Incorporate in Cyprus
Background & General Outline
Cyprus is the third largest island in the Mediterranean after Sicily and Sardinia. Located in the north-east end of the Mediterranean Sea Cyprus is effectively a crossroads linking Europe, Asia and Africa. It covers an area of approx 9,200 sq km and lies 65 km south of Turkey, 96 km west of Syria, 385 km North of Egypt and some 980 km south-east of Athens. The capital is Nicosia. Cyprus is one of the most discreet offshore centres in the world and enjoys economic stability making it a popular location.
The legal system is Civil code with many English Common Law influences.
The official Cyprus currency is the Cypriot Pound.
Greek, English and Turkish are the official languages of Cyprus. English is widely spoken and understood, particularly in commercial and government sectors.
Disclosure of the Beneficial Owner
The identity of the beneficial owners of a company we Incorporate in Cyprus may remain confidential if corporate shareholders or Nominees are engaged to act as the shareholder on behalf of the ultimate beneficial owners. This confidentiality is maintained as long as the company and its ultimate beneficial owners are not involved in any criminal activity.
Under special provisions in the Cyprus Income Tax Laws, the net chargeable profits of any company we Incorporate in Cyprus is taxed at a rate of 10%.
Double Tax Treaties
Cyprus has entered into almost 50 double-tax treaties (unusually for a low-tax jurisdiction). The general effect of these treaties is that Cyprus-registered offshore entities that have tax exemptions in Cyprus will have the same exemptions in the treaty countries (see Tax-Sparing Provisions below).
Most of Cyprus’s treaties follow the OECD Model Convention, although the US Treaty follows the most recent model of United States Agreements. Normally speaking, therefore, the country of residence will give a credit for taxes paid in the other treaty country. The Cyprus offshore entity qualifies for treaty protection under all the extant treaties except those with Canada, France, the UK and the USA, and even in those cases the limitations apply only to flows of income to Cyprus, and not to income flows from Cyprus to the countries concerned.
Revisions to Cyprus’s corporate tax regime consequent upon its accession to the EU, and the abolition of the ‘offshore’ sector as such, have made Cyprus more rather than less attractive as a tax treaty partner, and the island has found itself needing to revise many of its treaties as a result, as well as entering new treaties with additional countries.
The German Ministry of Finance announced on September 1, 2009, that it had initialled the text of a revised double taxation agreement with Cyprus to allow for the exchange of information on tax matters between the two countries’ tax authorities, in accordance with Article 26 of the OECD model convention.
Upon entry into force, the agreement will allow the respective countries’ tax authorities to request information pertaining to tax crimes, and in civil tax matters. The Ministry’s statement recognized Cyprus’ commitment to implementing the internationally-agreed standard.
The agreement will enter into force when both countries have signed and concluded their individual ratification procedures.
The Cyprus/Germany DTA was also updated In July, 2005, with one of the more significant outcomes of the revision being a clarification of taxation in the shipping sector. According to the amendmentl, profits from international ships and aircraft in international traffic “shall be taxable only in the Contracting State in which the place of effective management of the enterprise is situated”.
The agreement also clarified the taxation of ships’ crews, who were to be taxed according to the residential status of their employer, rather than according to an individual crew member’s residential status, and included provisions which seek to prevent fiscal evasion.
Cyprus has signed a number of other double taxation avoidance agreements in recent years (see the table below for a list of tax agreements signed by Cyprus):
In May 2001, Cyprus announced that it had entered into double tax negotiations with Iran, the Seychelles, Lebanon and Armenia. Talks were also concluded with Indonesia.
In February, 2003, the Cypriot government said it had signed an agreement for the avoidance of double taxation with Lebanon. According to a government statement released at the time, the agreement was signed in Beirut by Cyprus’ Finance Minister, Takis Klerides, and his Lebanese counterpart, Fuad Siniora, and was designed to prevent both double taxation and fiscal evasion with regard to taxes on income and capital.
In November, 2005, the Foreign Minister of San Marino, Fabio Berardi, who was in Cyprus on an official visit, met then President Tassos Papadopoulos and signed a protocol designed to lead to a Double Tax Avoidance Treaty between the two countries.
