Located in the Eastern Mediterranean, the island of Cyprus is conveniently situated at the hub of three continents; Europe, Asia and Africa. The population of the Republic of Cyprus currently stands at approximately 850,000 with the majority residing in the four main towns of Nicosia (the capital), Limassol, Larnaca and Paphos.
As a former British Colony, English is widely spoken throughout the island with 80% of the population being relatively fluent. The legal system is structured on its English counterpart and is based on common law with many Cypriot Lawyers being trained in the UK. The Republic of Cyprus is a free market economy providing vast opportunities for international business and efficient tax planning. With first class legal and accounting services, excellent air links with Europe, the Middle East and Asia, Cyprus is a great location to conduct business.
Cyprus is a leader amongst international tax planning jurisdictions and registration of a company in Cyprus is the ideal mechanism for protecting a business. In the last decade the role of Cyprus in international tax planning has increased dramatically. As a member of the EU Cyprus has quickly gained a reputation as a reliable, legitimate jurisdiction with some of the lowest taxes in Europe in addition to having over 40 double tax treaties to assist in international tax planning.
Please contact us if you would like to receive additional information on Cyprus.
Based on new austerity measures there will now be a stronger enforced requirement that Cyprus enterprises are up to date on Annual Returns filing. The penalty for not filing will either be a fine or the legal entity being struck off. Read more
Eltoma can assist clients in setting up a Cyprus Investment Firm (CIF) which would provide them with a license that would enable them to provide the financial services including brokerage and portfolio management. A major benefit of operating a CIF is that there is no tax on the income that is generated from financial instrument transactions. Read more
Establishing and maintaining a holding structure
The formation of a holding structure is a great way to make sure assets are well managed in a way that results in strong growth. By having a holding structure it will be easier to identify where improvements can be made that will improve profitability. Read more
Key benefits of the island
In addition to having the lowest tax rate in the EU and other big tax advantages for enterprises, overall it is a simple and straightforward process to incorporate a company in Cyprus. A corporate bank account can also be opened without delay and the Directors of the entity do not have to be present in Cyprus. Read more
Procedure of company formation in Cyprus
A limited Liability Company is the most popular types of Cyprus offshore company. In order to assist with incorporation, Eltoma helps clients in completing several forms and providing the proper identification for the Beneficial Owner(s), Director(s) and Shareholder(s). Read more
Prices start at €1550 to incorporate a Cyprus legal entity. Price increase based on additional services required, nominee services, bank account opening, etc. Read more
Tax and accounting regulations
The following are the different types of taxes in Cyprus: corporate income tax, personal income tax, Value Added Tax (V.A.T.), special defense contribution tax, capital gains tax, Immovable Property Ownership Tax, inheritance tax, stamp duty tax. Entities are required to file every year and have an audit completed. Read More
Benefits of trading firms
There is no withholding tax in Cyprus. This applies to everything; dividends, interest, etc. In addition there is no capital gains tax. There is also no control of money as you will find in most EU countries.
Benefits of holding companies
A few reasons why Cyprus is a great location for a holding entity include that it has the lowest tax rate in EU at 12.5 %, tax free intercompany dividends and it is a trustworthy jurisdiction that is feature on the white list of OECD. When a Cyprus holding company disposes shares to the subsidiary or another one of the associated companies there is no tax liability.
Voluntary wind up
The voluntary winding up of a Cyprus legal entity is a 3 stage process. Initially a board meeting must be held where it is decided to proceed. A liquidator must be appointed at the meeting and relevant documentation must be filed. Finally a Certificate of Dissolution must be obtained.
Double taxation treaties
To avoid having to pay tax in more than one country, double taxation treaties have been established. There are a total of 45 such agreements that Cyprus has with other countries. By having these agreements withholding taxes on capital gains, royalties, interest and dividends can be eliminated in some cases.
Acquire temporary work permit for Cyprus employees
Eltoma has experience in acquiring temporary work permits. These are for employees that come from non – European countries. An International Company must first apply to obtain a permit that allows them to employ non – European personnel. Read more
A combination of favourable factors have led to Cyprus becoming a popular jurisdiction to form a company and in the last decade the role of Cyprus in international tax planning has increased dramatically.
The admittance of Cyprus to the European Union in May 2004 has ensured advantages in terms of increased legitimacy and compliancy; Cyprus is now included in the Organisation for Economic Cooperation and Development (OECD) White List.
One of the major benefits of Cyprus is the Corporation Tax Rate; Cyprus has one of the lowest tax rates in the EU with only 12.5% Corporation Tax.
Additional benefits are as listed below:
- The incorporation process for a Cyprus company is simple and straightforward. A Cyprus company can be incorporated with only one Director and Shareholder in addition and there are no restrictions on foreigners acting as Director or Shareholder. Prior to incorporating the name must be approved by the Registrar of Companies. Providing there are no companies with similar name approval will be granted quickly. Filing in English is permitted.
- Lowest corporation tax in Europe of 12.5%.
- Favourable tax regime for Cyprus holding companies, including no tax on consolidation, no controlled foreign company (CFC) rules, etc.
- No taxation on inward or outward dividends and no Capital Gain Tax (CGT) on sales of securities. Due to this many security traders have trading offices in Cyprus.
- There are more than 40 double tax treaties (DTT) concluded with other countries.
- A bank account for a Cyprus company can be open quickly and efficiently without the directors of the company being present. To open a bank account remotely notarisation and legalisation of documents of directors and shareholders of Cyprus company is required.
- Cyprus has adopted International Financial Reporting Standards (IFRS).
The Cyprus Investment Promotion Agency (CIPA) is a registered not-for-profit company limited by guarantee and fully funded by the government of Cyprus, with the aim of encouraging investment in Cyprus.
Please find brochures produced by CIPA that provide additional information about the benefits of Cyprus. In the document CYPRUS FOR FUNDS, you can read about:
Setting up funds in Cyprus PDF
In the document, Cyprus – Invest with confidence, CIPA gives the current overview on the investment situation on the Island. This report shows you key benefits of Cyprus as a location for your investments, clearly describing reasons. In “Cyprus – Invest with confidence” you can read about:
Invest in Cyprus PDF
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Notional Interest Deduction: A Useful Tool for Cyprus Companies
The corporate income tax rate of a Cyprus-resident company is 12.5% on its global taxable revenue, with unilateral credit for related foreign tax suffered. Moreover, non-Cyprus residents are not liable to pay Cyprus withholding taxes on payments. Frequently, the effective corporate tax rate is much lower, or even as low as nil, due to various tax exemptions and allowances.
How Cyprus is Retaining its Competitive Edge as a Favourable EU Jurisdiction for Tax Purposes
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Dormant Companies: A Definition by the Cyprus Inland Revenue Dept
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