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Annual results
The company Economic GmbH (Germany) imports toothpicks from China and sells them to various countries in the EU.
| I.A. Pre-tax results for 2003 | 100 000 EUR |
| I.B. Corporate tax (25%) | 25 000 EUR |
| I.C. Results after tax | 75 000 EUR |
II. ANNUAL RESULTS USING A CYPRUS COMPANY
The company Economic Ltd. (Cyprus) imports toothpicks from China and sells them to various countries in the EU.
| II.A. Pre-tax results for 2003 | 100 000 EUR |
| II.B. Corporate tax (10%) | 10 000 EUR |
| II.C. Results after tax | 90 000 EUR |
III. Difference between the two
| II.C. Results after tax – Economic Ltd. (Cyprus) | 90 000 EUR |
| I.C. Results after tax – Economic GmbH (Germany) | 75 000 EUR |
| III.C. Difference | 15 000 EUR |
It is quite clear, therefore, that even with a relatively “modest” profit, the difference which arises between the two levels of profit, thanks to the tax savings, is significant enough to cover the costs of establishing and running the company in Cyprus. If we then add to this, for example, the taxes payable on the payment of dividends, then the difference will be even more startling as the withholding tax payable by foreigners in Cyprus is 0%!
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