In November 2008, the Qatari Prime Minister Sheikh Hamad bin Jassim al Thani visited Nicosia to ratify several bilateral agreements and Memorandum of Understanding between Qatar and Cyprus, including an agreement on the avoidance of double taxation.
Seven agreements in all were ratified, including agreements for the avoidance of double taxation, tax evasion, economic and technical cooperation and the promotion and protection of international investment.
Memorandum of Understanding were also signed to intensify cooperation between both countries’ tourism, health and immovable property sectors. An additional Memorandum of Understanding was also signed between the central banks of Cyprus and Qatar for cooperation in the monitoring of money lending organizations.
In July, 2006, the governments of Cyprus and the Seychelles agreed to a new bilateral pact which aimed to prevent the double taxation of income, and boost investment flows between the two countries.
The agreement was signed in the Seychelles by the Seychelles’ Minister for Economic Planning and Employment, Jacquelin Dugasse, and the Cypriot Minister for Finance, Michalis Sarris.
“The signing is for us in Seychelles very important as it provides the framework which will enable businesses in our two countries to exploit the business ties and cooperation which exist,” Minister Dugasse commented after the formalities had been completed.
Cyprus has entered into more than 44 double tax treaties with the following countries:
Azerbaijan, Armenia, Austria, Belarus, Belgium, Bulgaria, Canada, China, CIS (ex-USSR), Czech Republic, Denmark, Egypt, Germany, France, Greece, Hungary, India, Ireland, Italy, Kuwait, Kyrgyzstan, Lebanon , Moldova, Malta, Mauritius, Norway, Poland, Qatar, Romania, Russia, San Marino, Serbia and Montenegro, Seychelles, Singapore, Slovakia, South Africa, Sweden, Syria, Tajikistan, Thailand, Ukraine, United Kingdom, United States, Yugoslavia
Yes, but does not apply to IBCs we Incorporate in Cyprus.
Any word that the Registrar considers undesirable. Any name that is identical or similar to an existing company or sounds similar. Any name that implies illegal activity or implies royal or government patronage, the following words or their derivatives: asset management, asset manager, assurance, bank, banking, broker, brokerage, capital, credit, currency, custodian, custody, dealer, dealing, deposit, derivative, exchange, fiduciary, finance, financial, fund, future, insurance, lending, loan, lender, option, pension, portfolio, reserves, savings, security, stock, trust or trustees. If the word “Group” is to be used in the company name the minimum number of corporate shareholders are two.
The name of a limited company, shall end with the word “Limited”, or “Ltd”.
A Cyprus company cannot undertake to the business of banking, insurance or the rendering of financial services to the public unless special permission is granted. Companies cannot trade with resident individuals or companies situated in Cyprus other than in relation to the maintenance of premises, banking and professional services, unless they have special permission from the Central Bank of Cyprus.
Summary & Features
International Business Companies (‘IBC’s’) are companies we Incorporate in Cyprus under the International Business Companies Act, but whose business is to be conducted outside the Cyprus, and which may not do business with any person resident in the Cyprus.
Cyprus IBC’s are a very popular and widely used offshore companies because of their administrative ease, flexibility, extreme low tax status, extensive double taxation treaty network, and the fact that they are widely accepted and understood by the international financial community. Cyprus IBC’s may not carry on banking or trust business unless licensed under the Banks and Trust Companies Act, or insurance or re-insurance business unless licensed in the Cyprus to carry on that business. Otherwise, Cyprus IBC’s may engage in any activity that is not illegal under the laws of the Cyprus subject to any restrictions in their Memorandum of Association.
Incorporate in Cyprus
OUR Cyprus Offshore Company Formation Service Includes:
- name check
- preparation of memorandum
- preparation of articles
- preparation of registration forms
- filing with the registrar of companies
- payment of filing fees
- certificate of incorporation
- share certificates
- minutes of board meeting
- register of directors
- register of shareholders
- 1st year registered office
- 1st year registered agent
- 1st year government administration and maintenance
Cyprus’ legislation has long created favorable tax conditions for offshore operations but the country’s popularity as such has only caught on over the last few years. Information given to local attorneys/notaries is protected by professional privilege and secrecy.