Question Rate my setup! Cyprus + BVI

[TheAtlas]

Thinking of moving myself and business from UK to Cyprus (I have a UK and EU passport), with this setup:

1. BVI/UAE/equiv. company from which I invoice clients. EMI to receive funds.
2. Personal residency in Cyprus, under 60 day nondom
3. Cyprus shell company for appearances. Maybe run €19’500 through it so it looks alive (take this as salary, tax free). Assume I need to do this to get the residency (showing substance).
4. Distribute BVI company dividends to myself, pay the ~2.5% GESY tax. Personal bank somewhere stable like Germany/Switzerland, so would receive payments there rather than a local Cyprus bank.

PWC notes that CFC rules don’t apply to non resident companies whose active revenue is under €750k. So I shouldn’t get taxed on my BVI income by Cyprus. Cyprus - Corporate - Group taxation

Overall looking like a 2.5% ‘tax’ rate on combined personal and corporate income, plus accounting expenses in Cyprus and BVI (<€10k per year?).

Can anyone see any holes in this plan? Have I missed something? Seems too good to be true.

 

[PaulKruger]

This looks very good. If you have asked PWC to look into the setup and they confirmed above is correct I can't see anything wrong with it and may even copy your setup

 

[CyprusLaw]

Thinking of moving myself and business from UK to Cyprus (I have a UK and EU passport), with this setup:

1. BVI/UAE/equiv. company from which I invoice clients. EMI to receive funds.
2. Personal residency in Cyprus, under 60 day nondom
3. Cyprus shell company for appearances. Maybe run €19’500 through it so it looks alive (take this as salary, tax free). Assume I need to do this to get the residency (showing substance).
4. Distribute BVI company dividends to myself, pay the ~2.5% GESY tax. Personal bank somewhere stable like Germany/Switzerland, so would receive payments there rather than a local Cyprus bank.

PWC notes that CFC rules don’t apply to non resident companies whose active revenue is under €750k. So I shouldn’t get taxed on my BVI income by Cyprus. Cyprus - Corporate - Group taxation

Overall looking like a 2.5% ‘tax’ rate on combined personal and corporate income, plus accounting expenses in Cyprus and BVI (<€10k per year?).

Can anyone see any holes in this plan? Have I missed something? Seems too good to be true.

We have worked with similar structures before, working perfectly fine.

 

[TheAtlas]

@PaulKruger @CyprusLaw Thank you both for your input! Paul I have not spoken to PWC yet, just going off of their website, last updated in July. I linked it in the post, you just have to scroll down about half way.

CyprusLaw, am I about right with the accountancy costs do you think? <€10k for both BVI an Cyprus together? And do you offer this setup as a service?

 

[CyprusLaw]

@PaulKruger @CyprusLaw Thank you both for your input! Paul I have not spoken to PWC yet, just going off of their website, last updated in July. I linked it in the post, you just have to scroll down about half way.

CyprusLaw, am I about right with the accountancy costs do you think? <€10k for both BVI an Cyprus together? And do you offer this setup as a service?

The costs would potentially be lower - depending on the volume of transactions - which at least for the Cyprus company I understand it will be low. Happy to discuss further in PM

 

[FreedomSearcher]

Would this structure still work and be legal if I switched the BVI company with a US LLC (in Wyoming)?

 

[AndyAresa]

Hello everyone, regarding step 1 in the plan in the opening message, which EMI would you recommend for opening a business account for a BVI company?

 

[AndyAresa]

Another comment regarding the setup outlined in the first message. Does the BVI company have any employees or contractors to perform its activities? Or is the shareholder and director the only one acting on behalf of the BVI company? In the latter case I wonder if there is a risk that Cyprus authorities may in fact consider the BVI company as a having PE in Cyprus and consequently assessing taxes on the profits of the BVI company. Has anyone had any experience with Cyprus tax authorities doing so?

 

[dziter]

We have worked with similar structures before, working perfectly fine.

Any favorite jurisdiction in mind for a tax-resident in Cyprus?

In the latter case I wonder if there is a risk that Cyprus authorities may in fact consider the BVI company as a having PE in Cyprus and consequently assessing taxes on the profits of the BVI company.

I am wondering exactly the same. I think Cyprus is not enforcing this law (from what I heard from many expats living in Cyprus). However, by the books, it’s probably essential to have « real » substance in BVI.
@CyprusLaw : What can you say about updated CFC/PE rules in Cyprus from your experience please?

 

[boomy]

now after all this time, you got comments on your setup. Some of the comments look valid, how would you say it is working for you now?

 

[Johnfodden]

Also interested to know

 

[boomy]

Also interested to know

What to know ?

 

[Johnfodden]

How it’s working for him