Cyprus, a European jurisdiction, has gained popularity as a favourable destination for company registration and incorporation. Its strategic location, robust legal framework, and tax incentives make it an advantageous vehicle for international tax planning. In this article, we will outline the key services and benefits of incorporating a company in Cyprus.
ADVANTAGES OF CYPRUS COMPANY FORMATION
Zero Percent Tax on Dividends Received: One of the standout features of Cyprus is the zero percent tax on dividends received by a Cyprus company. This means that profits distributed as dividends to shareholders are not subject to taxation.
Zero Percent Withholding Tax on Dividend Payments: Cyprus also imposes zero percent withholding tax on dividend payments made by a Cyprus resident company to non-resident shareholders. This promotes international business and investment.
Full Tax Exemption on Dividend Payments: Besides the favourable tax treatment of dividends, there is a full tax exemption on the payment of dividends by a Cyprus company. This encourages the efficient distribution of profits to shareholders.
No Capital Gains Tax on Transfer of Immovable Property: Cyprus does not levy capital gains tax on the transfer of immovable property, further enhancing its attractiveness for investors in real estate.
Zero Percent Taxation for Non-Tax Resident Companies: Non-tax resident companies enjoy a zero percent tax rate on their income in Cyprus, making it an ideal location for international businesses.
Double Tax Treaties: Cyprus has an extensive network of double tax treaties, ensuring that income is not taxed twice, thereby reducing the overall tax burden on international transactions.
Minimal Corporate Requirements: Cyprus has minimal requirements for company incorporation. A private limited company can be formed with a minimum of one director and one shareholder.
Corporate Legislation: The principal corporate legislation governing companies in Cyprus is the Companies Law, a blend of civil law with English common law influences, providing a stable and reliable legal framework.
Financial Transparency: Companies in Cyprus are required to maintain accounting records and conduct annual audits, ensuring financial transparency and compliance with regulatory standards.
Tax-Friendly Environment: Cyprus maintains a competitive 12.5 percent corporate tax rate, which is among the lowest in the European Union.
Cypriot Tax Resident Directors: To benefit from the advantageous tax regime, it is advisable that the majority of directors of a Cyprus company are Cypriot tax residents.
VAT and Exchange Control: Cyprus has a well-regulated VAT system, and there are no exchange controls, facilitating international trade and investment.
Company Name: The choice of a company name is flexible, provided it is unique and does not conflict with existing trademarks. The name of each company must end with the word “Limited” or “Ltd”.
Registration and Due Diligence: During the registration process, authorities request documents such as a passport copy of the beneficial owner, utility bill, CV, bank reference letter, tax declaration, and source of income details for due diligence purposes.
Registered Office and Secretary: A registered office within Cyprus and the appointment of a company secretary are mandatory requirements.
Annual Reporting: Companies must submit financial accounts and an annual report (HE32) to the Registrar of Companies and tax authorities on a yearly basis.
Cyprus stands out as a prime location for company registration and incorporation, offering a range of benefits, including favourable tax treatment, minimal corporate requirements, and a robust legal framework. With its strategic position within the European Union, Cyprus remains an attractive choice for businesses seeking to optimize their international tax planning and expand their global presence.