General
In an effort to attract offshore companies to register in Cyprus,
a number of benefits are given. Tax on company profits are set at
4.25% and the company does not trade in Cyprus and does not trade
from Cyprus Bank, unless the bank itself is established as a Cyprus
offshore bank. Expatriate employees working for offshore companies
are tax-free exempt or taxed at reduced rates.
Other benefits include the company and its expatriate employees
being allowed to import into Cyprus or buy in Cyprus cars, office
equipment and domestic appliances, free of duty and value added
tax. Offices and their running costs are also extremely reasonable
compared to most European countries. The cost of registration for
an offshore company in Cyprus would be around 1,300 CYP unless an
existing company can be found and bought at a less rate. Further
information can be obtained from the marketing department of Antonis
Petrides & Son L.T.D..
2. REQUIREMENTS FOR ESTABLISHING OFFSHORE ENTITIES IN CYPRUS
a. What is an offshore company in Cyprus?
An offshore business in Cyprus is essentially a Cyprus registered
business owned by non-residents and operating outside Cyprus.
b. Why Cyprus?
All offshore centers offer more or less the same opportunities to
individuals or organizations, which wish to use an offshore vehicle
for their international operations, or for investing funds with
minimum tax burden.
Cyprus does not try to be "tax heaven" and has always
been keen to attract international and multinational organizations,
or smaller companies with substance.
c. Taxation Environment in Cyprus
Offshore company is subject to tax at the rate of 4.25% on its profits
regardless of where management and control of the company is exercised.
A Cyprus offshore branch in subject to tax at the rate of 4.25%
on its a profits if managed and controlled in Cyprus. The offshore
branch exempt from tax if management and control is outside of Cyprus.
An offshore partnership as an entity, as well as its partners, is
totally tax-exempt.
Ship owning companies with ships flying the Cyprus flag and operating
in international waters are totally exempt tax.
Offshore and shipping entities are not subject to any capital gains
tax except on profit on the disposal of immovable property held
in Cyprus.
d. Double Tax Treaties
Eastern Europe
Cyprus is in unique position as a result of the recent political
and economic changes in East European countries. It is a western
type economy with excellent political and economic relations with
East European countries. It has tax treaties with West European
and North American countries. Furthermore, its own economic development
policies encourage through the offering of incentives, foreign and
local investors to seek business opportunities abroad.
List of Treaty Countries
Austria, Bulgaria, Canada, Czech Republic, Denmark, France. Germany,
Greece, Hungary, Italy, Kuwait, Norway, Romania, Russia, Slovakia,
Sweden, United Kingdom, United States, Ireland, Yugoslavia.
3. ADVANTAGES IN ESTABLISHING AN OFFSHORE COMPANY IN CYPRUS
The following paragraphs give detailed requirements for setting
up an offshore business in Cyprus.
The main advantages of a Cyprus offshore business may be summarized
as follows:
a. Tax on company profits
All profits are subject to tax at only 4.25% and the business is
not subject to any exchange control restrictions. This is however,
on the conditions that:
- The business does not trade in Cyprus
- It does not borrow from from a Cyprus Bank.
b. Tax on expatriate employees
Expatriate employees working for offshore companies are taxed at zero
or reduced rates. These rates are as follows:
Tax rates %
Employee working outside Cyprus and paid through:
- A Cyprus bank accounts Zero.
- A bank account outside Cyprus
Employee working partly in Cyprus and partly abroad, pay taxes on
combined basis at the above rates.
c. Other
benefits
The business and/or its expatriate employees are allowed to import
into Cyprus, or buy in Cyprus duty free cars, office equipment and
domestic appliances.
4. INFORMATION REQUIRED FOR THE
ESTABLISHMENT OF AN OFFSHORE ENTITY IN CYPRUS
a. Name of the Company
The name to be chosen for the company should not be similar to any
other name already registered and words such as king, queen, corporation
etc. cannot be accepted. When applying to the Register of wise to
give a choice of two or three names thus enabling the register to
have some flexibility.
b. Memorandum and Articles
of the Association
Every Cyprus limited liability company must have Memorandum and Articles
of Association, which specify the activities in which the company
may engage. This will be drafted according to information given in
connection with the activities of the company.
c.
Share Capital
There is no legal requirements as to the minimum or maximum share
capital of the company. However, the central bank of Cyprus recommends
that the authorized capital should be at least 10,000 CYP, which may
conveniently be divided into 10,ooo shares of 1 CYP each. Not all
of these shares have to be subscribed for, but at least 1,000 CYP
must be issued and fully paid upon incorporation, in order to comply
with the requirements of the Central Bank. If the company wishes to
take advantage of the duty free allowances outlined above, then it's
issued paid up capital must be at least 10,000 CYP.
d.
