Company Incorporation
Cyprus
Why Cyprus ?
Because you can get a EU
VAT number to trade in EU !!
You can arrange the company so you end up paying almost no tax.
Cyprus, a full member of the
EU as from 1st May 2004, can offer you the lowest tax regime in Europe. As
an already established international financial centre with a wide network of
Double Tax Treaties, an excellent legal and economic infrastructure and
numerous other advantages, Cyprus may well be the answer to your
international tax planning requirements.
It is a major destination for the location of international, holding
companies and worldwide investments and has features which are unique in the
offshore world. It has an excellent economic, professional and financial
services infrastructure and as a consequence of the numerous incentives
offered by the government based on its recent established policy, Cyprus is
an attractive international business and worldwide investment centre.
Cyprus is also one of
Europe’s most advantageous tax planning locations, offers the lowest tax
regime in Europe and may accommodate any of your international tax planning
requirements through its numerous tax benefits.
In particular, some of main
tax advantages are the following:
- Favourable tax regime
including 10% corporation tax rate
- Low set up and
operating costs
- Access to the EU
Parent-Subsidiary Directive and EU Interest and Royalty Directive
through which no withholding taxes imposed on dividends, interest and
royalties for non-residents (whether a company or an individual)
- Income from dividends
is exempt from income or corporation tax
- Exemption from income
or corporation tax of gains made by an individual or company resident of
Cyprus from the sale of securities
- A favourable tax regime
that Cyprus provides for a holding company by which subject to certain
conditions full exemption from local taxation in respect
- of dividends received
by a holding company from its local and foreign subsidiaries
- A favourable tax regime
for international trusts
- The network of double
taxation treaties with more than 40 countries
- Tax advantages
available to non-residents including non - E.U. residents
- The tax regime permits
losses to be carried forward indefinitely
Moreover, other important
advantages to be mentioned are the following:
- Member of the European
Union since 1st May 2004
- Low capital
requirements
- Competitive fees for
corporate formation and administration
- Legal system based on
English common law
- The English language
being widely known and used in Cyprus
- Non-complex
administrative procedures for acquiring necessary permits
- Freedom of movement of
foreign currency
- Highly qualified and
multilingual labour force
- Exceptional accounting,
legal and other professional services
- Well developed and
highly organized banking system
- The geographic location
of Cyprus at the crossroads of Europe, Asia and Africa
- Demogratic regime and
free market economy
- Very low crime rate
- European standard of
living
- Political stability
- Pleasant climate
Order here
your company in Cypru.
For your convenience, we have included a
Cost Calculator
in the order form:
The
following table presents the current Legal Fee Schedule:
Registration and annual maintenance costs
Our fees for incorporation and annual maintenance
of IBC's are listed below in € euro
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Fee schedule / Basic services |
€ |
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Incorporation plus the following documents:
Memorandum and Articles of Association
Certificate of Incorporation
Certificate of shareholders
Certificate of officers
Certificate of registered office address
Minutes appointing First Director(s)
First years registered office
First years secretary
In addition:
Apostille incorporation documents
*the price includes government fees for
registration |
1,950 (one-off) |
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Company secretary: |
200 (per annum) |
|
Registered Office address |
200 (for annum) |
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Nominee Director: |
300 (per annum) |
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Nominee Shareholder: |
300 (per annum) |
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Mail forwarding: |
Depends on volume of correspondence and
destination |
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Annual audit, tax return preparation and
submission to the IR authorities: |
800 (per annum for dormant companies)
In case of non-dormant companies it will
depend on the volume of transactions but will be agreed with the
client beforehand. |
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Annual accounting work which includes
preparation of financial statements based on IFRSs, translation
and submission to the Registrar of Companies every year and
periodic VAT return preparation and submission to the VAT
Authorities: |
800 (per annum for entities with transactions
up to 20 per quarter i.e.200 per quarter for a maximum of 20
transactions each quarter). In case of more transactions per
quarter, the fee will be agreed with the client beforehand.
