Cyprus & BVI: The Countries That Are Revolutionising Global Tax Planning

When it comes to trust settlement and administration, both Cyprus and the BVI have modern and efficient trust legislation that can efficiently facilitate the establishment and operation of companies and international trusts. This in combination with their respective company structures, offer efficient and comprehensive estate planning and asset protection.

With regards to trust settlement and administration, the two countries have proficient trust & equity legislation that can productively encourage the establishment and activity of international trusts. Together with Cyprus or BVI corporate structures, can offer effective and thorough domain arranging and resource security.

A structure including a BVI organisation can enjoy the benefits of a favourable tax system and their usage has been placed under a magnifying glass at various occasions as they are proficient and dependable to manage and operate.

Anyway, is this sufficient? Financial analysts and organisations are beginning to welcome the idea that in specific cases, tax efficiency isn't enough when structuring a business vehicle that will be automatically placed under investigation by certain countries that are becoming increasingly wary of any tax avoidance patterns or practices.

Additionally, low tax countries are not favoured by international customers because of the OECD’s base erosion and profit shifting initiative (BEPS) which mandates conglomerates to establish a transfer pricing policy.

As certain high-profile EU cases such as Amazon and Apple in Luxembourg and Ireland respectively have recently demonstrated, international trends now favour transparency and appropriate tax-sharing burdens over aggressive tax planning by corporations and individuals.

As certain prominent EU cases, for example, Apple Inc in Luxembourg and Ireland have both independently illustrated; worldwide trends are now leaning towards having a transparent and suitable tax-burden share rather than antagonistic tax planning schemes by companies and individuals alike.

Cyprus has introduced strict Anti-Money Laundering regulations and the legislative framework is in full compliance with the European Union.

See our article for a breakdown of the full benefits that Cyprus as a jurisdiction offers.

Cyprus has embodied the arm’s length principle in which is the cornerstone of the transfer pricing regulations. Such regulations govern intercompany pricing for services, royalties, goods and loans between entities in a multinational level. Cyprus has also introduced transfer pricing requirements in relation to intra group financing. Therefore, it follows the of

Section 33 of the Cyprus Income Tax Law follows the arm’s length principle which is the transfer pricing guidelines. Such rules oversee intercompany price evaluations for royalties, assets, and products and services between entities on a global level. Cyprus has likewise offered transfer pricing requirements in connection to group financing according to the BEPS initiative’s transfer pricing guidelines.

In addition, as more jurisdictions require companies to have “substance” in their presence in a respective jurisdiction, and not merely a registered office. Cyprus, building on its reputation as an established ship management centre, attracts international companies that relocate their headquarters, employees, operations and management staff to fulfil the substance criteria,

What's more, as more countries around the world are expecting organisations to have "substance" or presence in a country, rather than a registered office only. Cyprus, expanding on its notoriety for being a key maritime centre, draws in international companies that migrate their operations, registered office and business activities to satisfy substance criteria under new incentives that attract legal entities and HNWI’s to the island.

Meanwhile the BVI, trying to guarantee compliance and deter illegitimate tax avoidance, have tried to facilitate beneficial ownership data for those holding structures in the BVI by presenting another Valuable Possession System whereby enrolled operators are currently required to keep up a database of corporate and lawful elements for which they go about as enlisted specialists which will be private yet will be accessible by BVI experts so as to empower a productive and secure exchange of data to outside duty specialists when required.

The two jurisdictions are quickly moving from typical tax haven models of low taxes, secrecy and quick incorporation, to increasingly and progressively sustainable and accountable methods if company maintenance.


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