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  Professional offshore incorporations and offshore banking services since 1996

Company Incorporation flgcs.jpg (3340 bytes)
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:

order here


 

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

Fee schedule / Basic services

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)

Company secretary:

200 (per annum)

Registered Office address

200 (for annum)

Nominee Director:

300 (per annum)

Nominee Shareholder:

300 (per annum)

Mail forwarding:

Depends on volume of correspondence and destination

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.

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.

Bank Introduction and account opening:

300 (one off)

Bank account maintenance

To be agreed on a case by case

Tax consulting and compliance:

To be agreed on a case by case

Management reporting on a basis agreed with the client (i.e. monthly, quarterly, six monthly etc)

To be agreed on a case by case

Obtain VAT number

300 (one off)

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:

order here


 

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

  • International business companies
  • Branches of overseas companies
  • Offshore banking units
  • International trusts
  • Financial services companies

Office set-up and relocation

  • Obtaining residence and work permits
  • Locating office and residential accomodation
  • Purchase of property

Company Secretarial services

  • Provision of registered office
  • Provision of nominee shareholders and directors
  • Filing of returns with the Registrar of Companies

Administration and other services

  • Mail forwarding
  • Provision of telephone, fax and e-mail services
  • Opening and monitoring of bank accounts
  • Processing bank transfers
  • Invoicing
  • Legalisation of documents

Audit, accounting, payroll and tax services

  • Bookkeeping services
  • Payroll services
  • Tax consultancy
  • Preparation of management accounts
  • Preparation of audited accounts

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,...)

 


Order here your company in Cypru.
For your convenience, we have included a
Cost Calculator in the order form:

order here


 

=====================================================

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).
 

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.

 


 

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.

  • 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

     
      Chargeable income
      CY Ł
       
      Tax rate
      %
      Accumulated tax
      CY Ł
      0 - 10.000
      Nil
      Nil
      10.001 - 15.000
      20
      1.000
      15.001 - 20.000
      25
      2.250
      Over 20.000
      30
       

       
  •  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.

 


further details about Cyprus here


Order here your company in Cypru.
For your convenience, we have included a
Cost Calculator in the order form:

order here


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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.


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