The Republic of Cyprus is one of the most optimal jurisdictions for conducting international business. Cyprus is a full member of the European Union, which makes it possible to carry out actual activities in any EU country.
Benefits of incorporating in Cyprus
Benefits of incorporating in Cyprus are as follows:
- Company incorporation in Cyprus means an incorporation in a prestigious jurisdiction, which is trusted by European partners.
- Relatively low company operating costs.
- One of the lowest corporate tax rates in the EU – 12.5% of profits, payable in two transactions every 6 months + € 350 annual fee.
- Opportunity to obtain a Cyprus Tax Resident Certificate.
- Avoidance of double taxation with other countries.
- Company incorporation in Cyprus provides you with opportunity to open an European bank account.
- 0% tax rate on repatriation of incomes from dividends, interest and royalties (if the rights are not used in Cyprus).
- Protection of intellectual property rights.
- IP-Box – a special regime for taxation of intellectual property, which allows you to decrease the corporate tax rate to 2.5%.
- VAT rate – 19%.
Why do companies incorporate in Cyprus?
Cyprus is not included in the list of offshore zones. Herewith, Cyprus incorporation offers very favorable conditions for companies registration and legal optimization of taxation
Conducting business in Cyprus is possible in several organizational and legal forms:
- Private Company Limited by Shares (Ltd);
- Public Company (PLC);
- Open Joint Stock Company (OJSC);
- Company Limited by Guarantee;
- General Partnership;
- Limited Liability Partnership;
- Private Entrepreneur;
- Branch of a foreign company.
The most popular form for registration of Cyprus company is Ltd – a limited liability company in which the shareholder is responsible within the limits of his or her contribution to the authorized capital.
Feartures of Ltd in Cyprus:
- Number of shareholders – from 1 to 50 (there can be individuals and legal entities).
- Minimum capital for Cyprus incorporation is EUR 1.000, upon a company registration the one-time tax on the authorized capital is levied –6% of the declared amount.
- Minimum number of directors is 1, no maximum number is provided. A shareholder can be simultaneously a director. For a company to obtain the tax resident’s status in Cyprus, the majority of directors must be residents (the service of nominee directors is used for this).
- A secretary’s presence is required. It is desirable that the secretary will be a resident. Corporate secretary is allowed.
- Availability of a registered office in Cyprus is required. In order to open an account in a Cypriot bank, the company must have an office premise and at least one employee.
- Publicly accessible business register Cyprus.
How to register a Cyprus company?
Company registration in Cyprus includes the following stages:
- choice of a name, verification and confirmation of its originality in a special register;
- preparation of documentation;
- payment of registration fees and charges;
- registration in the Cyprus registrar of companies;
- notarization and apostille affixing on documents.
It should be noted separately that Cyprus has long ceased to be a jurisdiction where you can open a company and an account as quickly and easily as possible. In the past few years the country legislation has greatly tightened the rules for working with non-residents, including in terms of compliance with shareholders, beneficiaries and directors, including for the purposes of maintenance of the Cyprus registrar of companies. In addition, as of today, if not obligatory, then it is very desirable to have a substance, that is, a real office and company personnel.
Tax Law in Cyprus
One of the main benefits of incorporating in Cyprus is a comparatively low tax burden. The main tax burden after registration of Cyprus company is a 12,5% corporate income tax. Also, companies incorporated in Cyprus are exempted from taxes for dividends, operations with securities and profit of its foreign branches.
During opening of a company in Cyprus, you should pay a great attention to the Special Tax Contribution for Defense Purposes. It provides a number of situations when companies have to pay flat rate taxes for particular types of profit, e.g. company interests or individual’s income received from the Cyprus resident company.
Company registration in Cyprus also provides 20% capital gain tax for profit received from selling real estate or share in a company.
VAT rate after Cyprus company incorporation is 19%. Also, opening of a company in Cyprus allows you to use the IP-Box, a special regime for taxation of intellectual property, which allows you to decrease the corporate tax rate to 2.5%.
How much does it cost to register a company in Cyprus?
Cost of registration of Cyprus companies depends on particular circumstances, e.g. whether it is necessary to find a nominal director, form a substance on Cyprus etc. Thus, cost of Cyprus company incorporation has to be calculated personally in every separate case.
Please contact us and we will calculate the cost of registration of Cyprus companies due to your needs.
How can we help?
VigoLex team monitors all tendencies of conducting business in Cyprus, therefore, it is ready for changes. VigoLex lawyers will advise clients wishing to start or structure an existing business in this country, based on the new legislative requirements, so that the business will be as profitable, comfortable and legal as possible.
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First of all, the registration of a company in Cyprus is due to the fact that there is a favorable tax regime here – especially if your activity is related to making a profit from the use of intellectual property.
In addition, Cyprus is a part of the EU, which at the same time means a good reputation for the jurisdiction of Cyprus and the absence of problems with conducting business in the EU.
The main reason for opening a company in Cyprus is the low tax burden on the company. In addition, the registration procedure itself has been fully studied by specialists – this greatly simplifies the time and cost of the registration procedure, and also allows you to minimize risks.
Another plus is that Cyprus has the English law, which allows the use of effective mechanisms for regulating corporate relations and protecting corporate rights (for example, shareholders’ agreement, etc.).
Provided that specialists are involved in registering a company in Cyprus, the average registration period is about 4-5 calendar weeks.