Offshore Company in Cyprus

Since joining the EU, Cyprus has ceased to be a global tax haven but has not lost its key advantages for international companies:

• Possibility of cooperation with any European parties. If you open a company in European jurisdiction, you can duty-free transport of goods throughout the EU.
• The island uses the friendliest EU VAT rates of 19% and corporate tax rates of 12.5%.
• You can get a residence permit in Cyprus for an investment of 300,000 euros.
• All income derived by Cypriot companies from the purchase/sale of securities, interest, dividend income, and royalties is to be taxed at zero rate.

Cyprus benefits

The Republic of Cyprus, previously considered a colony of Britain, since 2004 is in the European Union, is not in any “black list” offshore jurisdictions, but still offers the most advantageous tax rates in the EU. Today you can register an offshore company in Cyprus for literally 4-6 working days if you have the necessary documents and requirements.

The logical question – for what offshore, if the state of Cyprus is not considered a classic offshore? Actually, the offshore company is called any, registered in other jurisdiction. The island state itself is situated in the offshore zone, thanks to tax relief and an attractive tax system. If we consider the key sectors of the economy of Cyprus, the biggest number of firms, including enterprises with foreign participation open in the spheres of tourism, insurance and financial sector, IT, and also in the field of commercial construction. Quite popular is the registration of investment funds and trusts in Cyprus.

Advantages of opening offshore companies in Cyprus

Every investor and businessman wants to minimize tax payments and optimize the operating costs of his companies. Not surprisingly, Cyprus receives an impressive annual increase in the number of new legal entities that are registered by third-country persons. The second important point, considered by many as an obstacle to effective action, is public authorities, which often impede the development and prosperity of business. Cyprus is practically an ideal state from the point of view of taxation and economic and political stability.

Key advantages of Republic of Cyprus for international and cross-border business activities are presented below:

• optimal geographical location (access to markets in Europe, Asia, Africa)
• great amount of agreements on avoidance of double taxation (SIDCs) which allow withholding of taxes only once
• ability to use trade agreements within the European Union
• licenses, permits of Cyprus permit to operate/provide services in any country within the EU
• total absence of exchange control
• a wide range of income classes fully exempt from taxation in Cyprus
• special tax regimes for VAT payers – effective rate can be 9% or 5% instead of standard 19%
• state protection of assets with guarantee of confidentiality, etc.

Indeed, it is difficult to describe all the advantages of jurisdiction. Besides the above-mentioned points, in addition, there are special stock agreements, with which you will protect yourself from unlawful actions of other owners. It’s quite easy to prove the economic presence of companies in the country and absolutely legal activities of a registered offshore company in Cyprus.

Cyprus terms of development of international and local business

Under the present conditions, the opening of a company should not be associated with illegal capital outflow, erosion of the tax base, or concealment of income; therefore, Cyprus is very often viewed as an ideal option for legalizing one’s business with savings on tax payments. The great advantage of the desire to register an offshore company in Cyprus is the possibility of foreign employees with third-country citizenship moving to the country, officially finding employment and staying in the country with family members – may apply for a residence permit under the procedure of family reunification.

Regarding the general atmosphere and business climate, offshore companies in Cyprus enjoy the following conditions:

• No taxation of net profit, less than any other European Union country: 12.5% corporate tax
• Zero VAT for exporting and importing goods and services within the European Union
• No taxation of dividend and interest income, and royalties
• 0% Capital Gains Tax. Only the exception is the more rapid sale of real estate outside of Cyprus.
• Exemption of 80% of royalty income, or obtaining an effective tax rate of 2.5% upon its acquisition with an advance ruling.
• IT companies receive a special tax regime – IP box
• upon reorganization of the company is possible full exemption from taxation in case if the legal entity has no economic substance, no commercial purpose

Lawyers at RUE will help you duly register the offshore company in Cyprus, considering all the peculiarities and nuances of local legislation. Opening an offshore in the Cyprus jurisdiction is quite beneficial for those who conduct their activities in the field of investment and trade in financial instruments because a Cyprus license allows for providing services to professional and retail investors within any EU countries.

What are the conditions to be followed in order to register an offshore company in Cyprus?

In order for the registration authorities to establish a new company in Cyprus, it is required that there should exist an already licensed Cyprus Law Company. Further on, the future legal entity must provide a proof of a number of requirements:

• to have a registered capital of at least 1,000 EUR;
• Appoint at least one director-a representative, preferably from the tax residents of the Republic of Cyprus;
• Appoint a secretary-just like a director, he is also chosen at the general meeting of shareholders;
• Rent or buy property office in key decisions, documentation will be stored;
• Submit documents on shareholders-from 1 to 50 people is allowed in the form of LLC-and beneficiaries;
• attach to the application the necessary information-applications of incorporation, memorandum, personal data of shareholders, director, secretary, beneficiaries, etc.

Obligatory stages of opening of an offshore enterprise in Cyprus

Existing Cypriot legislation provides an order in which registration is to be carried out and starts with choosing the name for the company. All juridical bodies of the island state need to have the ending of Ltd (Limited), the name is verified by the business register, it is not possible to have two companies with the same name.

With regard to names, firms are prohibited from:

• assigning unsounding names
• Issue titles that imply illegality, and any relation to royal families;
• Choose names that will defame the reputation of any country

With RUE it is much easier to register an offshore company in Cyprus – our lawyers will promptly check the selected names, in the absence of similar – reserve the selected name for you. The next steps for the opening of the Cyprus firm are as follows:

• Registration of the company in the register
• Legalization of documents
• Opening a corporate bank account in Cyprus
• documents are issued for the operating company; starting from this moment, the firm can begin its legal activity.

You will be required in advance to choose an office and finalize with a lease agreement of at least 1 year. It is allowed to use in Cyprus the so-called virtual office; you can also place your employees in common offices, where the staff of other companies are working. Also, it is possible to rent a personal specialized office in Cyprus for your legal entity.

Important information about Cyprus offshore companies

Currently, Cyprus has no legal requirement concerning the residency of directors and secretaries; however, it is so much easier to confirm real presence with such Cyprus resident officers and, correspondingly, to obtain significant tax incentives. In any case, whether the company has an activity or not, annual financial statements with the opinion of a certified auditor are attached to the accounts for the previous reporting period.

The following are other significant aspects that arise in the context of the Cyprus offshore company registration:

• There is an advance payment procedure on tax on planned profit, adjustments are allowed during the second half of the year upon calculation of the final tax amount.
• Subsidiaries are entitled to transfer losses to the parent company’s income, including when the latter is in a different jurisdiction, and such losses can be carried forward with no time limitation.
• Due to crisis measures, the House of Cyprus has decided to postpone the liquidation of those companies that have no commercial activity.
• As far as Cyprus companies are concerned, information on the beneficiaries is not given in the public registers.
• Cyprus is almost fully compliant with all the international standards and provisions of pan-European directives.

All the court proceedings related to the Cyprus company registration should be performed by the representative, with legal higher education and a license to practice law.

It is also worth noticing that there is some specific public body in Cyprus, named Business Information Base. The aim is to inform large, medium, and small companies about modifications in available legislation, exclusive proposals, and new state incentives.