Cyprus VS Bulgaria VS other - where to incorporate in 2019?

@800008 you may do a Google search on this forum to find the endless threads about US corps and the many up's and down's

I would go with a Cyprus company and bank account at any time there. It's stable and many have already setup their company there and happy for the last years. This is for me an indication that it works out well for people and I don't need to worry about anything new to test.

That said, I'm happy to try new things but just not for my core business strategy.

darkster said:

I would go with a Cyprus company and bank account at any time there. It's stable and many have already setup their company there and happy for the last years. This is for me an indication that it works out well for people and I don't need to worry about anything new to test.

That said, I'm happy to try new things but just not for my core business strategy.

How long ago did you set this up? I tried last year and this was a nightmare, and it didnt work

OffshoreSolutions said:

I tried last year and this was a nightmare

why ?

GrumpyMess said:

why ?

The banks would not open the bank account for the company since the company had no substance nor business coming from Cyprus.

So if you did this before 2018 it might have been possible. According to my incorporator agent the rules changed.

kevino said:

Which country you suggest to have a bank account with an incorporation in Gibraltar?

Greeting Kevino, You need to inspect the list of countries that are Blacklisted by the European Commission in order to determine if a country is shady or not. However, you may have a difficult order as most of the countries that engage in offshore procedure are on the list. All you have to do is go to Google and search: "List of countries blacklisted by the European Commission and you will be able to inspect and choose. However, you may have some difficulties determining which is the best country for your business.

OffshoreSolutions said:

The banks would not open the bank account for the company since the company had no substance nor business coming from Cyprus.

So if you did this before 2018 it might have been possible. According to my incorporator agent the rules changed.

bulls**t and

OffshoreSolutions said:

How long ago did you set this up? I tried last year and this was a nightmare, and it didnt work

bulls**t

The bank will not open a bank account for a Cyprus company if the owner is full of bulls**t - Nor will they open an account if the agent is an amateur and don't know how to setup the company and HOW TO REQUEST the right information from the client.

It is less than 1 month ago since I setup the last Cyprus company with Cyprus bank account. No problems at all except that it took a very long time to get the thing setup.

darkster said:

bulls**t and

bulls**t

The bank will not open a bank account for a Cyprus company if the owner is full of bulls**t - Nor will they open an account if the agent is an amateur and don't know how to setup the company and HOW TO REQUEST the right information from the client.

It is less than 1 month ago since I setup the last Cyprus company with Cyprus bank account. No problems at all except that it took a very long time to get the thing setup.

Well, can you help me then? do you offer this service, or can you refer me to someone?

Dubsize said:

How is banking system in Romania ?

Banking in Romania isn't bad and not amazing, it's comparable to other eastern European countries meaning if you stick to large international banks you're not doing too bad (I like a lot of them much less than say the major Asian banks in terms of safety but they aren't super risky like the small regional ones often are).

kevino said:

Exactly. One shareholder is in Indonesia, one shareholder is in Taiwan. In both case we don't have customers on those countries. And freelancers/workers are somewhere else in the world (India, Argentina, etc). If we incorporate in Indonesia, taxman will tell Taiwan's shareholder it's not good, if we incorporate in Taiwan, taxman will tell Indonesia's shareholder it's not good. So at end there is no logic reason to incorporate in one of this country legally so I think we can incorporate everywhere we want because there is no trick, we are really a global company with interest everywhere and nowhere specific in same time. So I guess it's more an advantage than an inconvenient.
Also shareholders will be paid by dividends and not salary, so I think legally you have the right to live in country A and get dividends from country B because you are shareholder as long you report them to taxman. And nobody can know if we work everyday for this company or not. What makes the difference between an inactive shareholder and an active shareholder who work 50 hours by week for the company?

Ok so some technicalities here.

They actually can investigate and in that investigation discover you're running the company from those countries (in practice it's highly unlikely that will happen in Indonesia because they are so disorganized and chaotic, much more likely it could happen in Taiwan).

You are correct that it's legal to have a company somewhere else and receive dividends then pay tax on those dividends. Where you run into the problem is the company could be taxed by Taiwan on the basis that you are a PE there. It's not super likely but certainly possible and they'd definitely have reason to look at it because you're a resident there and have authority over the bank account.

kevino said:

Example of question : can we get a CLEAN company with a CLEAN bank account without TRICKS in Cyprus if the company have no substance nor business coming from Cyprus? By trick I mean provide fake document or do something which is potentially harmful for the company in long term. In other words can we do things in clean way (legal) to get a company and bank account in Cyprus if we don't run business there physically (no shareholder there, no customer there, no employee there)? Simple answer YES / NO is requested.