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Bank Introduction and account opening:
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300 (one off) |
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Bank account maintenance |
To be agreed on a case by case |
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Tax consulting and compliance:
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To be agreed on a case by case |
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Management reporting on a basis agreed with
the client (i.e. monthly, quarterly, six monthly etc)
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To be agreed on a case by case |
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Obtain VAT number |
300 (one off) |
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Obtain TAX number |
200 (one off) |
| The share capital
of the company need not be deposited in the bank.
The big capitalization is preferable to be made via a share
premium account and not as a share capital.
For example a share capital of 1 million would have 6000 euro
extra governmental fees. So all lawyers/accountants in Cyprus
advice clients to issue shares at a premium and thus avoid this
high government fees.
So there is no real need to deposit share capital in bank
account, however the share capital (lets say of 1000 euro) could
be paid up by the shareholder in order that there is no taxation
of 9% imposed on the company on amounts owed by shareholders.
Order here
your company in Cypru.
For your convenience, we have included a
Cost Calculator
in the order form:
Our
office
in Cyprus provides virtually all the services required for the
establishment and administration of international
business (offshore) companies such as:
Incorporation
of international business entities
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-
International business companies
- Branches
of overseas companies
- Offshore
banking units
-
International trusts
- Financial
services companies
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Office set-up
and relocation
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- Obtaining
residence and work permits
- Locating
office and residential accomodation
- Purchase
of property
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Company
Secretarial services
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- Provision
of registered office
- Provision
of nominee shareholders and directors
- Filing of
returns with the Registrar of Companies
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Administration
and other services
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- Mail
forwarding
- Provision
of telephone, fax and e-mail services
- Opening
and monitoring of bank accounts
- Processing
bank transfers
- Invoicing
-
Legalisation of documents
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Audit,
accounting, payroll and tax services
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-
Bookkeeping services
- Payroll
services
- Tax
consultancy
-
Preparation of management accounts
-
Preparation of audited accounts
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Administration services
Depends on time we spend on the company's affairs.
The fees, which are very reasonable, are always agreed in advance with
the client.
Bookkeeping, tax and audit
Accounting records must be kept by every company in
Cyprus. Also, annual audited financial statements must be submitted to
the Inland Revenue and the Registrar of Companies.
Alliott Partellas Kiliaris Ltd, as practising
auditors and accountants can provide these services at very reasonable
costs which are always agreed in advance with the client.
Resident or Non-Resident? What are the options?
The option of whether to set up a resident
or non-resident IBC depends partly on whether the IBC wants to
take advantage of
Double Tax Treaties. A non-resident IBC does not qualify for
Double Tax Treaty benefits.
The pros and cons of the two options are:
- Option A - Company with non-resident shareholders set
up, having its management and control in Cyprus (resident
IBC)
- is subject to 10% corporation tax.
- is subject to 10% special defence contribution on
interest and 3% on rents (after deduction of 25%)
- is subject to 2% special coherence contribution on
the emoluments of their employees in Cyprus
- qualifies for Double Tax Treaty protection
- qualifies for unilateral tax credit
- Option B - Company with non-resident shareholders set up
having its management and control outside Cyprus
(non-resident IBC)
- is not subject to tax in Cyprus except for income
derived from Cyprus
- does not qualify as resident of Cyprus for Double
Tax Treaty benefits
- unilateral tax credit is irrelevant
Comment:
If profits from an IBC are not to be
repatriated but instead transferred to a foreign bank account by
the shareholders (e.g. Switzerland) or left in a foreign
currency account in Cyprus, then option B may be the option to
choose. If Double Tax Treaty protection is required, then option
A should be considered.
It should be obvious, however, that there
are many opportunities for successful corporate tax planning
which may effectively lead to reduced or even 0% tax in Cyprus.
(Using another offshore company that have 0% income tax, like
Delaware, Panama, Seychelles, BVI,...) |
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Order here
your company in Cypru.
For your convenience, we have included a
Cost Calculator
in the order form:
|
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Registration Procedure
An IBC can either be resident in Cyprus (provided
its management and control is in Cyprus) or it can be non-resident (if
its management and control is outside Cyprus).
Further an IBC can either operate from a
fully-fledged office with permission to employ expatriate staff or it
can have its registered office at the office of a local accountant or
lawyer (our office address can be used for this purpose).
