Looking for tips on Curacao + Cyprus Incorporation/Banking/License

I have some rough knowledge on the topic now, but no actual experience and I know there's a big difference there.

I know the following:

1.) I need to incorporate a company and appoint a Local director for the company in Curacao + have a business "located" in curacao to receive a license

2.) The business should be located in E-commerce park to receive the 2% e-zone tax rate

3.) The Cypriot company and merchant account are needed to work with payment processors (Such as Gamemoney and Payop)

4.) The Cypriot company is a subsidiary of the Curacao company therefore all money that goes through it is taxed at the curacao rate of 2%

That's about the extent of my knowledge, it's not much. I've been told to fly there and do the ground work myself but I can't do that at the moment and need to get the license asap. I heard PWC will re-direct me to formation services like HBM group/E-management for what I need. There is a PWC location near me and they said they can probably communicate with the Curacao location, just waiting on a call back.

I know I am missing about 90% of what I need to know so any tips are very appreciated, thank you!

Sols said:

Yes and no. You only need the EU company to contract with PSPs that for one reason or another cannot or will not contract with a Curaçao company. This used to be a bigger deal back when you could get MCC 7995 processing for Curaçao and it worked. That's not the case anymore. You can sign plenty of PSPs with the Curaçao company directly.

I read a few articles about MCC 7995 and it seems like it's a bad thing. Are you saying that the Curacao company won't flag as a MCC 7995 when received as an incoming payment now? Sorry if I'm way off target on this one.

Sols said:

No, you have to leave some profits in the Cyprus company. Otherwise even the gentle Cypriot tax authority might give you problem as you are in violation of Transfer Pricing regulations. It's easy to navigate, but make sure it's covered in the service agreement between the two companies. Leave enough to cover the running costs and a tiny profit, which you pay CIT on, and then either keep as cash reserves or remit to the parent as dividends.

Okay that makes sense. I was looking into Transfer Pricing and the arm's-length principle. It all seems very complicated to me and illegal to transfer money from the Cypriot merchant account to the curacao corp and not pay tax on that money. What exactly would be included in the service agreement between the two companies you are mentioning? Also is there any benefit tax or legal wise keeping money in "cash reserves" in the Cypriot account as apposed to sending the money over to the curacao company?

Sols said:

No need to go to Curaçao in person. Go to conferences, though.

With Pinnacle having left Curaçao there is almost nothing physically left of the igaming industry there. It's just CSPs.

Okay thank you for the reassurance on this part.

Sols said:

Another CSP in Curaçao that might be interesting for you is XCM. They have a higher risk appetite than HBM, which if you're doing skins/virtual goods might be required.

Thank you. I really appreciate the help so far guys.

Would a regular bank account be needed for the Cypriot corp or only a merchant account. I'm wondering if money can be transferred directly from the merchant account to the Curacao corp.

Also with the Curacao corp, would a merchant account be needed for that? From what I understand the Cypriot corp and merchant account is sort of a safety net if we can't work with PSPs from the Curacao corp, though you've said it's much easier to do so than in the past. So if a PSP would work with the merchant account from curacao it would be much more beneficial for us to do that rather than going through the Cypriot company as it's less of a hassle and the 2% tax rate will be paid on all the money instead of only the lion share of it which would be the case in Cyprus.

AMD said:

now you are inside, check Admin's list of trusted providers, you will find HB Management there which are very professional and have been in business for decades.
https://www.offshorecorptalk.com/th...hy-offshore-company-formation-services.26419/

HB Management is the same entity as HBM Group right?

Sols said:

The Cyprus company is only taxed on its profits. If you run 20 million EUR in a year through it, but only keep a fractionas profits, the Cyprus company pays 12.50% tax on that fraction. This is why it's important to maximize how much you can take out of the Cyprus company, while also keeping the tax authority happy and off your back.

All payments received by the Cypriot company from PSPs would be profit unless it was all used for business and marketing expenses. So this is an issue, paying 12.5% on a decent chunk of our revenue. 20-30% of all volume on similar sites to us are through gift cards and banking payment methods. Is there anyway to get around paying this 12.5% rate with the company located in Cyprus legally?

Sols said:

You will need to run around and open multiple accounts with different EMIs.

Why is that? I don't understand what EMIs have to do with receiving payments from a PSP.

Sols said:

MCC 7995 is used to identify transactions as gambling. There are no acquirers that contract directly with a Curaçao company and open a direct MID ( merchant account) and code it as 7995. This is when you need the EU company to contract with an EU acquirer and process 7995 transactions. However, because of increased crackdown on offshore gambling, 7995 is either completely blocked or only permitted from whitelisted merchants in many/most markets.

I don't understand this part because in a previous post you said this:

Sols said:

Yes and no. You only need the EU company to contract with PSPs that for one reason or another cannot or will not contract with a Curaçao company. This used to be a bigger deal back when you could get MCC 7995 processing for Curaçao and it worked. That's not the case anymore. You can sign plenty of PSPs with the Curaçao company directly.

This leaves me confused when it comes to the relationship between the curacao company and PSPs, I am unsure if it can work with them or it can't, in the most recent message you said even the EU company 7995 transactions are completely blocked. With that info I don't see how there is a solution to working with PSPs at all then.

Sols said:

Do you think that the Cyprus/EU subsidiaries for all of these non-EU operators are paying CIT on their entire processing volume? They do not. First of all, CIT is not paid on revenue. It's paid on profit. Second, not everything the subsidiary processes is profit.

We won't be paying out via any banking related methods, only crypto and skins. So anything we receive into this account is technically profit unless it's spent on marketing or other business expenses.

Sols said:

Because there is a near-0% chance that regular banks will touch you.

We don't need to accept banking related payments directly only through PSPs like Payop and GamePay, which I think will go smoothly with the Cypriot merchant account, that's what all the other sites are doing who work with those 2 PSPs to take Visa/Mastercard.

Sols said:

I mean this in a helpful way, but I get the impression you're trying to do all of this by yourself, without having the required knowledge. Know your limitations. It's OK for a founder to now have deep understanding of every aspect of the business. This is where your co-founders/team and advisers will fill the gap.

Yeah I appreciate it, I want to get a decent understanding of how it works before getting in touch with accountants and lawyers in these countries so they don't think I'm a complete idiot. It's good to get the basic fundamentals before trusting someone with all the banking of my business.

It seems when I call pwc in Curacao I get forwarded to Grant Thornton, maybe they took over their old number or location, I am unsure. If pwc is no longer working within Curacao would grant thornton be a good option? I spoke to one of their Cyprus locations in detail about what we are looking for and he said they can do it + they have locations in Curacao and Cyprus which is good because we wouldn't have to work with 2 different companies for accounting and lawyer work and they could more freely pass info between each other.

Maybe someone can help me out with this, Deloitte is another option as they have locations in both Curacao and Cyprus but I heard a few negative things regarding them. Thanks in advance!

Sols said:

I almost never see any of the Big Four or others like them (i.e. Grant Thornton) being used for gambling in Curaçao. Maybe for non-gambling corporate services but most of those companies don't have the risk appetite for gambling.

PWC is considered within the big 4 and I was referred to them by an admin in the prior thread, Grant Thornton Cyprus location worked with cryptopia which seems very high risk but I am unsure. I spoke with Grant Thornton Cyprus and they seemed to be able to work with me under the circumstances of the Cyprus company being a subsidiary of the corporation in Curacao which I mention was a gaming site. I Will have to look into it more myself but I understand where you are coming from.