Dividends from Cyprus to BVI Companies: Withholding Tax and Tax Ruling Considerations

(real client enquiry)

Dear Client,

I hope this email finds you well.

Following your email conversation with my colleague, we would like to inform you as per the below table with our information.

If you have any additional questions, please do not hesitate to contact us.

Kind regards,

Dear CYAUSE,

Thanks for clear answers, we will return later after discussion with client.

Dear Client,

Your email is well noted.

We will await your reply!!

Kind regards,

Dear CYAUSE,

1. Could you please clarify is it possible if we start registering branches now (and finish it, let’s say to October) and receive tax ID just after that, receive tax residency certificates register tax ID from 01/01/2026 (for full 2026 year)?

2. Also BVI companies currently has substance reporting in BVI for period till 30 June 2026. Whether there any obstacles in Cyprus if BVI company will declare in BVI substance reporting that it has tax residency in BVI at the date of this reporting (mid year)?

3. Is it possible to receive 10% discount on your service fee?

Thank you!

Dear Client,

I hope this email finds you well.

Following your previous email, we would like to inform you accordingly as per below.#

1. Point 1 -> Of course, if we proceed with the incorporation of the branches now, by the end of the year they will be up and running along with their TIC numbers. Kindly note that summer holidays are approaching and most governmental departments and authorities will be on leave and there might be a delay in the process during August.

2. Point 2 -> Allow me to revert back on this point.

3. Point 3 -> Allow me to revert back on this point as well.

Kind regards,

Dear CYAUSE,

Thanks for your comments. This client today sent us urgent tax question related to the same BVI companies.

Tomorrow he would like to get short comment with understanding whether WHT shall be applied in current structure or not.

Please see more detailed information below.

Can you please have a short call with us tomorrow for short discussing this case?

The client has company registered in Cyprus. This company shall distribute dividends to 2 BVI companies.

The client would like to understand whether in current structure (without tax redomiciliation of BVI companies to Cyprus) Cyprus company shall withheld WHT from dividends to be paid to BVI companies (as from payment to low-tax jurisdiction).

Here is the summary table on the participation in CypCo.

Individual 1 and individual 2 are brothers (relatives). Individual 2 is tax resident of Cyprus.

*Trust structure

Irrevocable discretionary trust, registered in ***

Settlor is Individual 3 - she is a mother of Ind1 and Ind 2

Trustee is corporate body, independent. Providing trustee services as part of its ordinary professional activity.

Beneficiaries:

Individual 1, Individual 4 (daughter of Ind 1) and

Individual 5 (son of Ind1), Individual 6 (son of Ind 2).

No distribution was made so far.

Protector – 3^rd party, not related to Ind 1 and Ind 2.

Articles of association of BVICo2 permits disproportionate distribution of dividends under the resolution of director (independent).

There might be the situation where BVICo2 distributes the 50% of dividends to BVICo1 and 50% of dividends to Ind2 and nothing to trust.

All three shareholders of BVICo2 have equal rights, however in this separate case it could be decided by the director not to distribute dividends to trust, but to two remaining shareholders.

Taking all the above mentioned into consideration will the 5% WHT for dividends to be paid to BVI companies or there is no 50% associated company with Cyprus company.

Dear Client,

I hope this email finds you well.

Following a review on the information provided and the structure, we would like to inform you that there is no withholding tax in Cyprus to the BVI entities.

Kind regards,

Dear CYAUSE,

Thanks a lot for the answer.

The client is asking whether it is possible to receive tax ruling in Cyprus with respect to this issue (application or not application of WHT with respect to dividends according to client’s structure).

If it’s possible, please indicate:

1. Price of your service for preparing request on ruling (please indicate whether you will include in this work reviewing corporate documents of BVOCos and trust for the purposes of ruling request)

2. Term of service (preparation of request)

3. Statutory and actual term of providing ruling by the tax authority

Please answer today, if possible (short answers are enough).

Dear Client,

I hope this email finds you well.

Following our previous email correspondence, we would like to inform you about your initial two points.

1. Point 2 - No, there are not any obstacles.

2. Point 3 - We can do a 500-800 euros discount once all the invoices are issued and realised to the client. If it's approved.

Regarding your today's email, please find below our response:

The client is asking whether it is possible to receive tax ruling in Cyprus with respect to this issue (application or not application of WHT with respect to dividends according to client’s structure). - Yes, we will be able to receive a tax ruling on this matter while using the client's registered CY company. Our fee for the tax ruling is 4,000 euros + VAT (from 6,000 euros + VAT) + any disbursements.

If it’s possible, please indicate:

1. Price of your service for preparing request on ruling (please indicate whether you will include in this work reviewing corporate documents of BVOCos and trust for the purposes of ruling request) - Fee as mentioned above.

2. Term of service (preparation of request) - We can prepare on terms of service/service agreement if the fees are approved from the client's side.

3. Statutory and actual term of providing ruling by the tax authority - The application and supporting evidence will be gathered and submitted to the tax authority who will then review and issue this ruling.

Kind regards,