Cyprus

CYPRUS

Under the current tax legislation, Cyprus has the lowest tax regime in Europe and its role as an international financial centre is greatly enhanced. There is no longer a differentiation in the tax treatment of local companies and International Business Companies as a single corporation tax rate is applicable for all companies. Cyprus clearly stands as a prestigious tax – incentive EU country and is be free from suspicions usually associated with “tax-havens” which have zero tax.

There are two options of forming a company in Cyprus:

1.Company with management outside Cyprus – tax non resident
Director of the company has to be private person or company which are not the residents of Cyprus and the ownership (either private person or company) has to be foreign (outside of Cyprus). Business activity and source of income has to be outside of Cyprus, local borrowings to the Cypriot companies are not allowed and all local payments must be registered and reported. Annual invoices and reports must be reported to the Central bank. Tax non resident company does not have to pay taxes on net profits (12,5%) but has to pay all other expenses and liabilities. This company is ideal if you wish your company to has an EU status but are not interested in the benefits that tax resident company from Cyprus bring.

2.Company with management in Cyprus – tax resident
Director of the company has to be private person or the company which are the residents of Cyprus, while the shareholder can be either domestic (Cypriot) or foreign (private person or company). We can offer you the service of nominee director from Cyprus in order for your company to be tax resident. Resident Cypriot companies have full status of an EU company , they can register for a VAT number as well for other
numbers (EORI)..Companies with management from Cyprus can benefit from Tax treaties that Cyprus has signed with 45 countries.

 

Cyprus Tax Treatment of Offshore Operations:

Under the current tax legislation, Cyprus has the lowest tax regime in Europe and its role as an international financial centre is greatly enhanced. There is no longer a differentiation in the tax treatment of local companies and International Business Companies as a single corporation tax rate is applicable for all companies. Cyprus clearly stands as a prestigious tax – incentive EU country and is be free from suspicions usually associated with “tax-havens” which have zero tax.

 

The principal tax and other fiscal incentives may be outlined as follows (see also Cyprus Tax Reform):

  • An International Business Company (IBC) will pay a tax of 12,5% on its net profits if it is a Cyprus resident. An IBC is resident if its management and control is in Cyprus. Management and control is usually determined by the place of residence of the majority of the directors and the place where board meetings take place. Full advantage of the Cyprus double-tax treaty network can be obtained by resident IBCs
  • An IBC will pay zero tax if it is not considered to be resident in Cyprus. This will be the case when its management and control is outside Cyprus.
  • A non-resident IBC will not be able to obtain a Cyprus Tax residence certificate and therefore cannot utilise the double-tax treaty network.
  • There is no withholding tax on payment of dividends, interest and royalties by an IBC to non-resident individuals or companies.
  • Dividend income received in Cyprus by an IBC is wholly exempt from tax in Cyprus (under certain conditions).
  • Profits earned from a permanent establishment abroad are fully exempt from corporation tax.
  • Profits from the disposal of shares are not taxable for all Cyprus tax residents.
  • 50% of interest received is exempted unless the interest arises in the ordinary course of business (e.g. interest on overdue debtor balances).
  • There is no restriction in the carry-forward of tax losses. They can be carried forward indefinitely to be set-off against future profits.
  • Group relief is available whereby losses from a company can be set off against taxable profits of other companies in the same group.
  • Reorganisation, amalgamations, mergers and acquisitions of companies can be effected without any tax implications.
  • Exemption from capital gains tax (except on sale of immoveable property situated in Cyprus).
  • No exchange control restrictions – an IBC can open a bank account in any currency in Cyprus and abroad.
  • Cyprus has 50+ Double Tax Treaty agreements which apply to 40+ countries and which can be exploited to minimise tax.
  • Confidentiality and anonymity of beneficial owners is safeguarded (true identity is only disclosed to local banks, if a local account is opened and information is not disclosed to any third party or to other countries, except in the case of properly authorized criminal investigation (drugs, terrorism, e.t.c.) or by a court order.

 

In order to start the company opening procedure, please submit the following:

  • Name of the company (2-3 names)
  • Copy of the passport (certified with Apostille) – Original
  • Utility bill as proof of address (electricity, telephone, etc.) – Original
  • Reference letter from the bank – Original
  • The opening procedure is approximately 3 weeks (it depends on Cyprus Registry where the company docs will be certified, + 7days).

