Cyprus new tax rule. still worth to setup company there?

[Expatgenie]

So if I live in a country e.g in south east asia like Cambodia, Thailand etc where I am NOT tax residenc and I setup a Company in Cyprus, doing e.g affiliate marketing then I am consider tax residence in Cypyrs if I like or not. So what will the tax % be? I mean after all expenses I have to pay corp profite tax 12.5% if I have the number correct then what more tax will I need to pay? And also would there be any advantages to be tax residence?

Last edited: Jan 5, 2023

 

[Jerry1911]

Is this new tax rule in the room with us right now?

Seriously though, post a link or something, not sure anyone here understands what you mean.

 

[JohnnyDoe]

He refers to new residence rules in force since Jan 1. It can be good or bad depending on how you use it, I see some favorable opportunities but it depends on your particular overall setup. @CyprusLawyer101 can certainly help.

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[Expatgenie]

Sure here is link https://cyprus-mail.com/2022/03/02/assessing-the-new-laws-to-fight-tax-avoidance/ and its also mention in some post in the forum

 

[CyprusLawyer101]

Expatgenie said:
So if I live in a country e.g in south east asia like Cambodia, Thailand etc where I am NOT tax residenc and I setup a Company in Cyprus, doing e.g affiliate marketing then I am consider tax residence in Cypyrs if I like or not. So what will the tax % be? I mean after all expenses I have to pay corp profite tax 12.5% if I have the number correct then what more tax will I need to pay? And also would there be any advantages to be tax residence?
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Hello - setting a company in Cyprus does not in any way make you a tax resident in Cyprus. The company should be considered tax resident itself by virtue of its registration under the new rules unless you can demonstrate that the management and control is carried out from elsewhere in which case corporate tax in Cyprus would be reduced to 0% (not clear how this would be demonstrated as of yet).
As a tax resident COMPANY it will be subject to 12.5% corporate tax and any dividends distributed to you will be subject to 0% withwholidng tax. If you would like to discuss your options let me know and I can PM you.

 

[JohnLocke]

CyprusLawyer101 said:
Hello - setting a company in Cyprus does not in any way make you a tax resident in Cyprus. The company should be considered tax resident itself by virtue of its registration under the new rules unless you can demonstrate that the management and control is carried out from elsewhere in which case corporate tax in Cyprus would be reduced to 0% (not clear how this would be demonstrated as of yet).
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That means it is all like it has been in the past? We never paid any tax in Cyprus with the foreign non resident company in Cyprus back in time.

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[Marzio]

James Spader said:
We never paid any tax in Cyprus with the foreign non resident company in Cyprus back in time.
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That's not the case anymore, a Cyprus non resident company has to be resident somewhere else or it will be resident in Cyprus.

 

[JohnLocke]

Marzio said:
That's not the case anymore, a Cyprus non resident company has to be resident somewhere else or it will be resident in Cyprus.
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Okay that's a slight change, I wasn't aware of. But you could register it in Romania or Serbian and possibly avoid taxes..?

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[CyprusLawyer101]

James Spader said:
That means it is all like it has been in the past? We never paid any tax in Cyprus with the foreign non resident company in Cyprus back in time.
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No! It is not as it was in the past.
The new legislation being introduced would render a Cyprus company being tax resident by virtue of its incorporation unless demonstrated otherwise.

 

[JohnLocke]

CyprusLawyer101 said:
The new legislation being introduced would render a Cyprus company being tax resident by virtue of its incorporation unless demonstrated otherwise.
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clear, but that would mean that if you rent a office say in Dubai or some other place where it may be possible to avoid corporate tax and register the company there, you can avoid the tax in Cyprus?

On the other hand, 12,5% corporate tax is one of the lowest in Europe, if it is possible to deduct company expenses from the tax as you can do in most EU countries, you can get it very low and it may be not worth to argue about.

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[CyprusLawyer101]

James Spader said:
clear, but that would mean that if you rent a office say in Dubai or some other place where it may be possible to avoid corporate tax and register the company there, you can avoid the tax in Cyprus?

On the other hand, 12,5% corporate tax is one of the lowest in Europe, if it is possible to deduct company expenses from the tax as you can do in most EU countries, you can get it very low and it may be not worth to argue about.
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The actual way ( if available) to structure around this is not yet identifiable since we have not seen the Tax office's treatment in practice. Therefore, what you are proposing may or may not work.

 

[Expatgenie]

CyprusLawyer101 said:
Hello - setting a company in Cyprus does not in any way make you a tax resident in Cyprus. The company should be considered tax resident itself by virtue of its registration under the new rules unless you can demonstrate that the management and control is carried out from elsewhere in which case corporate tax in Cyprus would be reduced to 0% (not clear how this would be demonstrated as of yet).
As a tax resident COMPANY it will be subject to 12.5% corporate tax and any dividends distributed to you will be subject to 0% withwholidng tax. If you would like to discuss your options let me know and I can PM you.
Click to expand...

Yes please pm and we can discuss.