Cyprus - Company Incorporation

Advantages of a Cyprus Company

• A great degree of respectability amongst companies registered in other tax incentive or tax haven countries.
• Cyprus is not considered to be a tax haven but a tax incentive country.
• No withholding of tax on dividends.
• No capital gains tax.
• Freely transferable accounts of any currency may be kept either in Cyprus or anywhere abroad without any exchange control restrictions.
• No exchange control restrictions once the approval for the registration of the company is granted by the Central Bank of Cyprus.
• All expenses incurred for the earning of income as well as annual allowance on fixed assets are allowed as deductions.
• Company's foreign employees working in Cyprus are liable to personal income tax at a rate from 0 to 20% and if working outside Cyprus but receiving their salary through Cyprus at a rate from 0 to 2%.
• Foreign employees are exempt from social insurance contributions.
• The net profits of the company are subject to a corporate tax at the flat rate of 10% and if such profits are derived from dividends received from another Cyprus offshore company, then no further tax is payable other than the flat rate of 10% paid only by the distributing company.  This rate is paid irrespective of whether they are managed and controlled from Cyprus or elsewhere.
• Shareholders are not liable to an additional tax on dividends over and above the amount of corporate tax paid by the company.
• Exemption from stamp duty on any contracts entered into by offshore entities.
• No estate duty on the inheritance of the shares provided the deceased was not domiciled in Cyprus.
• Duty free facilities are extended to offshore companies maintaining an office in Cyprus and to their expatriate personnel in respect of motor vehicles, office equipment and household effects (except furniture and air-conditioning equipment).
• Cyprus has a wide network of double tax treaties with many countries including Russia and other ex Eastern Block countries.  Specifically with reference to Russia, the tax treaty provides for zero withholding tax on dividends paid from Russia to a Cyprus company as well as on gains generated by Cyprus companies from the disposal of securities in Russia.
• The Owners identity can be kept secret, and nominee shareholders may be used.
• An offshore entity is not subject to any capital gains tax except on gains arising from the disposal or immovable property held in Cyprus.

Tax Advantages

The existence of double tax treaties combined with the low tax paid by offshore entities offer tremendous possibilities for international tax planning through Cyprus in view of the fact that:

• Any tax paid in a country with which Cyprus has a treaty is deducted from the Cyprus tax payable on the same income.
• Cyprus does not impose any withholding tax on dividends, interest and royalties paid by Cyprus offshore companies.
• Offshore entities are exempt from VAT on their trading activities.  Furthermore they do not pay VAT on telecommunication services and on goods eligible to be purchased duty free.
• No withholding tax is payable on dividends, interest and royalty payments.
• Full tax exemption of income derived by way of interest on foreign capital imported into Cyprus and deposited with banks operating in Cyprus.
• Offshore entities are full exempt from local social insurance schemes in respect of their foreign employees.
• Housing and office accommodation are easily available at reasonable prices.
• The professional and management services offered in Cyprus are of a very high standard.
• Foreign employees of offshore entities and their family members can secure work and residence permits.
• Offshore companies and their expatriate employees are allowed to purchase immovable property in Cyprus for their own use or their residence.