Why Chinese E-Commerce Sellers Are Exploring Cyprus Corporate Structures And Nominee Directorships For Global Marketplaces

Over the past months, Cyprus-based corporate service providers have observed a noticeable increase in enquiries from Chinese entrepreneurs seeking to incorporate Cyprus companies for use with global e-commerce platforms such as Amazon, Temu, Shopify, CJ Dropshipping, and similar marketplaces.

These enquiries often include requests for nominee directorship structures, particularly at the platform onboarding stage. This article explains why this trend has emerged, what Cyprus realistically offers, and the compliance considerations that must be addressed under Cyprus and EU law.

Important Notice
This article is provided for general informational purposes only and does not constitute legal, tax, regulatory, or platform compliance advice. Nominee structures must always be implemented in full compliance with Cyprus law, EU regulations, and the applicable terms and conditions of each e-commerce platform. Any attempt to conceal ownership, misrepresent control, or circumvent platform rules is unlawful and strongly discouraged.

1. Why Chinese Sellers Are Re-Evaluating Their Structures

Historically, many Chinese e-commerce sellers operated through:

• Hong Kong companies
• Mainland China entities
• US LLCs (e.g. Wyoming or Delaware)
• UK private limited companies

However, since 2023–2024, major global platforms have introduced significantly stricter onboarding and verification requirements, making many legacy structures less viable.

These changes are driven not only by internal platform policy, but by regulatory obligations imposed directly on marketplaces, particularly within the EU.

1.1 Platform Verification Has Become Significantly Stricter

Platforms such as Amazon, Temu, eBay, and Etsy now commonly require:

• clear proof of business ownership and control,
• enhanced AML/KYC documentation,
• verifiable directors and responsible persons,
• EU VAT registration and OSS compliance (where applicable),
• evidence of tax residency and operational substance,
• alignment with EU consumer protection and product safety rules,
• compliance with DAC7 seller reporting obligations.

In practice, Chinese-based owners may face:

• language and documentation barriers,
• difficulties evidencing tax residency acceptable to platforms,
• elevated platform risk scores,
• extended verification timelines,
• higher rejection or account suspension rates.

These pressures have prompted many sellers to explore EU-based corporate structures, including Cyprus.

2. Why Cyprus Is Attractive for EU-Facing E-Commerce

2.1 EU Single Market Access

Cyprus is a full EU Member State, allowing companies to:

• register for EU VAT and OSS,
• operate within the EU Single Market,
• access EU payment institutions and PSPs,
• operate under EU consumer and data protection frameworks.

This is particularly relevant for platforms that now shift regulatory liability onto sellers at onboarding stage.

2.2 Cyprus Corporate Tax Framework (2026 Onwards)

As of 1 January 2026, Cyprus applies a 15% corporate income tax rate, following the implementation of national tax reform and alignment with international minimum tax standards.

While the headline rate has increased, Cyprus remains competitive due to:

• no withholding tax on dividends paid to non-residents,
• participation exemptions on qualifying dividends,
• an extensive double tax treaty network (including with China),
• a stable EU legal and regulatory environment.

3. Why Nominee Directors Are Being Requested

It is important to distinguish why clients request nominee directors from what is legally permissible.

3.1 Platform Onboarding Reality

Many global platforms require:

• the director submitting the account to be clearly identifiable,
• a verifiable EU address and contact person,
• a clean AML and platform compliance profile,
• alignment between declared management and operational responsibility.

In some cases, Chinese nationals encounter difficulties due to:

• jurisdictional risk scoring,
• prior rejected or suspended accounts,
• platform policies on "related sellers",
• privacy concerns around public exposure.

3.2 Legal Boundary (Critical Clarification)

A Cyprus nominee director cannot be used to:

• conceal the ultimate beneficial owner (UBO),
• misrepresent actual control,
• bypass platform rules,
• "recover" or recycle previously banned accounts.

Any nominee structure must involve:

• full UBO disclosure to service providers, banks, EMIs, and tax authorities,
• documented governance and oversight,
• ongoing AML, tax, and regulatory monitoring.

Where used correctly, a nominee director may form part of a lawful corporate governance framework, not a platform-circumvention mechanism.