Whatever the type of IBC, the application procedure
is basically the same.
The basic steps and information required for the
formation of an IBC are outlined below:
- Our application form / questionnaire must be
completed and either sent back to us by e-mail or fax.
- We must receive by fax a photocopy of the
proposed shareholders' passports as well as a bank reference for
each shareholder (from their native banks - specimen bank reference
letters disclosed in the application questionnaire). The original
copy of the passport (which must be notarized) along with the
original bank reference letter should be mailed or couriered to us.
- We submit the proposed company names to the
Registrar of Companies for approval. This usually takes 2-4 days (In
order to save time one of the approved company names from our list
can be selected).
- Once approval for the company name is
obtained, the memorandum and articles of association of the company
are prepared and submitted for registration to the Registrar of
Companies.
Some important points to note are:
- A brief description of the main activities of
the company is required to enable the drafting of the memorandum and
articles of association.
- There must be a minimum of one shareholder.
If anonymity is required, the shares may be held by a nominee or
trustee.
- There must be at least one director who
may be foreign or local .
- A company secretary must be appointed
and a registered office address in Cyprus must be specified
(required by law).
Our firm can provide nominee directors and
shareholders from our employees. The company secretary is always from
our office for purposes of administrative convenience and the registered
office is our office address. These services are provided at a small
annual fee.
The registration procedure for an IBC can usually
be completed within a period of eight working days (five working days if
an approved company name is selected).
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Documents and certificates
Following registration of the company, the
following documents are produced:
- Memorandum and Articles of Association in the official Greek
language (English certified translations are prepared by our firm)
- Certificate of incorporation
- Certificate of registered office
- Certificate of directors
- Certificate of shareholders
- Undated, signed share transfer documents and undated signed
resignation letters by nominee shareholders and nominee directors
respectively (if nominees are opted)
- Declaration of trust by the nominee shareholders
- Deed of indemnity whereby the beneficial owners indemnify the
nominees for their actions
Bank accounts can be opened at any local bank by
presenting copies of the above documents, together with copies of the
passports of the beneficial owners and bank references. Also, bank
accounts for the company can be opened anywhere in the world (usually
legalization of the above documents is required in order to open bank
accounts abroad - this can be arranged at an extra cost).
Day - to - day administration of the company
Our firm can undertake to perform the daily
activities involved in operating the company such as monitoring
bank accounts, processing bank transfers, invoicing,
bookkeeping, filing of Vat returns (where applicable),
preparation of profit and cash flow forecasts, preparation of
management reports, payroll preparation etc.
Annual requirements
Audited financial statements must
be submitted annually to the Income Tax Office. The
audit must be carried out by an auditor authorized under
Cyprus Law. Also, an Annual Return accompanied by a
Greek translation of the financial statements must be
filed with the Registrar of Companies, giving details of
directors, shareholders and registered office address.
Our office as authorized auditors,
can offer the above services to your company, ensuring
compliance with all regulatory requirements. |
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New Tax Legislation in Cyprus
The Parliament of Cyprus has approved
the changes in the tax legislation of Cyprus, which will be effective from 1
January 2003. The main goal of the changes was to harmonize the legislation of
Cyprus with European Union law and to follow the OECD directives concerning the
elimination of low taxes.
The main changes concerning the
Cyprus companies are as follows:
-
The distinction between Cyprus
local companies and Cyprus non-resident (i.e. offshore) companies will not
exist any more. All Cyprus companies will be taxed at the profit tax rate of
10%. Non-resident Cyprus companies which started their activities before 31
December 2001 could choose between the old advantageous rate of 4,25% and the
new 10% rate. The 4,25% tax rate was used until the end of 2005.
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Dividend income both from Cyprus
and from abroad is wholly exempt from the profit tax.
-
The dividends, interest payments
and royalties paid to non-residents of Cyprus are free from withholding tax.
-
Profits earned from the foreign
branches of Cyprus companies are wholly exempt from profit tax.
These changes are not a big problem, because all
our clients will use a Delaware , or other 0% tax offshore company to minimize the taxable profit
of the Cyprus company.
