Cyprus company 0% tax on foreign income question?
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Thanks for your answer. I thought this isn't so much time that things change this significantly...
My tax accountant set up a Belize firm with a nominee director for me and said this will work. I was skeptical from the beginning.
So as we are in 2021, it seems I should just liquidate the company because it makes no sense?
Would appreciate your opinion.
My tax accountant set up a Belize firm with a nominee director for me and said this will work. I was skeptical from the beginning.
So as we are in 2021, it seems I should just liquidate the company because it makes no sense?
Would appreciate your opinion.
Hi there,
A Cyprus︀ non tax resident company is taxed at 0% corporate tax.
The type of company is︁ the same as a normal limited company, you just have to demonstrate "management and control"︂ outside Cyprus by having the Directors of the company based outside Cyprus.
If you appoint︃ yourself as director, being a UK resident, Cyprus will not tax you but UK has︄ a right to tax you instead on the same basis ( place of management and︅ control).
You could appoint a nominee director which is based in a country which does︆ not have the management and control test or is subject to 0% tax. This may︇ not fully eradicate the taxing rights of the UK if they can prove management and︈ control in the UK, or the creation of a permanent establishment ( taxable presence )︉ but makes a challengeable and rather solid structure.
Further please note that you will still︊ have to assess VAT considerations in the country from where goods are shipped and in︋ the country where goods are shipped to. Similar VAT implications should still be examined if︌ the company is providing services.
Hope this helps.
Good Luck
Lawyer101
A Cyprus︀ non tax resident company is taxed at 0% corporate tax.
The type of company is︁ the same as a normal limited company, you just have to demonstrate "management and control"︂ outside Cyprus by having the Directors of the company based outside Cyprus.
If you appoint︃ yourself as director, being a UK resident, Cyprus will not tax you but UK has︄ a right to tax you instead on the same basis ( place of management and︅ control).
You could appoint a nominee director which is based in a country which does︆ not have the management and control test or is subject to 0% tax. This may︇ not fully eradicate the taxing rights of the UK if they can prove management and︈ control in the UK, or the creation of a permanent establishment ( taxable presence )︉ but makes a challengeable and rather solid structure.
Further please note that you will still︊ have to assess VAT considerations in the country from where goods are shipped and in︋ the country where goods are shipped to. Similar VAT implications should still be examined if︌ the company is providing services.
Hope this helps.
Good Luck
Lawyer101
I agree with Sols on this one. There is no real point in setting up a Cyprus non resident company, noting that you may not be taxed in Cyprus but you would be taxed at the jurisdiction where the management and control of the company lies. Also this kind of structure could lead to issues with banking services.
Hi - yes you do get a Tax Identification number upon incorporation and you still have to submit a tax return, where you explicitly state the tax status of the company as non resident for tax purposes. You may need a VAT registration number in the jurisdiction you sell to or buy from depending on the actual︀ operation you are setting up and meeting the necessary thresholds, but such requirement would have︁ been the case anyways.
The riight consultant would get you a bank account.
The riight consultant would get you a bank account.
I wont argue with what you are saying, but this option may be one of the only remaining and viable alternatives which reminds of old days of the usages of traditional offshore jurisdictions like the BVI/Belize/Seychelles.
With reference to establishing management and︀ control, let me just say that not all jurisdictions apply the management and control tax︁ residency test while others apply taxation on territoriality or have 0% tax.
Banking services would︂ sometimes pose an issue but if you look to carefully satisfy the banks' requirements as︃ they reflect your company's operation opening an account for such a company is rather doable.︄
With reference to establishing management and︀ control, let me just say that not all jurisdictions apply the management and control tax︁ residency test while others apply taxation on territoriality or have 0% tax.
Banking services would︂ sometimes pose an issue but if you look to carefully satisfy the banks' requirements as︃ they reflect your company's operation opening an account for such a company is rather doable.︄
Hi all, I have a similar question to OP but a slightly different scenario so I will ask here instead of creating a new thread.
I have been reading up on the subject of being a resident in Cyprus with a offshore company in a low tax country, mainly looking at Malta due to its incredibly low company tax (5%). I have read some articles that apparently mention this as a possibility, but also that Malta has been "cracking down" on these type of offshore companies. The basic premise of these articles I guess you could say, is that because you only pay the 5%︀ corporate tax in Malta, then get say private health insurance when living in Cyprus for︁ sub 10% "tax" expenses if that makes any sense (it does sound a bit too︂ good to be true).
