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Comment by walrus01 | Hacker News Reader

There's a couple of mentions of Cyprus in the article, but I'm kind of disappointed in how the article doesn't expand into any more detail on how having a Cypriot corporation can be used for tax avoidance purposes, and to hide the beneficial owners of unusual things.

It's my understanding that the part of Mindgeek that rents colocation space, owns/leases/runs servers and buys wholesale scale Internet access in Canada, is the Cypriot corporation.

This isn't really a "new" thing in the internet porno business, people have been doing funny things with panamanian, cypriot, maltese, manx, channel islands, nauru corporations and such for 20+ years.

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> channel islands

Your comment is spot-on, but technically the Channel Islands are two separate crown territories (Jersey, Bailiwick of Guernsey) with four sub-jurisdictions with its own rules on companies (Jersey, Guernsey proper, Sark, and Alderney), but there is some co-operation between the, uhm, governments (the best description I can use since the specific term differs between sub-jurisdictions).

I can't say that I've ever researched it in that much detail to know the legal and tax distinctions between the different channel islands. All I can say is that if I miraculously woke up in charge of a massive porno empire tomorrow, cyprus would be high on my list of places to start forming corporations..

The Channel Islands (before Brexit) had this weird situation where they were not part of the EU (compared to Gibraltar which was), but were part of the customs zone.

In the 2000s many CD and DVD retailers setup shop there, as they could sell items without VAT.

For porn and “gaming” (gambling) there aren’t many other places to register which is why you have these companies in places like Cyprus, Malta or Gibraltar it’s not necessarily for tax avoidance (although they surely do that too) but primarily to avoid harassment and legal issues that can arise from being registered most other nations.

The former owner, Fabian Thylmann, battled some tax evasion charges according to Wikipedia https://en.wikipedia.org/wiki/Fabian_Thylmann

Simple: Cyprus doesn't charge taxes on royalties. Meanwhile Malta and Panama do. And Canada has a tax-treaty with Cyprus.

Canada doesn't have a favourable tax treaty with Panama (partly why the Panama Papers didn't impact Canadians much). Now, if Barbados or Bahamas leaked... oh boy!

Is Cyprus much different from Delaware?

Yes.

Delaware is used for many corporations because their legal framework is well understood, standard and unlikely to cause any questions.

Cyprus on the other hand is used for companies trying to do non-standard tax or legal affairs.

Cypress is attractive, except for the fact they are the first nation to have "tried" a "bail-in" of sorts where the gov't pillages the bank accounts of its citizens for monetary relief in 2013.

I have a relatively scant understanding of the recent Dodd Frank legislation in the U.S. that has outlined how this could happen in the U.S. - fortunately it outlines that only non FDIC insured assets can be seized by banks.

https://www.forbes.com/sites/nathanlewis/2013/05/03/the-cypr...

And then the Russians (with money in Cyprus) called Putin and Cyprus changed course.

Funny. Other countries have inflated away their debt, which is essentially the same thing as just taking a certain fraction of everyone's money. Printing money to pay debts would also have the same effect (since it would cause inflation). The only reason Cyprus would have to resort to taking its citizens' money is because these options aren't available to it, since it doesn't control it's own currency.

You'd never see the US do the same because there's no need - a country that controls its own currency should always be able to pay its debts.

>> a country that controls its own currency should always be able to pay its debts.

That only if it borrows in its own currency which may not work on small countries, big loans or weak currencies because the lenders want a safe currency(i.e eur, usd).

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