Bank Accounts.
We will act on the client's behalf to open the required Bank
Accounts at Barclays
Bank PLC Cyprus, or other selected banks.
Computerized Accounting
System. Our Firm
provides a Computerized Accounting System exclusively for the use of our
International Clients where we keep their accounts. This service is chargeable
and depends on the volume of work.
Company Yearly
Financial Accounts.
Additionally, for Auditing and the preparation of the required Annual Financial
Reports (Balance Sheet, Profit & Loss, and other Tax reports), we enlist
companies in our "Group of International Companies for Auditing".
This service is provided with an associate Accountancy Firm from where we
negotiate lower fees than normal. Again, no fee is charged for
this service by us
TAX INCENTIVES
Main provisions affecting
International Business Companies
Under the current
legislation, Cyprus has the lowest tax regime in the European Union and
its role as an international financial centre is greatly enhanced. Due
to the extensive double - tax treaty network, Cyprus is an ideal
location for investments to and from Central and Eastern Europe and for
investments to and from the European Union.
The main provisions
of the tax legislation affecting International Business Companies
(IBC's) are outlined below:
(a) Cyprus tax residence
- A company is taxed if it is a
resident of Cyprus.
- A company is resident if its
management and control is in Cyprus. The incorporation of a company
in Cyprus is not sufficient to establish residence.
- Although the term "management and
control" is not defined in the legislation, it is generally
understood to mean the place where the board meetings take place or
where the majority of the board members reside.
- A company which is resident is
taxed in Cyprus on its worldwide income.
- Such income includes profit from
business activities such as trading, manufacturing, industrial,
mining, agricultural, profession or vocation, interest, rentals from
immoveable property, royalties and profit from sale of goodwill.
Foreign taxes paid are credited against Cyprus tax paid on the same
income.
- A company which is non-resident,
will only be taxed on its profits arising from a permanent
establishment in Cyprus. The term "permanent establishment"
basically includes an office, a branch, a factory or laboratory, a
mine, an oilfield, or a construction site for a project exceeding
three months. Rental from immoveable property located in Cyprus and
profit from sale of goodwill in Cyprus is also taxable irrespective
of the existence of a permanent establishment.
(b)
Corporation Tax
- There is no distinction between
local companies and International Business Companies. A uniform
corporation tax rate of 10% is applicable for all companies.
- Exemptions from corporation tax
- Dividend income
received in Cyprus by a foreign corporation is wholly exempt
from tax in Cyprus.
- Profits earned from a
permanent establishment abroad are fully exempt from
corporation tax except if:
- More than 50% of the
paying company's activities result in investment income; and
- The foreign tax is
significantly lower than the tax rate payable in Cyprus.
- Profits from the disposal
of securities are not taxable for all Cyprus tax residents
(individuals and companies).
- 50% of interest earned
other than interest earned in the ordinary course of business
(although other interest is subject to defence tax as explained
below).
- Tax losses
Tax losses can be carried forward indefinitely to be set - off
against future profits.
- Group relief
There are provisions for group relief whereby companies can transfer
losses to be set off against taxable profits of other companies in
the same group. Two companies will be considered as part of the same
group if one is a 75% subsidiary of the other or both are 75%
subsidiaries of a third company. Also, group companies must be
Cyprus residents.
- Reorganisations/amalgamations
The tax legislation adopts the relevant EU directive whereby
reorganisations, amalgamations, mergers and acquisitions can be
effected without any tax implications.
(c)
Special Contribution for Defense (withholding tax):
- On dividends payable
- There is a 15% withholding tax
on dividends distributed to shareholders who are residents of
Cyprus, but there is no tax on dividends paid to non-resident
shareholders.
- There is a deemed distribution
of dividends for an amount equal to 70% of profits if not
actually distributed within two years after the end of the tax
year in which the profits arose and payment of 15% withholding
tax on deemed distribution. Profits allocated to non-resident
shareholders are not subject to this tax.
