Business & Corporate Structures
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Cyprus Companies have many competitive advantages compared to companies from other global business centers. This is due to the fact that Cyprus offers considerable, EU compliant opportunities to minimize tax exposure. Thousands of investors every year set up companies in Cyprus taking advantage of the flat 12,5 per cent corporate tax rate and of the network of double taxation treaties set in place, along with the highly professional services and the business-friendly environment Cyprus has to offer. Indeed, Cyprus is the location of choice for the international business community as well as for reputable multinational organizations and individuals seeking a tax- efficient jurisdiction. The laws and regulations for setting up and administering Cypriot entities are the same for foreign investors carrying on international business activities as they are for local investors. Cyprus Companies can be used as Holding, Finance, Investment, Trading and Shipping Companies. Companies are registered with the Department of the Registrar of Companies. The law caters for the concept of re-domiciliation of foreign companies from other jurisdictions to Cyprus provided that certain terms and conditions are met. Under Cyprus company law, corporate entities may be registered in the following legal forms: • Cyprus Company • Branch of a Foreign Company • Partnership • Sole Proprietor • Cyprus Intentional Trust • Cooperatives |
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COMPANY COMPLIANCE
Every Cypriot company is required to maintain proper accounts, to prepare financial statements and to be audited in accordance with IFRS standards. There is also the requirement for filing annual financial statements prepared in Greek and a company annual return to be submitted to the Registrar of Companies. The translations are often undertaken by the local advisers at a favorable cost.
BUSINESS RESTRICTIONS
Unless a company is seeking to provide banking, insurance, financial or investment advisory services from Cyprus or undertake professional or medical services, there are no licenses or permissions required to commence business in Cyprus.
KEY FEATURES OF THE CYPRUS TAX SYSTEM
• The lowest effective tax rate in the European Union
• 12,5% headline corporate tax rate
• Foreign source income generally tax exempt
• Profits on transactions in shares tax-exempt
• Generous tax deductibility rules reduces effective tax rate
• No withholding taxes on outbound dividends, interest & royalties, irrespective of the country of destination i.e. tax free exit
• EU tax directives apply
• Parent / Subsidiary
• Interest / Royalties
• Reorganizations
• Unilateral credit relief for foreign taxes
• No CFC legislation
• No thin capitalization rules
• No detailed transfer pricing rules (arm’s length principle only)
• No capital gains tax (except on real estate situated in Cyprus)
• No taxes on entry, reorganizations and exists
• No wealth taxes and only minimal stamp and local taxes
• No exchange controls
• Most international transactions free of VAT
• Low personal tax regime – top rate 30%
• OECD approved / EU compliant system
• A tax administration that wants to help foreign investors
• Wide network of favorable tax treaties with 45 countries
Double Tax Treaties
Cyprus has concluded double taxation treaties with 45 countries which provide important tax advantages to Cyprus Companies. Treaties with the Central and Eastern European countries, China and India contain no anti-avoidance provisions and Cypriot companies may therefore be used beneficially as holding, licensing and financing enterprises in those countries. Of the treaties now in force, only those with Canada, Denmark, Germany, France, Sweden, the UK and the USA contain limitation of benefits which only affect the distribution of income from these countries to Cyprus and not income flows from Cyprus to other countries.
CYPRUS – RUSSIA DOUBLE TAXATION TREATY
Cyprus and Russia have a long history of friendship and mutual cooperation which dates back to 1960. Russia was one of the first countries to recognize the newly established Cypriot state following independence from Britain. Cyprus’ double taxation agreement with the USSR, which maw first signed in 1982, was published as a new Cypriot – Russian version in 1998. The text, which was updated by a Protocol in October 2010, continues to provide a preferential tax rate on dividends, no withholdings tax on interest and royalty payments.
Every Cypriot company is required to maintain proper accounts, to prepare financial statements and to be audited in accordance with IFRS standards. There is also the requirement for filing annual financial statements prepared in Greek and a company annual return to be submitted to the Registrar of Companies. The translations are often undertaken by the local advisers at a favorable cost.
BUSINESS RESTRICTIONS
Unless a company is seeking to provide banking, insurance, financial or investment advisory services from Cyprus or undertake professional or medical services, there are no licenses or permissions required to commence business in Cyprus.
KEY FEATURES OF THE CYPRUS TAX SYSTEM
• The lowest effective tax rate in the European Union
• 12,5% headline corporate tax rate
• Foreign source income generally tax exempt
• Profits on transactions in shares tax-exempt
• Generous tax deductibility rules reduces effective tax rate
• No withholding taxes on outbound dividends, interest & royalties, irrespective of the country of destination i.e. tax free exit
• EU tax directives apply
• Parent / Subsidiary
• Interest / Royalties
• Reorganizations
• Unilateral credit relief for foreign taxes
• No CFC legislation
• No thin capitalization rules
• No detailed transfer pricing rules (arm’s length principle only)
• No capital gains tax (except on real estate situated in Cyprus)
• No taxes on entry, reorganizations and exists
• No wealth taxes and only minimal stamp and local taxes
• No exchange controls
• Most international transactions free of VAT
• Low personal tax regime – top rate 30%
• OECD approved / EU compliant system
• A tax administration that wants to help foreign investors
• Wide network of favorable tax treaties with 45 countries
Double Tax Treaties
Cyprus has concluded double taxation treaties with 45 countries which provide important tax advantages to Cyprus Companies. Treaties with the Central and Eastern European countries, China and India contain no anti-avoidance provisions and Cypriot companies may therefore be used beneficially as holding, licensing and financing enterprises in those countries. Of the treaties now in force, only those with Canada, Denmark, Germany, France, Sweden, the UK and the USA contain limitation of benefits which only affect the distribution of income from these countries to Cyprus and not income flows from Cyprus to other countries.
CYPRUS – RUSSIA DOUBLE TAXATION TREATY
Cyprus and Russia have a long history of friendship and mutual cooperation which dates back to 1960. Russia was one of the first countries to recognize the newly established Cypriot state following independence from Britain. Cyprus’ double taxation agreement with the USSR, which maw first signed in 1982, was published as a new Cypriot – Russian version in 1998. The text, which was updated by a Protocol in October 2010, continues to provide a preferential tax rate on dividends, no withholdings tax on interest and royalty payments.
SOME OF THE COUNTRIES THAT CYPRUS
HAS DOUBLE TAX AGREEMENTS WITH,
INCLUDE THE FOLLOWING:
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