Dutch - Cyprus Dom with US LLC

[ChancellorCorp]

Hi everyone,

I formed an LLC in 2021 while I was a Dutch tax resident, though it wasn’t declared at the time. I only started using the LLC in July 2024 and made a single transfer of €1,000 to a personal Dutch bank account in August 2024. I relocated to Cyprus that same month.

Could Dutch authorities already be aware of the LLC? I’m aware I need to update my US banks with my Cyprus details before the end of the year to prevent the Dutch authorities from being notified if my balance crosses the reporting thresholds.

Now that I’m a domiciled tax resident in Cyprus, what would be the best tax strategy moving forward if everything remains undeclared and I establish Cyprus as my tax residency?

• Since the LLC is disregarded, it would be taxed under Cyprus personal income tax (PIT).

Option 1:
Use a Cyprus Ltd to invoice the US disregarded LLC, paying 12.5% corporate tax in Cyprus and 17% Special Defense Contribution (SDC) if I distribute dividends. This allows me to keep a lower US bank balance, reinvest profits back into the LLC tax-free, and transfer to the Cyprus Ltd as needed. When I decide to close the LLC, I could invoice the full amount. Possibly using partner agreements to avoid Arm’s Length Transfer issues.

Question: Since the US LLC is disregarded to me, would Cyprus authorities become aware of it?

Option 2:
Elect the LLC to be taxed as a C Corporation. Open a bank account in a non-CRS country like Jordan using my Cyprus tax ID. Transfer funds from the US as expenses, dividends, or salary, and use those balances to spend. This would allow me to pay US taxes on a minimal amount (e.g., $60k) and avoid Cy reporting.

Option 3:
Keep the LLC disregarded and report everything under Cyprus PIT.

Option 4:
Pay Dutch taxes for 2024.

My main concern is maintaining the LLC’s current banking setup, as it’s crucial for my ongoing operations.

Any advice on which option would be most tax-efficient given these circumstances?

 

[Sols]

Hi everyone,

I formed an LLC in 2021 while I was a Dutch tax resident, though it wasn’t declared at the time. I only started using the LLC in July 2024 and made a single transfer of €1,000 to a personal Dutch bank account in August 2024. I relocated to Cyprus that same month.

Could Dutch authorities already be aware of the LLC?

If the LLC has had a bank account somewhere in the period 2021—2024, there is a risk that the Dutch authorities know or at least have a record somewhere. Depends on where you banked and how compliant that bank is with CRS and/or FATCA. Probably quite low risk, though, if you banked it with a US neo bank (like Mercury).

Option 1:

Use a Cyprus Ltd to invoice the US disregarded LLC, paying 12.5% corporate tax in Cyprus and 17% Special Defense Contribution (SDC) if I distribute dividends. This allows me to keep a lower US bank balance, reinvest profits back into the LLC tax-free, and transfer to the Cyprus Ltd as needed. When I decide to close the LLC, I could invoice the full amount. Possibly using partner agreements to avoid Arm’s Length Transfer issues.

Question: Since the US LLC is disregarded to me, would Cyprus authorities become aware of it?

No one in Cyprus looks or cares. If you make the Cyprus company the new owner of the LLC, you have even less to worry about.

Option 2:
Elect the LLC to be taxed as a C Corporation. Open a bank account in a non-CRS country like Jordan using my Cyprus tax ID. Transfer funds from the US as expenses, dividends, or salary, and use those balances to spend. This would allow me to pay US taxes on a minimal amount (e.g., $60k) and avoid Cy reporting.

Good luck getting a Jordanian bank account for a US LLC owned by a Dutch national resident in Cyprus. Chasing non-CRS is like chasing a vegetable at the end of its season. The longer you keep looking, the worse the options are and eventually there are none left.

Option 3:
Keep the LLC disregarded and report everything under Cyprus PIT.

If you were to declare it as dividends (and not pay tax), you wouldn't be the first person in Cyprus to do so.

Option 4:
Pay Dutch taxes for 2024.

This is the winner. Tax fraud is one of the dumbest crimes a person can commit. Pay for your sins and look forward to a low-tax future in Cyprus.

 

[ChancellorCorp]

If the LLC has had a bank account somewhere in the period 2021—2024, there is a risk that the Dutch authorities know or at least have a record somewhere. Depends on where you banked and how compliant that bank is with CRS and/or FATCA. Probably quite low risk, though, if you banked it with a US neo bank (like Mercury).


No one in Cyprus looks or cares. If you make the Cyprus company the new owner of the LLC, you have even less to worry about.


Good luck getting a Jordanian bank account for a US LLC owned by a Dutch national resident in Cyprus. Chasing non-CRS is like chasing a vegetable at the end of its season. The longer you keep looking, the worse the options are and eventually there are none left.


If you were to declare it as dividends (and not pay tax), you wouldn't be the first person in Cyprus to do so.


This is the winner. Tax fraud is one of the dumbest crimes a person can commit. Pay for your sins and look forward to a low-tax future in Cyprus.

Thanks for taking your time to respond.

I do have connections to said non CRS bank - so I can definitely open the account. I just don’t want to be screwing up long term when transferring out (SoF) etc.

You think being a Cyprus domiciled resident (Cypriot) increases my risks if I were to declare as dividends when it really isn’t? Atleast for this tax year.

Lastly, I had like 3-4 neobanks under that LLC albeit barely used. So the risk increases there for it being under their radar.

Might just pay my dues and move all funds to Cyprus. Sounds like the most headache free plan

 

[Sols]

I do have connections to said non CRS bank - so I can definitely open the account. I just don’t want to be screwing up long term when transferring out (SoF) etc.

Moving money out of Jordan (or most other non-CRS jurisdictions at this point) is going to raise flags, especially if it's a large sum of money.

You think being a Cyprus domiciled resident (Cypriot) increases my risks if I were to declare as dividends when it really isn’t? Atleast for this tax year.

It's not by the book. But no one in Cyprus looks at the book. However, it's an easy thing to spot if they ever do check, since all the information is right there on the return.

Might just pay my dues and move all funds to Cyprus. Sounds like the most headache free plan

It definitely is. Peace of mind has a price often worth paying.

 

[basila]

Option 1:
Use a Cyprus Ltd to invoice the US disregarded LLC, paying 12.5% corporate tax in Cyprus and 17% Special Defense Contribution (SDC) if I distribute dividends. This allows me to keep a lower US bank balance, reinvest profits back into the LLC tax-free, and transfer to the Cyprus Ltd as needed. When I decide to close the LLC, I could invoice the full amount. Possibly using partner agreements to avoid Arm’s Length Transfer issues.

This doesn't directly answer your question, but please note that you do not need to pay the 17% SDC in Cyprus if you were not a tax resident of Cyprus previously. Just Google "Cyprus non-dom".