Taxes for Cyprus IBC web business (Greek resident)

[FriendlyFace]

Hello everybody!

New forum member here - hope you're well...

I'm a resident of Greece (EU country). I want to create an online business that sells instantly-downloadable information products and software, both as a merchant and as an affiliate. Customers will be mainly from USA, and then from countries like Canada, UK, France, Australia, New Zealand and India.

Obviously, I'm looking to keep as much money as possible from the revenue generated (aren't we all)?

I'm considering creating a Cyprus IBC.

My questions are:

1) Would that company pay VAT and corporate taxes? Every web page I have read says something different. Some say VAT is zero, some say I need to collect VAT from EU customers. Some say corporate tax would be 0%, others say 12.5%.

2) What would be the best way to withdraw funds from that? Dividends? The most recent info I have read on the subject says that Greeks pay 25% tax on dividends received from a Cyprus company (page 36 of this document - or page "20" of the pdf file).

However the 12.5% corporate tax that would have ALREADY been paid gets detracted from that. So, I would end up paying 12.5% on the dividends as well.

25% total tax sounds kinda steep...

What do you think?

Thanks in advance!

 

[negon]

1) Would that company pay VAT and corporate taxes? Every web page I have read says something different. Some say VAT is zero, some say I need to collect VAT from EU customers. Some say corporate tax would be 0%, others say 12.5%.

you have to pay corporate tax if the company is registered as Cyprus resident, in that case the tax you have to pay is 12,5% so you will have to register the company for VAT if you sell anything online, that's the rules. If you apply for a non resident company to be setup the tax rate is 0% and you can't register the company for VAT.

I have yet to see anyone to check a company that is registered non resident and which don't charge VAT to their customers that got shut down or had troubles, it's simply not seen yet.

 

[FriendlyFace]

Thanks for the reply...

So:

1) If I create a RESIDENT Cyprus IBC which has, say, $150K in revenue and $50K in expenses per year, the numbers would look like:

Revenue: $150,000

Expenses: $50,000

Profit: $100,000

VAT: $150,000 X 19% = $28,500

Corporate Tax: [(Profit - VAT) x 12.5%] = [($100,000 - $28,500) x 12.5%] = $71,500 x 12.5% = $8,937

Is that correct?

2) If I create a NON-RESIDENT Cyprus IBC which has, say, $150K in revenue and $50K in expenses per year, the numbers would look like:

Revenue: $150,000

Expenses: $50,000

Profit: $100,000

VAT: $0

Corporate Tax: $0

Is that correct?

If that's the case, why would people bother with a resident company at all?

What about when it would come the time to withdraw money from the company, in each one of the two scenarios above?

Thanks in advance, and sorry for the noob questions...

 

[Suzy Emerald]

Factor in that VAT is to be charged to customers when applicable and paid to the government subsequently. If you go offshore factor in the domicile of the bank and AEOI / CRS + residency of UBO.