Cyprus Company Incorporation and Management
Cyprus is a major offshore and onshore business centre, with a prosperous economy, excellent business facilities and thousands of offshore companies are registered here. There are 50 double tax treaties signed between Cyprus and other countries. The existence of these treaties, combined with the low tax paid by a Cyprus company offer the possibilities for effective international tax planning. The main objective of the double tax treaties is to avoid the double taxation of income earned in any of the two contracting countries. This is done through the tax sparing provisions whereby tax is credited against the tax that must be paid in the contracting state.
The Cyprus Company Law, Chapter 113, is based on the English Companies Act of 1948. Therefore the legal system and return forms are identical to those in the UK.
Legal Forms of Companies Under the Cyprus Law
1. Company Limited by shares which is subdivided into:
(a) Public companies and
(b) Private companies which are also sub-divided into:
i. Exempt Private Company
ii. Limited Private Company
2. Company Limited by Guarantee:
The Partnerships and Business Name Law, Chapter 116, also provides for two general types of Partnerships:
(a) General Partnership
(b) Limited Partnership
Further, section 347 of the companies Law Chapter 113 provides for the registration in Cyprus of foreign companies under the form of a branch.
The International Business Company is considered as non-resident for exchange control purposes and it can operate freely foreign currency bank accounts with any bank in Cyprus or abroad.
The net profits of the company are liable to income tax at the rate of 12.5%.
The beneficial owners of International Business Companies are not liable to additional tax on dividends or profits over and above the amount paid or payable by the respective company.
No capital gains tax is payable on the sale or transfer of shares in an International Business Company. No estate duty is payable on the inheritance of shares in an international business company in the case of the death of a shareholder. No capital gains tax is paid by the transfer of immovable property owned abroad (outside Cyprus).
International Business Companies do not pay stamp duty on documents which relate to transactions connected with their normal overseas activities.
An International Business Company does not pay on its net profits any kind of special contributions or defence contribution.
Interest and royalties paid by the Cyprus International Business Company to non residents are not subject to withholding tax if the use of such rights is outside Cyprus.
The Procedure of Registering a Company
The first step in the process is the choice of the name of the company. An application is filed to the Registrar of Companies with the requested name. The period for the approval of the name is 4-7 business days. Once the name is approved, the Memorandum and Articles of Association of the company are prepared and submitted for registration to the Registrar of Companies together with the information regarding the officers and shareholders of the company. The Registrar of the Companies usually gives a registration number within 4-5 working days and then the corporate certificates are issued either in English or in Greek.
Directors of the Company
The minimum number of directors is one, who can be either an individual or a legal entity. Usually members of our firm are appointed as nominee directors in order to execute the board meetings and resolutions in Cyprus. In this way management and control is made in Cyprus for tax purposes.
Shareholders of the Company
The minimum number of shareholders is one. Foreigners who do not wish to appear as registered shareholders may appoint nominees to act for them as registered shareholders, whilst the actual ownership shall always rest with the non-resident beneficial owners of the shares. Our firm can provide nominee shareholders services upon request.
The existence of the company secretary is required by the Law. The secretary of the IBC must be appointed by the directors. Although the nationality of the secretary is immaterial it is recommended the secretary of the company to be a resident in Cyprus.
The Cyprus Company Law requires the presence of the registered office of the company on the territory of Cyprus. The firm maintaining the IBC offers the services of a virtual office with telephone, fax and all other relevant facilities to assist in the administration of the IBC. The registered office is the place where writs, summonses, notices, orders and other official documents can be served upon the company. The advocate’s office is usually declared as the registered address of the company, where fax, telephone and other facilities are provided.