INCORPORATION COSTS
  • Opening fee
    Apostille certification of all documents
    Registered office
    Company’s secretary
    Courier fee
    1900 EUR

ANNUAL FEES
  • Registered office
    Company’s secretary
    500+19% VAT EUR
  • Registrar of Companies
    + 350 EUR annually

OTHER SERVICES
  • Nominee director - corporate (this is not obligatory, it is for concealing identity purpose)**
    + 300 EUR annually
  • Nominee director - private person (this is not obligatory, it is for concealing identity purpose)**
    + 600 EUR annually
  • Nominee shareholder - private person (this is not obligatory, it is for concealing identity purpose)
    + 600 EUR annually
  • Nominee shareholder – corporate (this is not obligatory, it is for concealing identity purpose)
    + 300 EUR annually
Full list of optional costs available upon request

About Cyprus

Republic of Cyprus is an island country in the Eastern Mediterranean and the third largest and third most populous island in the Mediterranean.

Cyprus is a presidential republic. The head of state and of the government is elected by a process of universal suffrage for a five-year term. Executive power is exercised by the government with legislative power vested in the House of Representatives whilst the Judiciary is independent of both the executive and the legislature.

The offshore regime in Cyprus has changed as part of the island’s accession to the EU, and as a result of agreements with the Organisation for Economic Cooperation and Development (OECD). Cyprus was excluded from the OECD’s June 2000 ‘harmful’ tax haven blacklist in return for pledging a commitment to amend its tax practices. In April 2009, Cyprus was placed on the OECD ‘white list’ of territories which have ‘substantially implemented’ the internationally agreed standard in tax transparency.

 

What is Cyprus IBC

Cyprus has one of the lowest corporate tax regimes in Europe and has become a well-established, popular international financial centre. Local companies and International Business Companies are taxed at the same corporation tax rate. Cyprus is a prestigious tax-incentive EU country and is free of the suspicions usually associated with “tax-havens” which have zero tax.

 

Tax in Cyprus

A company incorporated in Cyprus is considered to be a tax resident of Cyprus if it is managed and controlled from Cyprus. A company to be managed and controlled from Cyprus is expected to have the majority of directors residing in Cyprus and holding Board Meetings in Cyprus. A company which is tax resident in Cyprus is taxed on worldwide income at the rate of 12.5% which is one of the lowest in Europe. Dividends distributed to non-resident shareholders of Cyprus Companies are not subject to any withholding taxes in Cyprus. Cyprus has concluded tax treaties with more than 53 countries worldwide.
Apart from that a Cyprus company being an EU-based entity, is entitled to the benefits of the EU Parent-Subsidiary directive and the EU Interest and Royalty directives providing for withholding tax exemption for interest, dividends and royalty payments made by companies in other EU-member states to a Cyprus company.

A company incorporated in Cyprus is not considered to be a tax resident of Cyprus if it is not managed and controlled from Cyprus. A Cyprus company not managed and controlled from Cyprus is expected to have the majority of the directors residing outside Cyprus and holding Board Meetings outside Cyprus. Companies incorporated in Cyprus but not tax residents of Cyprus are not subject to taxation in Cyprus and considered as Offshore Companies.
A Cyprus non-resident company cannot take advantage of the Double Tax Treaties concluded by Cyprus, nor obtain VAT number.

 

Nominee Service

Nominee Service is consisted of Nominee Director and/or Nominee Shareholder. Both, resident and non-resident Nominee Directors and Shareholders are available in Cyprus.

 

Accounting and Audit

According to the Companies Law in Cyprus (Cap.113), Cyprus Companies (active and/or dormant) have to prepare Financial Statements (accounting) on the basis of the International Financial Reporting Standards (IFRS) within 18 months of incorporation.

Cypriot companies are required to have their financial statements audited by registered auditors in Cyprus.

 

List of documents received for standard IBC

  • Memorandum and Articles of Association in the official Greek language (English certified translations are prepared by our firm)
  • Certificate of incorporation
  • Certificate of registered office
  • Certificate of directors
  • Certificate of shareholders

 

Privacy

Cyprus has legislation in place to protect the privacy of offshore bank account holders, the owners of Cyprus trusts and Cyprus International Business Companies. Cyprus offshore companies or International Business companies are also awarded privacy per the companies’ legislation of offshore Cyprus. Company’s legislation allows for the registration of Cyprus offshore companies beneficial owners need not be filed with the Registrar of Companies. Company legislation allows for the incorporation of companies using nominee shareholders and directors. The names of the beneficial owners will remain private.

 

Corporate name

A company name must be chosen and approved by the Registrar of Companies. Any name that is identical or similar to an existing company or implies to illegal activity will not be approved.

 

Bank account

For Cyprus IBC we can assist you with the bank account opening in Cyprus or internationally. The banks we cooperate with are reliable financial institutions with a long tradition in private and corporate banking. Our clients are provided with an excellent customer service, online banking, Visa and/or Master cards, as well as other services, such as factoring, foreign exchange, savings and specialized banking solutions.

 

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