Moving to Cyprus – Is the HK offshore structure still viable? What are the real risks?

[bilguun]

Hi everyone,

I'm thinking about moving to Cyprus because I want to live in a sunny place by the beach. I run a 7-figure online business and I'm trying to understand the best way to structure things for taxes while living there.



I’ve heard that some people use a Hong Kong company with a nominee director, claim it as offshore, and pay 0% on dividends (just the 2.65% GHS contribution up to €180k). Is this still a viable and safe option?



Do the Cypriot tax authorities actually enforce the management and control test? Or do they generally not investigate where the company is really controlled from?



Would it be better to just set up a Cyprus company and pay the 12.5% corporate tax? Or maybe do both , have a clean Cyprus company and send part of the billing through an offshore one?



Also, if Cyprus considers that the offshore company is actually tax resident in Cyprus because I live there and manage it from there , what exactly are the fines and criminal consequences, if any? I know I'd have to pay back taxes, but I’d like to understand what kind of penalties I could face (percentages, amounts, or legal risks).



If anyone here is in a similar situation or knows more about this, I’d love to hear your thoughts. Thanks!

 

[alley]

jiejq said:






Would it be better to just set up a Cyprus company and pay the 12.5% corporate tax? Or maybe do both , have a clean Cyprus company and send part of the billing through an offshore one?

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Personally, I would prefer to set up a local company in Cyprus and just pay the required tax, simply to have peace of mind and something to show, if needed. You never know when you might want to finance a house, a car, or move to another country where you’ll need to document your income from the past couple of years.



That way, you can still have a Hong Kong company or any other structure alongside it, giving you a bit more flexibility in how you route income through the Cyprus entity.

 

[Sols]

jiejq said:






I’ve heard that some people use a Hong Kong company with a nominee director, claim it as offshore, and pay 0% on dividends (just the 2.65% GHS contribution up to €180k). Is this still a viable and safe option?

Click to expand...

Seems to be, but no one can guarantee it'll stay like that.











jiejq said:






Do the Cypriot tax authorities actually enforce the management and control test? Or do they generally not investigate where the company is really controlled from?

Click to expand...

They generally do not, especially if you're a foreigner that don't cause any problems.











jiejq said:






Would it be better to just set up a Cyprus company and pay the 12.5% corporate tax? Or maybe do both , have a clean Cyprus company and send part of the billing through an offshore one?

Click to expand...

Up to you.











jiejq said:






Also, if Cyprus considers that the offshore company is actually tax resident in Cyprus because I live there and manage it from there , what exactly are the fines and criminal consequences, if any? I know I'd have to pay back taxes, but I’d like to understand what kind of penalties I could face (percentages, amounts, or legal risks).

Click to expand...

I'm unsure if it's ever been attempted... However, based on what happens in other jurisdictions with similar laws (and which actually enforce such laws), the fines would depend on the exact circumstances. There's a difference between a simple mistake to actively taking steps to avoid paying taxes. In Cyprus, my guess is you'd be getting hit with the taxes owed plus late tax payment fines. The fines are modest.

 

[CyprusLawyer101]

jiejq said:






Hi everyone,

I'm thinking about moving to Cyprus because I want to live in a sunny place by the beach. I run a 7-figure online business and I'm trying to understand the best way to structure things for taxes while living there.



I’ve heard that some people use a Hong Kong company with a nominee director, claim it as offshore, and pay 0% on dividends (just the 2.65% GHS contribution up to €180k). Is this still a viable and safe option?



Do the Cypriot tax authorities actually enforce the management and control test? Or do they generally not investigate where the company is really controlled from?



Would it be better to just set up a Cyprus company and pay the 12.5% corporate tax? Or maybe do both , have a clean Cyprus company and send part of the billing through an offshore one?



Also, if Cyprus considers that the offshore company is actually tax resident in Cyprus because I live there and manage it from there , what exactly are the fines and criminal consequences, if any? I know I'd have to pay back taxes, but I’d like to understand what kind of penalties I could face (percentages, amounts, or legal risks).



If anyone here is in a similar situation or knows more about this, I’d love to hear your thoughts. Thanks!

Click to expand...

Hello

The various options you are describing are generally doable however carry with them elements of tax risk uncertainty. A more sound approach would have been to look at each and every part of the operation and seek to create a well defined operational structure which adheres to transfer pricing principles. This would mean that you could still end up with a HK company as your primary operating company but ensure that where certain operstional parts are handled from elsewhere, for example Cyprus, that the Cypriot tax authorities get their fair share of taxes. This way you do not carry the risk of uncertaintly where any tax authority would wake up one day , change its tax policies and start enforcing taxing rights. The fact that you already have the set up in place is good as you generally satisfy motive tests and potential claims of an artificial set up . At first sight it appears that we are able to advice on a sucessful transition. Kindly let me know if you would like to discuss it further.

 

[mohamad mahjoub]

jiejq said:






Hi everyone,

I'm thinking about moving to Cyprus because I want to live in a sunny place by the beach. I run a 7-figure online business and I'm trying to understand the best way to structure things for taxes while living there.



I’ve heard that some people use a Hong Kong company with a nominee director, claim it as offshore, and pay 0% on dividends (just the 2.65% GHS contribution up to €180k). Is this still a viable and safe option?



Do the Cypriot tax authorities actually enforce the management and control test? Or do they generally not investigate where the company is really controlled from?



Would it be better to just set up a Cyprus company and pay the 12.5% corporate tax? Or maybe do both , have a clean Cyprus company and send part of the billing through an offshore one?



Also, if Cyprus considers that the offshore company is actually tax resident in Cyprus because I live there and manage it from there , what exactly are the fines and criminal consequences, if any? I know I'd have to pay back taxes, but I’d like to understand what kind of penalties I could face (percentages, amounts, or legal risks).



If anyone here is in a similar situation or knows more about this, I’d love to hear your thoughts. Thanks!

Click to expand...



im working with Hong Kong Trust , yet still Hong Kong offshore GPTA the best structure to follow . with features and dividins , yet uncompeatable . anymore info ?