- On dividends receivable
- Dividends received from a
foreign company are not subject to withholding tax of 15%
provided that:
- The company receiving the
dividend owns at least 1% of the company paying the
dividend;
- Not more than 50% of the
paying company's activities result in investment income; and
- The foreign tax is not
significantly lower than the tax rate payable in Cyprus;
- There is no tax on dividends
paid by a Cyprus resident company to another Cyprus resident
company.
- On interest earned
- There is a 10% tax on any
interest earned by any individual or company resident in Cyprus.
- On interest and royalties
payable
- There is no withholding tax on
payment of interest and royalties to non-resident individuals or
companies.
- On rents
- There is a 3% withholding tax
on rents earned by a Cyprus resident (after deduction of 25%).
- Note: The special defence
contribution on dividends, interest and rents is treated as income
tax for the purposes of Double Tax Treaties as well as for the
purposes of unilateral tax credit.
(d)
Capital Gains Tax
- Capital gains arising from the
sale of immoveable property outside Cyprus is not within the scope
of capital gains tax. Capital gains tax is only applicable for
immoveable property situated in Cyprus.
(e)
Value Added Tax
- The standard VAT rate ιs 15%.
- The reduced rate is 5%.
- Resident International Companies
an register for Vat in Cyprus so that they can benefit with zero
rated tax on Intra European trading and recover input-VAT on local
expense
(f)
Taxation of employees
- An individual is taxed if he is a
resident of Cyprus.
- An individual is considered
resident if he spends in Cyprus more than 183 days per fiscal year.
- All Cyprus residents are taxed in
Cyprus on their worldwide income. Such income includes:
- Employment income (including
benefits)
- Profits from a business
activity
- Rentals from immoveable
property and royalties
- Pensions received (pensions
from abroad may be taxed at the rate of 5% for amounts in excess
of CYŁ2000)
- Non-residents of Cyprus are taxed
in Cyprus only on income earned in Cyprus. Such income includes:
- Employment income (including
benefits), in relation to services rendered in Cyprus
- Profits from a business
activity which is carried out through a permanent establishment
in Cyprus
- Rentals from immoveable
property situated in Cyprus
- Pensions in respect of
employment exercised in Cyprus, with the exception of pension
paid from a fund established by the Government or local
authority
- Personal tax rates
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Chargeable income
CY Ł
|
Tax rate
%
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Accumulated tax
CY Ł
|
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0 - 10.000
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Nil
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Nil
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10.001 - 15.000
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20
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1.000
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15.001 - 20.000
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25
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2.250
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Over 20.000
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30
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- Taxation of expatriates
- If employed outside Cyprus, no
taxation
- If employed in Cyprus for 183
days or more, taxed on all income from employment
- If employed in Cyprus for less
than 183 days, taxed in Cyprus on the salary attributable to the
employment in Cyprus.
- The following types of income are
exempt from taxation
- Dividends
- Interest received
- Profits from the sale of
shares
- Salaried services rendered
abroad by a Cyprus resident for a period totaling more than 90
days in a fiscal year to an employer who is not a Cyprus
resident or at the permanent establishment abroad of a Cyprus
resident
- Special Contribution for Defence
(withholding tax):
- 10% on interest received
either in Cyprus or abroad
- 15% on dividends received
either from abroad or in Cyprus
- 3% on 75% of rental income
from property wherever located.
- Allowances deductible from income
by individuals
- Social insurance contributions
- Life insurance premiums
- Contributions to approved
provident funds, pension schemes and medical schemes
- For an employee who was not a
Cyprus resident and is now taking up employment in Cyprus for
the first time, a special exemption from income tax will apply
for the first three years amounting to 20% of his salaried
income up to a maximum annual amount of CYŁ5.000 p.a.
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further details about Cyprus
here
Order here
your company in Cypru.
For your convenience, we have included a
Cost Calculator
in the order form:
FIND/BUY RELATED
BOOKS!
Whilst
every effort has been made to ensure that the details contained herein are correct and
up-to-date, it does not constitute legal or other professional advice. We do not accept
any responsibility, legal or otherwise, for any errors or omissions.
Please go to our Uses of offshore Companies Page where you will
find interesting information on the benefits of using offshore companies and trusts for
business and personal use, links to information on other locations and details of our
products and services.
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