I do imagine some of the info I have found is︃ outdated judging by how fast things can change..
It would be great if someone could︄ just give me a brief rundown of the information that could be relevant to me.︅ I have read this thread quite thoroughly but I don't quite understand everything.
Sorry if︆ I seem ignorant, I have almost no prior experience with doing things like this as︇ this is my first start up experience.
I have been reading up on the subject of being a resident in Cyprus with a offshore company in a low tax country, mainly looking at Malta due to its incredibly low company tax (5%). I have read some articles that apparently mention this as a possibility, but also that Malta has been "cracking down" on these type of offshore companies. The basic premise of these articles I guess you could say, is that because you only pay the 5%︀ corporate tax in Malta, then get say private health insurance when living in Cyprus for︁ sub 10% "tax" expenses if that makes any sense (it does sound a bit too︂ good to be true).
I do imagine some of the info I have found is︃ outdated judging by how fast things can change..
It would be great if someone could︄ just give me a brief rundown of the information that could be relevant to me.︅ I have read this thread quite thoroughly but I don't quite understand everything.
Sorry if︆ I seem ignorant, I have almost no prior experience with doing things like this as︇ this is my first start up experience.
Hi, I assume︈ that at the moment you have not relocated to Cyprus yet? In Malta you basically︉ pay 35% corporate tax and upon receipt of a dividend, shareholders of a Malta company︊ may claim a refund of around 6/7 of the tax paid. This is how the︋ number ends up at 5%.
You would however need to pay administration fees for the︌ company as you would need to show management and control in Malta. Having in mind︍ that you want to live in Cyprus, have you considered setting up a company only︎ in Cyprus? You would have a non dom status and any dividend payments would be️ tax exempt and corporate tax in Cyprus is 12.5%. It is worth considering, especially having in mind that the fees for the administration of the company in Malta (directors, sec, address etc) are generally quite higher than in Cyprus.
You would however need to pay administration fees for the︌ company as you would need to show management and control in Malta. Having in mind︍ that you want to live in Cyprus, have you considered setting up a company only︎ in Cyprus? You would have a non dom status and any dividend payments would be️ tax exempt and corporate tax in Cyprus is 12.5%. It is worth considering, especially having in mind that the fees for the administration of the company in Malta (directors, sec, address etc) are generally quite higher than in Cyprus.
I tend to agree with above; you might end up paying a little bit more but you will enjoy a solid operating structure. and if you end up increasing your sales and profits substantially, you can then start thinking more complicated tax structures.
We have not relocated yet as at the moment we are still trying︃ to figure out the most tax effective course of action. Regarding Cyprus-Malta business connection, fair︄ enough, I somewhat expected something like this to pop up.
When it comes to setting︅ up a business in Cyprus as non dom, it is definitely something to consider. Are︆ there any specific rules when it comes to paying out dividends? For instance, if I︇ were to purely pay me and my business partner in dividends, only having to pay︈ corporate tax of 12.5%, wouldn't this be red flagged by the government? Would say paying︉ each other a minimum wage salary and then in addition pay each other dividends work?︊ Would paying each other minimum salary mean we would benefit from things like health insurance︋ and other benefits we get by paying income tax on our salary, or would private︌ health insurance be something to look into?
Cheers.
When it comes to setting︅ up a business in Cyprus as non dom, it is definitely something to consider. Are︆ there any specific rules when it comes to paying out dividends? For instance, if I︇ were to purely pay me and my business partner in dividends, only having to pay︈ corporate tax of 12.5%, wouldn't this be red flagged by the government? Would say paying︉ each other a minimum wage salary and then in addition pay each other dividends work?︊ Would paying each other minimum salary mean we would benefit from things like health insurance︋ and other benefits we get by paying income tax on our salary, or would private︌ health insurance be something to look into?
Cheers.
No it would not︄ be red-flagged as it is something that you are allowed to do, you would be︅ compliant with the relevant laws. With respect to structure I suggest you discuss this with︆ a Cyprus legal advisor and a financial advisor, so that you get advised as to︇ the best structure and also be presented with the relevant fees for this.
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