1 - Why should I choose Cyprus for doing business?

In today’s economy, multinational companies strive to increase quality while reducing costs. Cyprus serves both purposes, providing a number of important advantages: 

  • Cyprus is a full member of the European Union since 2004. 
  • The labour force of the island is comprised of young, highly educated multilingual professionals.
  • Lowest corporation tax rate in the European Union, at 10% on net profits.
  • High Foreign Direct Investment (FDI) performance.
  • Macroeconomic stability with successful economic performance, with GDP growth rate well above the average growth rate of the EU.
  • Strategic location in the Eastern Mediterranean, facilitating partnerships and serving as the springboard for investments among Europe, Africa, and Asia.
  • Efficient legal, accounting and banking services, offering a world-class service.
  • Advanced telecommunications network and infrastructure.
  • Reputable international shipping centre.
  • A wonderful environment for a very comfortable standard of living.
  • Freedom from Exchange Control
  • A wide network of Double Tax Treaties 
  • Access to EU directives
  • Membership of most international organisations and maintenance of friendly relations with the majority of developing and developed countries
  • Low set-up and running costs

 

2 - What are the tax advantages of registering a company in Cyprus?

Cyprus has become a popular international business centre, having the lowest corporate tax regime in Europe. Both local companies and International Business Companies are taxed at the same corporation tax rate of 10%. Cyprus offers a beneficial low tax rate and is considered to be a prestigious country to register your international business, having nothing to do with suspicious “tax-havens”.

  • Withholding taxes
    There are no withholding taxes on payments to non tax resident persons (companies or individuals) in respect of dividends interest and royalties. 
  • Dividends
    Any income received from dividends by a Cyprus resident International Business Company is exempt from tax in Cyprus (under certain conditions).
    Dividends paid from one Cyprus tax resident company to another are exempt from any tax in Cyprus.
  • Tax Losses 
    Tax losses can be carried forward indefinitely to be set-off against future profits until they are extinguished. Losses incurred from businesses carried outside Cyprus are allowed as a deduction against other taxable profits generated by the Cyprus Company. 
  • Group Relief
    Group relief is allowed for at least 75% group structures and is applicable only on yearly results if claimants are Cyprus tax resident companies and are members of the same group for the whole tax years.   
  • Royalties
    Gross amounts of Royalties from sources within Cyprus by a company which is not tax resident of Cyprus are liable to 10% withholding tax at source if the intangible property right, however is granted to a Cyprus Company for use outside Cyprus, then there is no withholding tax and the corporate rate of 10% is applied only on the profit margin left in the Cyprus company.
  • Tax Residency
    A company is considered to be tax resident in Cyprus if the management and control is exercised in Cyprus
  • Corporate tax
    Trading profits are taxed at the rate of ten percent (10%), one of the lowest corporate income tax rates in Europe.
  • Interest income
    Active Interest income (interest income effectively collected with the carrying on of a trade. or business of the company) is subject to corporate income tax rate of 10%, as regular trading income. 
     
    Passive interest income (income not collected to a trade or business) is exempt from corporate income tax that is taxed under Special Contribution for defence at ten percent (10%) on a gross basis. 
  • Foreign Permanent Establishments
    The profit of a Foreign Permanent Establishment (PE) of a Cyprus Company is exempt from corporation tax if one of the following two conditions is satisfied:
  1. The PE must not engage more than 50% directly or indirectly, in activities which lead to passive income,
    Or,
  2. The foreign tax burden is imposed on the PE must not be substantially lower than that in Cyprus
  • Trading in Securities
    Any income from trading in securities is completely exempt from corporate tax.

