Introduction:
Cyprus position as an international financial center remains a right location for investments to and from other European Union countries, Russia, CIS and many other locations as Cyprus based companies enjoy the lowest tax regime in the European Union that is not offshore and its role as an international financial center is greatly enhanced.
In contrast to many countries commonly used for offshore structures, Cyprus has concluded a number of double tax treaties with many countries and has advantages that not a lot of other Offshore Business Centers can offer.
Main Characteristics of a Cyprus Private Limited Liability Company:
General
Type of entity: Cyprus Private Limited Liability Company (Resident)
Type of law: Common
Political Stability: Excelled
Currency: Euro
Language of Documents: Greek and English
Shelf company availability: Yes
Our time to establish a new company: 3 days
Language of Name: Latin or Greek Alphabet
EU Savings Tax Directive Applies: Yes, Cyprus is a member of the EU.
Corporate taxation: 12.5% Lowest in the EU.
Profit on sale of shares and securities: 0%
Investments income from dividend: 0%
Tax on dividends for foreign beneficial owners: 0%
Capital gains tax: 0% (except with respect to Real Estate situated in Cyprus.)
Register for VAT: Yes
Invoices from offshore companies: Accepted
Double taxation treaty access: Yes (over 40 countries)
Share capital or equivalent
Standard currency: Euro
Permitted currencies: Any
Minimum issued: €1,000
Usual authorized: €1,000
Directors or Managers
Minimum number: One (nominees may be used)
Corporate Director allowed: Yes
Local required: No, but advisable for purposes of tax residency
Publicly accessible records: Yes
Location of meetings: Anywhere, but Cyprus advisable for purposes of tax residency
Members
Minimum number: One (nominees may be used)
Corporate Shareholder allowed: Yes
Publicly accessible records: Yes
Location of meetings: Anywhere
Company Secretary
Required: Yes
Local or qualified: No, but Cyprus advisable for residency and compliance
Accounts
Requirement to prepare: Yes
Audit requirements: Yes
Local Auditor: Yes
Requirement to file accounts: Yes
Publicly accessible accounts: No
Other
Requirement to file annual return: Yes
Change in domicile permitted: Yes
Bearer Shares Allowed: No
Tax Advantages of a Cyprus company:
• The taxable profits of all Cypriot companies are taxed at the rate of 12.5%, the lowest in Europe that is not offshore. With proper tax structuring, much lower effective tax rates can be achieved.
• A fully EU and OECD compliant tax system (Cyprus is a respectable EU country, non – tax heaven jurisdiction).
• No withholding of tax on dividends.
• No capital gains tax.
• Tax exemption for profits from the sale of securities.
• Freely transferable accounts of any currency may be kept either in Cyprus or anywhere abroad without any exchange control restrictions.
• No withholding tax on payment of dividends, interest and royalties to non-resident individuals or to non-resident corporate shareholders.
• No thin capitalization and controlled foreign corporation legislation provides efficient tax planning opportunities.
• No time restriction on carrying forward of tax losses.
• Group relief provisions are available.
• Capital gains realized on immovable property held outside Cyprus will be exempt from capital gains tax.
• Cyprus has concluded an impressive number of treaties for the avoidance of double taxation. Along with the low corporate tax rates and the special provisions for holding companies, the Cyprus companies provide an excellent vehicle for effective international tax planning.
• The identity of the owners can be kept secret, and nominee shareholders may be used.
• The professional and management services offered in Cyprus are of a very high standard.
• Strong legal system based on English common law.
• Its strategic geographic location.
• Able to register for VAT purposes.
• No obligation for the Holding Company (or right) for VAT registration & compliance.
• Profits earned from a permanent establishment abroad are fully exempt from Cypriot tax, subject to certain conditions.
• No withholding tax on dividends received from EU subsidiaries.
Author: Panikos Symeou
