Marketing Department / Sunday, March 23, 2025 / Categories: Cyprus Taxation on Individuals, TAX ADVICE / CONSULTATION, Client Enquiries Client wants to purchase a property in Poland and is considering using his existing Cyprus company or a new Cyprus subsidiary Ok, you are recommending starting another business in Cyprus so that the business owns the property in Poland without dependencies Client: Hello CYAUSE team, Ok, you are recommending starting another business in Cyprus so that the business owns the property in Poland without dependencies. I do not question the overseas fees, but how do we “extract/transfer” money from ABC LTD into the new business so the new LTD can purchase the property? What would be a tax liability for such a transfer, if any? Can it be done? I don’t want to be the one injecting funds taken out as dividends, etc., but I want to leverage the retained profits ABCD LTD generates CYAUSE response: Hello dear Client, Please find our response below in bold. Ok, you are recommending starting another business in Cyprus so that the business owns the property in Poland without dependencies. I do not question the overseas fees, but how do we “extract/transfer” money from ABC LTD into the new business so the new LTD can purchase the property? What would be a tax liability for such a transfer, if any? Can it be done? Yes. No Taxes if the amount can be justified as dividend. I don’t want to be the one injecting funds taken out as dividends, etc., but I want to leverage the retained profits ABC LTD generates…Retained profits generated by ABC can be used to pay for the property and we will classified them as your dividends. In the FS we will show that you have taken dividends but instead of paying yourself you paid an associate company; the transfer will be from ABC Cyprus bank account to NewCo bank account instead of Mr x bank account to the NewCo bank account. Client response: Hello CYAUSE team, Hmm… so dividend paid to company… would it be shown as investment on our personal tax returns or as “dividends” as any other dividend transferred to our personal accounts? We don’t want to be slapped with dividend tax in the UK if our tax residency in Cyprus is questioned by HMRC… I mean if they investigate =, start asking questions etc… or the non-dom status is declined… simply I need to know how those dividends will appear from the personal taxation point of view. This was a question for the next of the following year where we can’t guarantee meeting the 60 or 184-day rules… I need to take a path forward that does not compromise extraction by incurring humanly prohibitive tax. What if the new LTD becomes a subsidiary of the ABC LTD for, let’s say 6 months so we can transfer profits that way… then we update the directors and make the new LTD independent? Another idea… the ABC LTD buys the house and “gifts” it to the new CO after a few months.. maybe 2 years? Please advise CYAUSE response: There will be capital gains taxes and consulting / accounting fees etc. Not advisable. If there is no solution due to your whereabouts, the property can be owned by the company. Client response: Capital gains tax on the profits transferred to the subsidiary? What is that tax rate? Whe you said property can be owned by the company, you referred to ABC Ltd? Yes In that case the risk of it being an asset apply as you explained, correct? CYAUSE response: Dear Client, Please find our response in bold. Capital gains tax on the profits transferred to the subsidiary? What is that tax rate? When the legal owner of the company changes -is as if a sale takes place -> the company is subject to local (not Cypriot) capital gains tax. Check this with Polish accountants. Whe you said property can be owned by the company, you referred to ABC Ltd? Yes In that case the risk of it being an asset apply as you explained, correct? Yes Client response: Hello CYAUSE team, The new LTD will be registered in Cyprus… not in Poland; the property will be in Poland though. So, even then the Capital gains tax would be payable in Poland not in Cyprus? Thanks CYAUSE response: Yes the capital gains are paid in the country where the property is situated. Client response: Hello CYAUSE team, Is it possible for a Cypriot company to register for VAT in Poland? This question comes from the Polish accountant since the acquisition of new build property or rentals will be subjected to VAT… Thanks CYAUSE response: Yes, The Polish accountant should confirm this as this would be a Polish VAT registration as the tax point is Poland where the income is generated. Thank you, Client response: Hello CYAUSE team, Good stuff… I guess the Polish accountants will be responsible for the VAT returns in Poland, correct? They did… they want to register the New CO in Cyprus or ABC for VAT in Poland so we could: Reclaim VAT after purchase of new build property. Reclaim VAT when renting out a property to business users etc. Beyond VAT… you mention the tax point… so if the New CO in Cyprus or ABC CY generate rental income out of the property where will it be taxed? (this is beyond VAT). Cheers CYAUSE response: Dear Client, Please find our response in bold. Good stuff… I guess the Polis accountants will be responsible for the VAT returns in Poland, correct? Yes They did… they want to register the New CO in Cyprus or ABC CY for VAT in Poland so we could: Reclaim VAT after purchase of new build property. Reclaim VAT when renting out a property to business users etc. Beyond VAT… you mention the tax point… so if the New CO in Cyprus or ABC CY generate rental income out of the property where will it be taxed? (this is beyond VAT). In Cyprus but any taxes paid overseas will be deductible Previous Article Company formation in Cyprus Next Article I am considering residency with non-dom status in Cyprus and decided to contact you after watching Mr. Tramountanellis’ informative videos. Print 77 Rate this article: No rating Tags: dividend taxcyprusTaxesVATTax ResidencyprofitsHMRCTransfer FeesCapital Gains Taxcyprus companies paying dividendscyprus groupbuy proprtycompany owns propertyproperty acquisitionproperty acquisition by companycyprus group of companiesland registry feescyprus land registry Please login or register to post comments.