It's still possible but fairly tough and not reliable long term, I'd advise against anything in that direction.

<<snippet>> said:

It's still possible but fairly tough and not reliable long term, I'd advise against anything in that direction.

You are telling that like there are other reliable options

GrumpyMess said:

You are telling that like there are other reliable options

More reliable than Cyprus? Definitely.

Now, I might be slightly biased. I'm not a huge Cyprus fan myself I've almost always found Gibraltar served myself and our clients better than Cyprus (Cyprus was mostly interesting because of how corrupt it is and the things you could get done with connections that shouldn't have been options). But the banking system failure in 2013 made me not excited to keep money there. Then there was FBME, which further reinforced this. Now, there's an increasing push for substance (which in my view people should be leaning into not running from as it makes structures way better long term). It all depends what you're looking for though. Cyprus is definitely one of the easier places in the EEA to end up with zero tax at the country of registration level.

<<snippet>> said:

It's still possible but fairly tough and not reliable long term, I'd advise against anything in that direction.

you advise against that, because you are are not a FAN of Cyprus ?

800008 said:

why not use US LLC ,

no federal tax for non-us source income for nonresident partners .

fixed state tax for states such as DE and NV , etc.

you may have a look on stripe atlas solution.

Stripe will report income to irs on 1099k. Anyone with experience in if they will investigate or request an explanation of why you don't file an income tax return when you have income?

<<snippet>> said:

I'm not a huge Cyprus fan myself I've almost always found Gibraltar served myself and our clients better than Cyprus (Cyprus was mostly interesting because of how corrupt it is and the things you could get done with connections that shouldn't have been options). But the banking system failure in 2013 made me not excited to keep money there. Then there was FBME, which further reinforced this. Now, there's an increasing push for substance (which in my view people should be leaning into not running from as it makes structures way better long term). It all depends what you're looking for though.

Why Gibraltar served better? The only benefit of Gibraltar I see is absence of necessity to submit audited accounts. Also in Gibraltar you can't use the local banking so no more benefits over Cyprus.

Admin said:

you advise against that, because you are are not a FAN of Cyprus ?

Did you read my description about the reasons I'm not a fan? As mentioned I've rarely found cases where Cyprus is the best option there's almost always been better options. As mentioned the most direct comparison I've typically made when designing structures has been Gibraltar. If I compare the two they both are EEA countries but Gibraltar isn't part of VAT. They both can be zero tax but I can usually get away without audited financials annually, while in Cyprus it's a requirement. Gibraltar I get to deal with english when it comes to laws, etc. while Cyprus I've got to deal with Greek so I'm more at the mercy of local providers and their interpretation rather than being able to verify sources. Gibraltar is a little more hassle to set up initially but that's a one time hassle, costs are similar. Cyprus you could bank locally but I'd never want to store any large amount of money in Cyprus banks so I'm probably going to need to bank elsewhere anyway so why would I go with Cyprus?

Cyprus is an option when there's tax treaties involved (Gibraltar has none), sometimes it's not treated as a tax haven when Gibraltar is, laws and regulations for farther out products and services are more strict in Gibraltar so Cyprus is more flexible if you're in certain types of businesses, and of course if you're going to live and operate in Cyprus that's a completely different thing as although I don't think it's an amazing place it's certainly more workable than Gibraltar due to population size and wages.

And of course if you've got things you can do because of the corruption in Cyprus that's a completely different story.

They are both quite comparable with HK, which has the advantage and disadvantage of being away from the EEA. Usually, HK sucks for payment processing compared with European options so Gibraltar was often a better way to go in this regard (unless you want Paypal then it changes) but was far better for banking and reputation and you can take advantage of the tax treaties without having to actually pay tax there.

If you're going the tax treaty route though you need the company to be Cyprus resident so it begs the question of why you'd use Cyprus vs Malta, Bulgaria, or Hungary (or HK as mentioned). Taxes are higher in Cyprus than all three of those options (though the Malta structure is a bit more of a hassle), though Hungary you may have the withholding taxes on dividends so it depends on your structure, Bulgaria also has them so it depends on the value you can get from deferral. Bulgaria and Hungary are better places cost wise to have some presence but I'd say better for banking (though certain specific needs for example Shopify options will vary slightly). Again, you've got regulations to consider for certain industries.

A lot of people have this one size fits all approach where they've got a go to they recommend all the time because they are comfortable with it, have relationships there, etc. I always figured this does a disservice to the client since each circumstance is different you should consider all the factors and make the best choice and compared against the alternatives it's very rare I've found the best alternative was Cyprus, hence why I'm not a huge fan and why I rarely recommend it, there are some cases though.