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Case Study - Discussion about Company Set up, Expenses, Non Dom, Fees etc Share Written By CYAUSE LTD Tags 12.5%company taxcompany taxationcorporation taxCypruscyprus companycyprus company invoicingcyprus company taxcyprus eu relocationCyprus limited companiesdirectorshipsdividend taxdividend taxationexpenses cyprus companyinvoiceslimited company expenseslimited company invoicesmmanagement and controlnon domrelocate cyprusrelocate euservice company formationtaxtaxation 2024-03-19 Real Client Enquiries CYAUSE Response - in red colour Company structure The new CY company will be invoicing the UK and US businesses for IT services, excluding VAT The CY company will not be VAT registered unless it receives EU invoices for goods and services in which case we will need become VAT Register and apply reverse change The new CY company will be issuing dividends to shareholders/directors and will not have any employees during this tax year - ok The dividend issued to shareholders will be tax-free in Cyprus, while shareholders will be obliged to pay taxes in the country of residence - correct Since both directors/shareholders are EU citizens, we can manage the company outright (no need for nominee director service) - Wrong - If you do not use Nominee then the Company will not be considered as managed and controlled from Cyprus thus be taxed at 12.5%. We will require the registered office & secretarial services - OK We will invoice you accordingly. The application for non-dom status for directors/shareholders is put off until 2023 That is until we purchase the residential property in CY or rent something for the “long term.” - No problem, still no tax on dividends as you are not Cyprus Tax Residents Expenses We will be able to expense 1/3 of the running expenses of the residential property owned in CY (once purchased) - Yes We will be able to expense the travel costs in and out of CY The flights, car rental, short-term rental, meals, etc., regardless of the number of trips per tax year - Yes We will be able to expense 1/3 of the running expenses of the residential property we work from in the UK (once CY property is purchased, this will be discontinued) Until then, the expenses will include electricity, gas, property tax (rates), mortgage payments (capital and interest), and internet; how to log those expenses? - As long as it makes sense and not too excessive Mobile phone contract in the name of the director; until migrated to a company name -ok common issue Cover some entertainment expenses, like a dinner, short trip, or a company day out… up to 1% of revenue - ok Cover pre-incorporation expenses such as laptops or electronics necessary to perform business activities It is understood that fixed assets will not bring down the tax but would still be regarded as the director’s expense Yes Would you please share some more info regarding your accounting software so I can get familiar with it? How will I track expenses, declare dividends, etc? We will be doing everything and if you want we can be sending you the detailed ledgers which show the transactions or the income statement and balance sheet items. We can chat about this as well. The software we use you can not have access to it but you can request all activity etc at your convinience. =================================== CYAUSE Response Good morning XXXX, Company Corporation Tax is always 12.5%. Dividend Tax - as explained does not apply if you are a non dom or you are not living in Cyprus Nominee Services (directors etc) All UBOs (like yourself) who choose not to live in Cyprus must appoint local directors so that the Management and Control is performed in Cyprus and thus the 12.5% can not be challenged by overseas authorities. So the answer to your question is essentially that you need the nominee services to safeguard the 12.5%. This is a standardised procedure for all Cyprus companies. Kyriakos Tramountanellis | BSc, FCA, Director