The Advantages of Cyprus Jurisdiction for Offshore Companies

Cyprus is a jurisdiction with a very competitive European tax. Being an Europenan Union jurisdcition and having a very good reputation, these companies are strictly formal not called any more “offshore companies”, in comparrison to the classical “offshore” jurisdcitions.

Cyprus offers favorable conditions for offshore registration and has a very interesting tax status:

1. Very low level of profit tax (10%). Given this rate of taxation proper planning can be reduced to 2-3% of the profit company in Cyprus.

2. Cyprus has the lowest VAT in the EU: only 17%, having a short repayment term of  VAT in comparison with other European countries. Because of reduced VAT, the imported in EU products through the Cyprus company are much more competitive.

3. Payments abroad are not taxable in Cyprus.

4. Dividends are not taxable in Cyprus – neither domestic ones and the ones from abroad. Therefore Cyprus is used to import-export companies and holding companies.

5. There are no taxes on capital contribution or capital increase.

6. No transfer of shares is taxed.

7. The increased value of assets of a company is not taxable and there is no regulated transfer prices if the Cyprus company owns real estate. Therefore the acquisition of real estate is usually done on Cyprus companies, as there is no tax payable for the share transfer of the Cyprus company, even if the company owns property in Cyprus or abroad.

8. There are no taxes on the sale of shares, thus many stock brokers have their offices located in Cyprus.

9. There is a favorable regime for Cyprus holding companies, because there is no consolidation tax, no divident tax, there are no rules regulating the activity of foreign company that is controlle by the Cyprus holding, etc. Holding companies have even more advantages over other Cyprus companies. This also means that if “daughters” companies are located in areas not taxable (such as Belize, British Virgin Islands, etc.), although in those jurisdictions the profit is not taxed, it is also not taxed in Cyprus.

10. Although Cyprus joined the EU from 1 May 2004, Cyprus legislation has changed very little.

11. Cyprus has a highly developed system of international treaties to avoid double taxation. Cyprus has signed such treaties with over 40 states. To take advantage of international treaties of avoidance of double taxation (corporate tax, dividends, etc.) it is required a tax residence certificate. To receive such a certificate it is necessary for the company to be based in Cyprus and the management of the company to take the management decisions from Cyprus. For these advantages, it is necessary to conclude  proper minutes of the board of the Cyprus company and the conclusion of the contracts must be done by the Cyprus nominated director.

12. Cyprus accepted the International Accounting Standards (IRS).

13. Bank account, Internet banking with cards can be opened even without the presence of the directors or shareholders to Cyprus.

14. Confidentiality – using the nominee services for the directors and shareholders the – information about the final beneficiary is confidential.