.