    The term ‘securities’ includes but is not limited to: ordinary and preference shares, options on titles, debentures, bonds, short positions on titles, futures/forwards on titles, swaps on titles, depository receipts on titles, rights of claims on bonds and debentures, index participations (only if they result on titles), repurchase agreements or repro on titles, participations in companies, units in open-end or closed-end collective investment schemes such as mutual funds, International collective Investment Schemes and undertakings for collective investments in transferable securities. 
  • Capital Gain Tax
    Capital gains are not included in the ordinary profits of a business, but instead are taxed separately under the Capital Gains Tax Law. Capital Gains from the sale of immovable property situated in Cyprus as well as for the sale of shares in companies other than quoted shares) in which the underlying asset is immovable property situated in Cyprus are taxed at a flat rate of twenty percent after allowing for indixation. 

    Capital gains that arise from the disposal of immovable property held outside Cyprus or shares in companies which may have as an underlying asset immovable property held outside Cyprus, are completely exempt from Capital Gain Tax. 
  • Inheritance or Estate Taxes 
    There are no Inheritance or Estate Taxes 
  • Wealth taxes
    Cyprus imposes no tax on wealth
 

3 - What is the procedure of Registration of a company in Cyprus?

 

Alpha Audit will take care of all legalities and applications required for registering your company in Cyprus. Alternatively, you can acquire a ready-made company from us. Please feel free to contact us to discuss your needs.

 

 

4 - Do I need nominee services?

Regardless of whom the actual registered shareholders are, a Cyprus resident International Business Company enjoys all available tax advantages.

Nominees are used for practical reasons to fulfil certain legal requirements, such as reaching the minimum number of shareholders, directors, etc.

 

5 - Do I have to come to Cyprus to register an International Business Company and to open a bank account?

There is no need to come to Cyprus in person to establish your International Business Company, or to open a bank account.

International business limited companies

An application has to be made to the Registrar of Companies for the formation of an international business company. The Registrar of Companies requires the following:

  • To approve the name of the company
  • Memorandum and articles of association must be submitted for filing

Share capital requirements

There are no minimum authorised and issued share capital requirements. However, a share capital of €2,000 is recommended. 

Shareholders

At least one registered is required for whom the following information is required

  • Full name
  • Nationality
  • Address
  • Number of shares to be held
  • Bank reference letter

Appointment of directors

From a tax planning point of view, it may be important that the company’s management and control is performed in Cyprus. For this to be the case, it is recommended that the majority of directors appointed are Cyprus residents. 

The following information is required for each director:

  • Full name
  • Nationality
  • Address
  • Occupation
  • Bank reference letter

 

Appointment of secretary and registered office

The existence of a secretary and a registered office address are mandatory and secretarial companies are allowed to act as secretaries for international business companies.

 

Formation, annual and administrative costs

The formation and registration procedures are normally completed within a period of a week. For total formation costs for a company including all out of pocket expenses, as well as for annual domiciliary costs required for running a company, i.e. directors, secretary, nominee companies and registered office address, please contact the CEO of our Firm. Professional fees are based on the time spent and the standard of the accountant/consultant involved and are very reasonable by European standards.

 

6 - Is a Cyprus resident International Business Company (IBC) entitled to open an office in Cyprus?

Yes. Work permits and residence permits are only required for non-EU nationals who will live and work in Cyprus.

 

7 - How are foreign employees of International Business Companies taxed?

If an International Business Company opens an office in Cyprus, the company can acquire permission to employ expatriate staff who will be living and working in Cyprus EU citizens may work in Cyprus but they must obtain a residence permit which is normally granted on application.

Work permits can be obtained by foreign employees of such companies, provided that the employees are employed in executive positions or in positions where there is lack of labour in the local labour force. A work permit is required for third country nationals wishing to work in Cyprus and is granted by a specific employer. These permits are normally issued for a period of one year and can be renewed. 

All Cyprus resident individuals are taxed at the same tax rates on their income arising in Cyprus and abroad. An individual is deemed resident if he lives in Cyprus for one or more periods which exceed 183 days per fiscal year. Non-residents are taxed only on their income arising in Cyprus.

 

8 -  Is it possible to receive the financial statements of a company registered in Cyprus?

Every company has to file its Annual Return with the Register of companies every year together with its financial statements in the Greek language. Every member of the public may conduct a company search. 

 
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