Is Cyprus best choice for my business

[Lucas32]

Hi everybody

Today i had some discussion with an agent here in Spain, (iam Algerian citizen with Spanish Residence) after explaining my business he told me that the best choice is Cyprus, my business is strictly ONLINE (sell and buy VOIP minutes, so its basically calls flow), i have my server in Netherlands (rent) and 80% of my clients are from EU (will need VAT ), and the rest are mostly from USA, transactions will be Bank transfer (no paypal , no credit card), my idea is to reduce TAX as here in Spain it near 45%

The question is as i askd above, is Cyprus good choice ?

1- is easy to get VAT and Bank account ?

2- should i need a Nominee Director ? as i will be the unique director / business associate

3- how much it will cost ? i mean with accounting and everything , don't want hidden fees PLZ (you can send me your price via PM)

4 - Price for yearly renewal ?

5- as iam from Spain he said that i can windrow money to my Spanish bank Account as Dividends ?

6- accounting is each 3 months ? or yearly ?

7- TAX in my case will be 12.5% ?

8 - Can i be an associate in other Cyprus company ? (my friend will open one and i will be an associate)

Please i really need response for those 8 questions, because iam thinking to open company ASAP this month

thank you so much

 

[mnschwarz]

I won't comment on Cyprus being the best option because I don't have have first hand information on it. As for your other points, a nominee director can be used if privacy is you goal. It may be a wise idea as simply incorporating in Cyprus does not legally avoid taxes in Spain. Spain has CFC laws which more or less state if you control the company, you pay tax where you are resident. For this reason also, I would not be transferring anything from the company to your personal account. You will create a connection that may attract attention & result in an investigation. If you do, certainly not as dividends. You would probably get the nominee to appoint you as an employee or consultant etc and claim it as a wage (which you would then pay tax on in Spain). I would have a chat to a local Spanish tax professional regarding your structure before you go ahead with it.

And yes there is nothing to prevent you being an associate of your friends company. Why are you wanting to do this though?

 

[Lucas32]

Thank you mnschwarz, i know i have to pay tax in Spain also its 15% for Dividends and 12.5% in Cyprus, but not 45% if my company is Spanish, so as i said above Reducing tax legally
- They said yes i can transfer money to my personal account as its a Legal activity and i will pay tax for it
- iam not looking for privacy as my business is legal and i will have contract with big companies in EU
- because my friends will do more or less the same and i will be a shareholder

now knowing my situation what do you suggest for me ?

 

[mnschwarz]

Thank you mnschwarz, i know i have to pay tax in Spain also its 15% for Dividends and 12.5% in Cyprus, but not 45% if my company is Spanish, so as i said above Reducing tax legally
- They said yes i can transfer money to my personal account as its a Legal activity and i will pay tax for it
- iam not looking for privacy as my business is legal and i will have contract with big companies in EU
- because my friends will do more or less the same and i will be a shareholder

now knowing my situation what do you suggest for me ?

I still suggest you talk to a Spanish tax professional regarding CFC laws. Each jurisdiction has their own version but usually you would pay the difference in tax in Spain. CFC laws were designed with the sole purposes of preventing people doing exactly what you're trying to do.

 

[mnschwarz]

The only way I can potentially see you being able to avoid CFC laws is if Spain excludes EU jurisdictions. These kind of exclusions are somewhat unique to the EU and quite possible. In this case then yes everything would be legal and Cyprus is pretty much your only decent option to lower taxes legally. Again, I would still clarify this with a professional.

As for you and your friends being shareholders in each others company, what are you trying to achieve? You can certainly do it, but doing it 'just because' is a silly reason. Keep in mind that your friends as shareholders have the same legal rights as you as a shareholder (assuming the same class of share). If you pay yourself a dividend, you will have to pay them a dividend also.

 

[negon]

As for you and your friends being shareholders in each others company, what are you trying to achieve? You can certainly do it, but doing it 'just because' is a silly reason. Keep in mind that your friends as shareholders have the same legal rights as you as a shareholder (assuming the same class of share). If you pay yourself a dividend, you will have to pay them a dividend also.

What do you think about loan agreements between shareholders of the company and the company? it should be tax free legally?

 

[mnschwarz]

What do you think about loan agreements between shareholders of the company and the company? it should be tax free legally?

Legally the interest on the loan would be seen as personal income for the shareholder.

 

[Okanda Fernando]

You can try north-Cyprus also because North Cyprus tax rates are much less than any other European country.

 

[JohnLocke]

You don't want to bank in North Cyprus the Turhish part of Cyprus, you won't face anything than trouble if you do! This apply for company registration too!

 

[Okanda Fernando]

Probably the North Cyprus is the best option because of its tax rates and easiness of establishing your business.

 

[Okanda Fernando]

You don't want to bank in North Cyprus the Turhish part of Cyprus, you won't face anything than trouble if you do! This apply for company registration too!

why you say like that? Please provide some facts

 

[JohnLocke]

You may read about North Cyprus and the banking system. Most parts of the world have banned North Cyprus banks! Why would you want to bank there?

 

[Okanda Fernando]

I was residing there for 4 years. I couldn't see anything wrong with the bank system. Bank system in Cyprus is getting stable day by day. By the way, i will search more for it. Thank you

 

[MrAndrew]

You don't want to bank in North Cyprus the Turhish part of Cyprus, you won't face anything than trouble if you do! This apply for company registration too!

True. I recently attempted to open a bank account in the TRNC (I am a Cyprus Resident, but Citizenship elsewhere) and it was awful. Although, I had a break through right at the end I lost trust and thought it was better just to open several EMI's and use prepaid card services to mitigate tax liabilities. Let's see how it goes!