Main Characteristics and Tax Advantages of a Cyprus Company By: Symeou & Konnaris LLC

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