4. Why Platforms Often Require "One Director – One Seller Account"

Major platforms use advanced fraud-prevention and AI-based monitoring systems to detect:

• shared identities or documents,
• repeated director usage,
• linked IP addresses or device fingerprints,
• overlapping corporate structures.

Where a director appears across multiple unrelated seller accounts, platforms may:

• freeze funds,
• suspend listings,
• reject verification,
• classify sellers as "related accounts".

From both a platform and compliance perspective, nominee directors should not be reused across unrelated high-risk e-commerce operations.

5. Why This Trend Accelerated Recently

5.1 Amazon Identity Enforcement (2024–2025)

Amazon has expanded its real-identity enforcement through:

• biometric verification,
• multi-factor cross-checks,
• director–UBO consistency reviews,
• EU residency and documentation validation.

5.2 Temu's Rapid Expansion into the EU

Temu's EU entry has increased scrutiny on:

• EU-based responsible persons,
• regulatory contact points,
• AML and consumer compliance structures.

This has pushed sellers to seek EU-anchored governance models.

5.3 EU Regulatory Pressure on Marketplaces (2025–2026)

From 2025 onwards, EU marketplaces face heightened obligations relating to:

• VAT collection and reporting,
• DAC7 seller transparency,
• product safety and consumer enforcement,
• digital operational resilience and ICT risk (DORA-driven expectations).

As a result, platforms increasingly externalise compliance pressure onto sellers at onboarding stage.

6. AML & Compliance Risks (Service Provider Perspective)

For service providers, these structures carry elevated risk and require enhanced due diligence, including:

• full UBO verification,
• source of funds and business model validation,
• review of platform history (prior bans, chargebacks),
• supply chain verification,
• product classification, TARIC and dual-use checks,
• sanctions and trade exposure assessment,
• DAC7 and VAT reporting consistency.

Any indication that a nominee structure is intended to bypass platform enforcement should result in immediate rejection of the engagement.

7. Why Cyprus Service Providers Must Act with Caution

A nominee director in an e-commerce business:

• holds full statutory and fiduciary duties under Cyprus law,
• may be exposed to VAT or marketplace claims,
• may be referenced in platform enforcement systems,
• must respond to bank, EMI, auditor, or regulator queries.

Nominee directors owe the same legal duties as any other director, regardless of commercial arrangements.

Conclusion

The increased interest from Chinese e-commerce sellers in Cyprus corporate and nominee structures is real, recent, and driven primarily by global marketplace compliance reforms, not tax arbitrage.

Cyprus offers a credible EU framework, but nominee directorships in high-risk e-commerce activities involve significant AML, VAT, and reputational exposure and must be structured with care.

For service providers, the challenge is not facilitating platform access, but ensuring that any structure implemented is transparent, legally defensible, and sustainable under ongoing EU regulatory and platform scrutiny.

Frequently Asked Questions – Cyprus E-Commerce Structures

Q1: Can a Cyprus nominee director be used to open or operate an Amazon or Temu account?
A nominee director may form part of a lawful corporate governance structure. However, nominees cannot be used to hide ownership, misrepresent control, or circumvent platform rules. Full AML transparency and UBO disclosure are mandatory.

Q2: Will the nominee director be the real owner of the business?
No. The beneficial owner remains the Ultimate Beneficial Owner (UBO) and must be fully disclosed to service providers, banks, EMIs and company registrar and tax authorities in accordance with Cyprus and EU law.

Q3: Why do platforms require EU-based directors or responsible persons?
Platforms face direct EU regulatory obligations (VAT, DAC7, consumer protection). As a result, they increasingly require sellers to demonstrate EU-anchored accountability and verifiable governance.

Q4: Can one nominee director be used for multiple seller accounts?
In practice, this is strongly discouraged. Platforms use AI-based systems to detect shared identities and related sellers, which can lead to account suspension or fund freezes.

Q5: Is Cyprus still tax-efficient after the increase to 15% corporate tax?
Yes. While the corporate tax rate increased to 15% from 1 January 2026, Cyprus remains competitive due to:

• no withholding tax on dividends to non-residents,
• participation exemptions,
• double tax treaties (including China),
• EU legal certainty.

Q6: Are banks and EMIs open to dating or high-risk e-commerce platforms?
Traditional banks are often cautious. EU EMIs are generally more receptive, provided robust AML, moderation, chargeback and governance controls are in place.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.