In today’s digital world, OnlyFans professionals are always looking to maximize their earnings and streamline their business. For OnlyFans models and account managers, setting up a Cypriot company can bring many benefits – from lower corporate tax rates and attractive dividend policies to a respected legal framework within the EU. This guide explains why Cyprus is an ideal jurisdiction for your venture and outlines a clear, step-by-step process for company formation.
Why Incorporate in Cyprus?
Strategic Location & Business Environment
- EU & Eurozone Membership: Cyprus is a member of both the European Union and the Eurozone, meaning stable economic policies and access to the European market.
- Business-Friendly Regulation: With modern regulatory frameworks and fast company registration, Cyprus is a smooth business setup environment.
Attractive Tax Regime
- Low Corporate Tax Rate: Cyprus has one of the lowest corporate tax rates in the EU at 12.5%. This is applied on a company’s net profit – after deducting all business expenses – so you’ll pay much less tax overall.
- Dividend Treatment for Shareholders: In Cyprus, dividends received by a shareholder of a Cypriot company are taxed in the country where the shareholder is a tax resident, as Cyprus does not impose any withholding taxes on dividend distributions. If a shareholder is a tax resident of Cyprus and has attained non-domiciled status, then their dividends will be taxed exclusively in Cyprus and will only be subject to a health system contribution of 2.65%, capped at a maximum of €4,770 per year.
If you would like to learn how to register as a tax resident in Cyprus and obtain non-domiciled status, please click here: Cyprus Tax Residency & Non-Dom Status Guide.
- Double Taxation Treaties: Cyprus has over 60 double taxation agreements, so income won’t be taxed twice across jurisdictions.
Additional Advantages for OnlyFans Professionals
- Privacy and Credibility: Operating through a Cypriot company adds an extra layer of professionalism and credibility. This is particularly important in digital industries where privacy and reputation matter.
- Flexibility: The corporate structure in Cyprus supports various business models, whether you’re an individual content creator or a manager of multiple accounts.
Step-by-Step Guide to Incorporating in Cyprus
1. Select and Reserve a Company Name
- The process begins with selecting and reserving a unique company name. This involves checking the proposed name complies with local regulations and isn’t already in use. Once the name is submitted to the Registrar of Companies, approval takes 2–5 business days.
2. Prepare Incorporation Documents
- Next, the essential legal documents are drafted. This includes the Memorandum and Articles of Association, which detail the company’s structure, objectives, share capital, and internal governance. This includes the Memorandum and Articles of Association which outline the company structure, objectives, share capital and internal governance. We also collect all necessary information and identification documents for directors and shareholders.
3. Submit the Registration Application
- Once all documents are prepared, they are filed with the Cyprus Registrar of Companies. This submission includes the statutory forms (HE1, HE2, HE3 etc.) along with the approved company name certificate and the registration fees. Processing of the application takes around 5–7 working days.
4. Obtain a Tax Identification Number (TIN) and VAT Registration (if applicable)
- Once the Certificate of Incorporation is issued, the company is registered with the Cyprus Tax Department to get a Tax Identification Number (TIN). If required by your business activities or turnover, VAT registration is also completed. This ensures the company is fully compliant with local tax laws from the start.
5. Opening a Corporate Bank Account and Social Insurance Registration:
- A corporate bank account is then opened to manage the company’s financial transactions, including capital injections, operating expenses, and revenue collections. In parallel, if the company plans to hire employees, registration with Social Insurance Services is completed to fulfill local labor and regulatory requirements.
Detailed Tax Benefits: A Practical Example
To illustrate the tax advantages, let’s consider the following scenario:
Example:
An OnlyFans creator establishes a Cypriot company that generates €100,000 in annual revenue. The company incurs €30,000 in business expenses (e.g., marketing, software subscriptions, professional services, and other operational costs).
- Net Profit Before Tax:
- €100,000 (Revenue) – €30,000 (Expenses) = €70,000
- Corporate Tax (12.5% on net profit):
- €70,000 × 12.5% = €8,750
- Net Profit After Tax:
- €70,000 – €8,750 = €61,250
If the creator decides to distribute €50,000 as dividends, the taxation depends on their tax residency status:
- If the Shareholder is a Non-Tax Resident of Cyprus:
- Dividend Withholding Tax: 0% (Cyprus does not impose withholding tax on dividends paid to non-residents).
- Total Effective Tax: The only tax paid is the corporate tax of €8,750, meaning the shareholder receives the full €50,000 without any additional tax obligations in Cyprus.
- If the Shareholder is a Tax Resident of Cyprus and has Non-Dom Status:
- Dividend Tax: Cyprus does not impose Income Tax and Special Defence Contribution (SDC) on dividends for non-domiciled tax residents.
- Health System Contribution (GESY): 2.65% on dividends, capped at €4,770 per year.
- €50,000 × 2.65% = €1,325 (assuming the cap has not been reached).
- Total Effective Tax:
- Corporate Tax: €8,750
- Health System Contribution on Dividends: €1,325
- Total Tax Paid: €10,075
- Net Amount Received by Shareholder: €48,675
This streamlined tax structure makes Cyprus an attractive location for digital entrepreneurs, as it permits significant retention of earnings and optimizes overall profitability.
Compliance and Regulatory Considerations
Accounting and Auditing:
- Keep accurate financial records and prepare annual audited financial statements.
- Our law firm has an in-house accounting department, allowing us to provide a full range of accounting, bookkeeping, and auditing services to ensure full compliance with Cypriot regulations.
Substance Requirements:
- Ensure your company has a physical presence in Cyprus (registered office and local director) to satisfy substance requirements.
- Our law firm provides registered office, nominee director, and nominee secretary services, ensuring that your company meets all local substance and compliance obligations.
Legal and Professional Support
- Our law firm specializes in corporate and tax law, providing comprehensive legal and financial advisory services to ensure your company remains fully compliant with Cypriot regulations. We offer tailored solutions, guiding you through every step of company formation, tax structuring, and ongoing compliance.
Strategic Considerations for OnlyFans Professionals
Branding and Credibility
- Operating through a formally incorporated entity in Cyprus not only boosts your professional image but also gives you a structure to manage your income streams.
Flexibility for Global Operations
- With the benefits of EU membership and a network of double taxation treaties, a Cypriot company allows you to expand your digital business easily.
Financial Planning and Investment
- The tax benefits and dividend policies in Cyprus enable more effective financial planning, to reinvest profits in your business or explore new opportunities in the digital economy.
Conclusion
Setting up a Cypriot company offers OnlyFans creators and managers a strategic advantage—combining a favorable tax regime with a robust legal framework and access to European markets. By following the outlined steps, you can streamline the company formation process, optimize your tax liabilities, and position your business for long-term success.
At Polycarpos Philippou & Associates LLC, we specialize in corporate and tax law, offering end-to-end legal, accounting, and compliance services tailored to your business needs. From company formation and tax structuring to nominee services and ongoing compliance, our experienced team ensures that your business operates efficiently and in full compliance with Cypriot regulations.
Contact us today to explore how we can assist you in setting up and managing your Cypriot company, allowing you to focus on growing your digital business with confidence.
