Cypriot company owns a UK Company (UK sole director who is carrying out IT consultancy)
The cypriot company is charging management fees
I am sure the UK director is the ultimate owner but he said he is not
How do I find this out. Does anyone know if there is a website. Credit safe doesn't have Cyprus on its database
Replies (16)
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Failure to confirm beneficial owner
You need to explain to your client that under Reg 11 MLR 2007 if you cannot confirm who is the beneficial owner then you have to cease to act for the client. Maybe then he will provide the documentary evidence you require.
Failing that, you have a difficulty. I could suggest you get on a plane & spend a couple of weeks in Cyprus. It won't help you with this problem, but at least you will be warm over Christmas!
David
I know this might be a bit late in the discussion but I will leave it here in case somebody needs this in the future.
There are specialised agents and services that can retrieve documents from the official registry on your behalf.
CyprusRegistry is one of them (shameless plug) and for a low cost you can get the information you need, e.g directors, shareholders, their addresses etc. within a day
There are also a lot of free information on cyprusregistry.com and useful features like affiliated companies etc.
What it doesn't tell you is if the company has Nominee directors and shareholders, in which case you can't really verify who the ultimate owner is.
@basil
Yes but there is Cyprus & Cyprus! Or if you prefer Greek-Cyprus & Turkish-Cyprus. I think that the one you mention relates to Greek-Cyprus. It won't be of any use if the client is referring to a company based in Turkish-Cyprus.
Even if the OP's query refers to a company based in Greek-Cyprus I am not at all sure the public record will include any information about the ownership of the company (although it may list company officers which may be of some help).
David
Ireland
Yes but there is Cyprus & Cyprus! Or if you prefer Greek-Cyprus & Turkish-Cyprus. I think that the one you mention relates to Greek-Cyprus. It won't be of any use if the client is referring to a company based in Turkish-Cyprus.
Is Cyprus not like Ireland ?
There's Ireland and Northern Ireland. And there's Cyprus and Northern Cyprus.
Reg 11 problem
But you still have the Reg 11 problem which leaves you liable (worst case) to criminal prosecution or civil penalty if you continue to act without knowing the beneficial owner of your client company (i.e. the individual(s) who have ultimate control - if anyone owns 25% or more).
David
Beneficial owners for MLR purposes
But you still have the Reg 11 problem which leaves you liable (worst case) to criminal prosecution or civil penalty if you continue to act without knowing the beneficial owner of your client company (i.e. the individual(s) who have ultimate control - if anyone owns 25% or more).
David
If I obtain the incorporation documents for the Cyprus company will that suffice
Though there is no way of knowing the ultimate ownership.
Real tough one
The Cypriot company is not the "beneficial owner" referred to in Reg 11. The definition of 'beneficial owner' in Reg 6 refers to any "individual' - so not a company (which is a legal "person").
However you say that the person with whom you are dealing is the sole director. He is certainly a 'beneficial owner' of your client company as he exercises control over it. The problem you have is that you do not know if there are any more 'beneficial owners' who exercise control over your client company by exercising control over the Cypriot company.
David
How is he being paid?
Hi Jim
If they are related parties then the transactions should be on arm's length terms.
On what basis is the company claiming a deduction for the management charge? Is there an agreement in place? What is it for?
How is the Director extracting remuneration for his IT services? Is 120k most of the profits?
I think that you are doubting that it all stacks up and you have reason to do so. The Cypriot parent company should be receiving dividends paid out of taxed income instead of a management charge to eliminate a UK tax charge. If you can't get comfortable then file the accounts (subject to your AML checks per above) but add back the management charge for tax purposes.
Have you considered IR35 and are you completing his personal tax return too?
I disagree
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All international companies seem to use these charges to transfer profits to low tax jurisdictions like Cyprus.
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As the professional filing the tax return I would want support that the costs are wholly and exclusively for business purposes. Just because Amazon and Google do it does not meant it is OK for less sophisticated crossborder transactions, they spend loads on obtaining tax opinions from Big 4/law firms and analysing the functions of each office. If you put the deduction on the tax return then are you signing off that the management charge is deductible and is it covered by your PII if your client sues you for getting it wrong?
Are you sure that he is not resident in the UK, where is the work carried out?
Sorry it has ruined your weekend, you have made the right decision to delay.
True Shareholders
H All,
I have read the post, and I hope the same people are still around who are familiar with this thread.
I too looking into a Cypriot company and trying to unravel the corporate structure.
Brief Position:
I wish to undercover from an UK estate agent who is acting for the target company who is behind the target company. let’s call it “CY LTD. I have received confirmation of the directors as well as the shareholders of Cy Ltd.
But I have identified that the stated shareholders of Cy Ltd are the same as the directors the Corporate Service Provider (CSP) who is dealing with this Cypriot Limited Company.
For this case, lets assume that I also “know” that these appointed shareholders of the CY Ltd are actually nominees for the true Beneficial owners.
In relation to Davidwinch post about “Reg 11 MLR 2007” for all purposes the Shareholder have identified themselves. Do you think there is any legal room under the above Law to say that the True Beneficial owners have not be identified as there is no real way it can be accepted that the listed Beneficial owners are the same as the CSP