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International trading is one of the most commonly used examples where a Cyprus IBC can be used. An intermediary Cyprus IBC can be placed in between a Buyer and a Seller. In this way, taxable profits can be transferred from a high tax jurisdiction to one with low taxes. The trading will continue with the goods moving directly from the seller to the final buyer and the documents through the intermediary Cyprus IBC company.
Cyprus companies can be used efficiently in trading activities either in the form of purchasing and selling goods or receiving and providing services. Any profit realised by the Cypriot company would be taxable at the rate of 10% with no further corporate tax implications. In addition, the profits accumulated in the Cypriot company can be expatriated to the holding company with no withholding taxes irrespective of the country of residence of the recipient or the existence of a double tax treaty. The Cypriot company conducting the trading activities would be able to obtain a VAT registration number but the physical delivery of the goods in Cyprus is not a requirement.
The addition of a Cyprus IBC in the commercial chain can be suitable for a seller or a buyer. Both the seller and the buyer can use an intermediary IBC to reduce taxes paid on the profits arising from the trading in their home countries.
It must be mentioned that the transactions with the intermediary company should be entered into on terms and conditions which could be obtained on an arm's length basis from independent third parties.
