Company in Cyprus
Cyprus is a country located on an island in the eastern Mediterranean Sea, which is an intersection of trade routes of Europe, Asia and Africa. Cyprus is a member of the European Union and its capital city is Nicosia, also known as the cracked heart of the country. Of the EU member states, Cyprus is one of the most favourable countries for tax planning. Operating a company in Cyprus can prove to be the best solution, which is why a company in Cyprus is a very popular choice for Polish investors.
Establishing a company in Cyprus – advantages
The picturesque country attracts foreign investors with many aspects that make it easier for the company to operate. The popularity of registering a company in Cyprus results not only from the aesthetic qualities of this place, but primarily due to the business advantages. It is important to note that the country belongs to the European Union and the legal system is based on Anglo-Saxon law. In addition, the costs of maintaining a company in Cyprus are relatively low, and advice on running a company is offered by qualified and experienced professionals. Cyprus offers ideal solutions that encourage the development of a holding structure and, most importantly, guarantees economic confidentiality. Considering the above and analyzing the tax system in this country, Cyprus seems to be an ideal country to conduct business.
Taxes in Cyprus
Tax haven is a term used to describe places that have gained popularity among entrepreneurs wishing to set up a business abroad in order to optimise taxation. In the list of places where Poles willingly open a foreign company there is Cyprus described as a tax haven. There are many reasons for this and one of the most important is the favourable tax system. Cyprus has a low corporate income tax (12.5%). Moreover, it is also possible not to collect lump-sum tax on payment of royalties to foreign licensors and tax exemption on dividend payments between companies in holding structure.
Apart from the already mentioned low income tax, which the entities residing in Cyprus pay in the amount of 10% of their income, regardless of the place of its generation, it should also be mentioned that dividends paid by Cypriot companies to their shareholders – regardless of their residency are generally not subject to taxation, as well as interest (from deposits and accounts in Cyprus) – if paid to a person who is not a Cypriot resident or profit of Cypriot companies derived from trade in securities. Tax year in Cyprus corresponds to the calendar year except for the first year which may last up to 18 months. Tax residency, and consequently the use of tax preferences, requires locating on the island the management center and full control of the company. In practice this means that the majority of directors must be residents of Cyprus. Registration of the company in Cyprus also implies that board meetings must be held there.
Tax planning is facilitated by Cyprus’ double tax treaties and harmonized laws with EU regulations.
Registration of a company in Cyprus
Many investors wonder how to set up a company in Cyprus. Opening a company in Cyprus begins with passing personal verification of the actual beneficiaries. Using our services, it is only necessary to present an identity card, a document confirming the address of residence, and a CV. It is also necessary to provide several proposed names for the company along with a description of its planned activities. When the name is accepted, you can proceed to the next stage – registration of the company in Cyprus. Travel to Cyprus is not necessary, but in this case additional formalities will be required.
There is no minimum or maximum amount of share capital required in Cyprus. There is also no obligation to actually cover the share capital. However, the company must have at least one director and a secretary (it is possible to use nominated officers).
Opening a company in Cyprus is associated with an advantage: confidentiality. This means that the beneficial owners do not appear in any public registers. Instead of UBOs, nominee officers appear there. Who are the nominal shareholders, directors and secretaries (nominee)? The use of their services in Cyprus is very common and there are dedicated companies in Cyprus that provide such services. Under a contract (trust deed), the beneficial owners transfer their shares to the nominee officers who are registered as a shareholder. Importantly, the nominal officers do not manage the affairs of the company, but act on behalf of the beneficial owner of the company. It is the actual shareholder who is entitled to all the benefits (such as dividends). Trust in nominees is fundamental, so it is important to choose a company that has experience and reputation in conducting this type of activity.
Ready-made company in Cyprus / buying a company in Cyprus
However, the entrepreneur does not always want to wait until the company in Cyprus is registered. The solution to this situation may be to buy a company in Cyprus that is already registered. Buying a company in Cyprus is the fastest way to start a business. As a rule, such companies have existed for a relatively short period of time, have not conducted business before and have been created in order to be sold later. However, it should be remembered that buying a ready-made company requires proper verification of the registered company, so in some cases setting up a company in Cyprus by yourself will be a much faster and less complicated process than buying a company in Cyprus. An entrepreneur should consider whether a ready-made company in Cyprus is the right solution for him.
Why is it (still) worth investing in Cyprus?
On 1 January 2013 the provisions resulting from the signing between the Government of the Republic of Poland and the Government of the Republic of Cyprus of the Protocol amending the double taxation treaty with Cyprus came into force. Although, as a result of the introduction of the document, the corporate income tax rate was raised to 12.5%, Cyprus still remains a country that has the most favourable tax system among the European Union member states. Additionally, the optimisation of business costs is ensured by a number of tax breaks and exemptions, which, when competently implemented, translate into visible profits
Establishing a company in Cyprus
A company in Cyprus will be a good investment only if the registration process is carried out in accordance with the local laws and guidelines. Setting up a company in Cyprus is not a very complicated process, but you need to meet all the requirements to avoid possible problems. It is worth emphasizing that the changes that came into force in 2013 include a clause concerning a better exchange of information between the Polish and Cypriot tax authorities, which enforces proper tax administration for entrepreneurs in order to avoid additional controls. This is why company registration in Cyprus should be entrusted to professionals. Our law firm provides comprehensive legal services and advice in the field of commercial law, which allows you to avoid mistakes that would prevent full tax optimization of your company