Interview with Maria Vlaeva from Royce Office Cyprus

a) Consult a professional:
 

Whether you seek advice on moving your company or already have one, you need help of a professional local legal firm or a corporate service provider. They will be able to assist you with the incorporation of your company and answer all your existing questions.

 

b) Make sure your company has substance:
 

Why is substance important for companies? Because it has become that much more difficult for a company to obtain tax advantages without proving that the company is, in fact, an active operation with a clear economic purpose, an employed personnel and a business address. Because of some of the new regulations, substance now requires an actual physical office space, telephone and fax lines of the company, an email address and a website, qualified hired staff for all administrative work, a local bank account, the use of a local accounting service, and for most business activities to be performed from Cyprus.

 

c) Hire a competent financial advisor or accountant:

Having solicited financial advice is crucial to any business operation. A financial planner will be better suited to advise on how the recent tax reforms will impact one’s company and assist with the opening of a bank account.

 

d) Use Cyprus as a basis for International Tax Planning:
 

Engage in genuine tax planning and not aggressive tax planning, while ensuring tax efficiency and tax optimization through legitimate means. Cyprus is an ideal forum because it has an efficient and flexible legal system. It also has a wide range of DTTs, which are constantly under re-negotiation or review to meet the latest OECD standards

 

 

The recent changes in the regulatory requirements and international tax reforms and initiatives such as the Base Erosion and Profit Shifting (BEPS) have had a major effect on international financial centers. The changes are a result of discussions held by organizations such as the Organization for Economic Cooperation and Development (OECD) and the European Commission to address issues such as tax avoidance, aggressive tax planning, inequitable tax competition and the unscrupulous practices of ambiguity in double taxation evasion agreements. Cyprus has also been quick to adopt the common reporting standard (CRS), which would automatically provide information of financial institutions based in Cyprus to other jurisdictions within the CRS network. The latest alterations to the EU Parent Subsidiary Directive are also being taken into consideration in Cyprus’ legal order.

 

Cyprus is also successfully advancing in the process of implementing the Base Erosion and Profit Shifting (BEPS) initiative, for instance, the denial of granting tax advantages to companies lacking any proven substance on the island. The days of brass-plate companies are over. Substance is needed. BEPS is targeting bigger companies and many rules will not affect small and medium companies so much. In fact, the definition of a permanent establishment will even be widened with BEPS, helping smaller companies to get the permanent establishment easier with an office and some substance.

 

Cyprus is a signatory to the MLI and is also implementing tax treaty-related measures developed through the BEPS Project in order to prevent the abuse of DT Treaties.

 

Cyprus has also recently introduced new regulations for combatting money laundering and tax evasion guaranteeing that financial institutions, legal professionals and accountants employ the strictest compliance standards to ensure a transparent and safe business environment operating within the ambit of international legislation and regulations.

 

2. What are the biggest challenges for companies looking to set up in Cyprus? Any suggestions to companies looking to overcome these?

 

The cost of setting up and maintaining a fully-fledged operation: This can be overcome by engaging the services of an experienced and well-established company offering corporate services.

 

Establishing and maintaining residency: Cyprus residency legislation and regulations are very versatile and flexible. In addition to the classic residency rules, Cyprus, being a common law country differentiates between residence and domicile and offers the possibility of establishing a non-domiciled residency allowing a person to enjoy the advantages of a Cyprus residency without having to abandon his domicile. This can be achieved by engaging the right professionals.

 

Safely navigating the complex waters of international treaties legislation and regulations:This can also be achieved by seeking advice from qualified professionals.

 

3. Do you have anything else you’d like to share?

 

Due to all the actions undertaken by Cyprus in the active implementation and following of the new regulations, the island is strengthening its position as a respectable business and financial center.

 

Following the financial crisis of 2013, Cyprus has made a remarkable recovery thanks to the effective measures taken by the government and the cooperation spirit exhibited by all parties concerned, including trade unions and commercial institutions who have shown a great degree of flexibility and have proven that the Cyprus economy is a strong and versatile economy able to withstand and endure a high degree of stress.

 

Recently enacted legislation and policies adopted appear to be on the right path to bring home the point and persuade foreign investors that Cyprus is still the right forum for international business operations offering a modern, transparent and versatile business environment, with well-educated and highly skilled professionals applying the highest compliance standards.

 

Maria Vlaeva – Brand Manager at Royce Office Cyprus