Shareholders
Under Cyprus law, every company must have two shareholders. If anonymity
is required, the shares may be held by trustee companies in Cyprus
at free of up to 100 CYP per annum.
It should be noted that, in order to maintain the business property
of offshore activities, the Central Bank of Cyprus requires banker's
reference for beneficial shareholders, whether or not these are to
be publicity known. In this respect, a bankers fax is shown below
be adequate:
Telex No 2424 Central Cy OR Fax No 02-472012
The Manager
Exchange Control and Foreign Department
Central Bank of Cyprus Nicosia
At the request of Antonis Petrides and Son, Paphos we hereby conform
that (give the names of the beneficial owners) are well known to us
and in our opinion are good financial standing and trustworthy persons.
e. (Sgd) Name of bank
The following information is needed for each shareholder:
- Full name
- Address
- Nationality
- Occupation
- Number of shares to beheld
f. Directors
The following information is needed for each director:
- Full name
- Nationality
- Residential address
- Occupation
Directors can be foreign or local.
Local directors can be recommended at free ranging from 200 CYP to
500 CYP per annum.
g. Secretary
The company, by law, must have a secretary and in this respect a secretarial
company can be provided at a fee of about 150 CYP per annum.
h. Registered address
It is also a requirement of the law that a company must have a registered
address could be the official of a firm of accountants.
i. Period needed to register a company
The formation and registration of the company can be completed within
a maximum of ten days.
j. Bankers, currency
and signatories
The company may open bank accounts with any bank in most of the main
currencies and money transfers can be affected without foreign exchange
restrictions. Bank signatories can be provided locally if necessary
at no extra cost.
k. Formation costs
The total formation costs for a company with a share capital of 10,000
CYP, including lawyers and accountants fees and all other out-of-pocket
expenses such as stamp duties etc. are in region of 2,500 CYP.
l. Documents to be provided to owners
On registration of the company, the owners will be supplied with full
documentation, properly legalized and translated into English comprising:
- Certificate of registration
- Memorandum and articles of association
- List of directors, secretary and shareholders
- Address of the company's registered office
- Share certificates
- Any other information concerning the companies activities up
to the date of its establishment
m. Annual fixed costs
The annual fixed costs may be summarized as follows:
| Directors fee |
up to 300* |
| Legal retainer fess |
100* |
| Secretarial fees |
up to 150 |
| Nominee fees |
up to 100 |
| |
----
600 |
- If the shareholders wish to appoint a lawyer or a person from
outside the firm.
5. OFFSHORE BRANCHES
a. Requirements
Offshore branches of company registered outside Cyprus (overseas company)
can be easily registered in Cyprus upon filing with the Register of
Companies the following documents translated in Greek:
- certified copy of the charter, memorandum and articles of association
or any other;
- particulars of directors and secretary of the company;
- name and address of at least one person resident in the Republic
and authorized to accept on behalf of the company any notices
required to served on the company.
The Central Bank of Cyprus requires bank references for the "overseas
company" for the establishment of the branch in Cyprus. These
references can be on the same lines as those required for the establishment
of a company.
Upon completion of the registration the following documents properly
certified and translated into English are made available to the
owners:
- certified of registration;
- the Charter of the overseas company;
- list ot the directors and the name of the person aythorized
to accept notices;
- the permission of the Central Bank and other relevant documentation
b. Taxation
The profits of the offshore branch are subject to 4,52% if the management
and control of the branch is in the Cyprus and completely tax free
if the management and control of the branch is outside the Republic
of Cyprus.
c. Costs
The formation costs are in the order of CYP 1.000 and the registration
of the branch can be completed within one week.
6. OFFSHORE PARTNERSHIP
a. Requirements
The Central Bank of Cyprus requires partners bank references for
the establishment of the partnership in Cyprus. These references
can be on the same lines as those required for the establishment
of a company.
b. Registration and taxation
Offshore partnerships, the profits of which are completely tax free,
can be easily registered in Cyprus. Such registration can be completed
within one week.
Upon the incorporation of the partnership in Cyprus the partners
will receive full documentation properly legalised and translated
in English comprising:
- Certificate of Registration;
- list of partners and their authority to bind the partnership;
- all other relevant documentation including the permisssion of
the Central Bank of Cyprus.
c. Formation costs
The formation for the partnership costs are estimated to be in the
order of CYP 1.000.
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