Strategic location, solid infrastructure and recent membership in the European Union are the major factors shaping its current development in Cyprus. Cyprus offers investors a set of unique advantages and opportunities for the conduct of their business affairs throughout the world.
A Company may be created in Cyprus as a legal entity by being registered under the provisions of the Cyprus Companies Law, CAP 113. The Companies Law is based on English Law, but several amendments have been made due to Cyprus accession to the EU, Asia and the Middle East.
Full member of the European Union.
Lowest corporate income tax across the European Union.
Liberal Foreign Direct Investment regime allowing up to 100% foreign participation in most sectors of the economy.
No exchange control and freedom of movement of foreign currency. Profits, interest and dividends, capital invested and capital gains from the disposal of shares can be freely remitted abroad with no limitation whatsoever.
Democratic country with a free market economy. Perfect telecommunications and easy access by air and sea.
Modern and efficient legal, accounting and banking services based on English professional practices.
Double Tax Treaties with 40 countries.
Low set up and operating costs for companies. Excellent support facilities and services.
Favourable business environment with highly qualified and skilled managerial, clerical and technical staff available at rates of pay lower than in industrialised nations.
No restrictions concerning the maximum allowable percentage of foreign participation or the minimum level of foreign investment in an enterprise in Cyprus. Investors may acquire up to 100% of the share capital of most Cypriot companies listed on the Cyprus Stock Exchange.
Cyprus is the “lowest-tax EU Jurisdiction” that is not offshore. The standard corporate tax rate of 10% (0% for shipping companies, 4.25% for maritime management companies) is the lowest in the European Union, and the lowest “non-offshore jurisdiction corporate tax rate” in the world. Cyprus is now a premier holding, finance, royalty and trading company jurisdiction.
However, Cyprus’ biggest asset is its friendly and investor-friendly Tax Authorities who achieved a long and stable history of always being keen to help foreign investors. Thin spreads of profit are acceptable and so it is possible that a lot of legal tax-planning strategies can be effectively and easily employed in order to lower Cyprus Tax, even at levels significantly lower than 10%.
Limited liability Company: The members’ (shareholders’) liability is limited to the nominal value of the shares subscribed by them in these types of companies.
Company with limited liability by shares: Companies with limited liability by shares may be private or public. A limited liability company offers protections of personal assets from business risks and liabilities and has separate legal status. A private company is one whose articles restrict the transfer of shares, the number of members to fifty and prohibit the subscription of any shares or debentures of the company whereas these restrictions do not apply to a public limited company.
Company with limited liability by guarantee: In the case of a Company by guarantee, members’ liability is limited, on winding up, to the extent agreed upon. This type of Company is usually adopted when its purpose is non-profit making.
Cyprus General Partnership: Partnerships fall under the Partnerships and Business Names Law Cap 116, basically similar to the equivalent English legislation. They must be registered with the Registrar of Partnerships within one month of formation, giving name, purposes, place of business, full particulars of the partners etc. Minimum number of members required is two and maximum can be ten in case of banking business and twenty in other businesses. Partnerships do not need to file accounts or to be audited.
Cyprus Limited Partnership: These are similar to general partnerships except that they have one or more general partners with unlimited liability and one or more limited partners (whose liability is limited to the amount declared in the partnership return filed with the Registrar). Limited partnerships, used in conjunction with offshore companies offer good tax planning possibilities.
Cyprus Sole Proprietorship: A Sole Proprietorship falls under the Partnership and Business Names Law Cap 116, being essentially similar to the English sole partnership. It is subject to broadly the same rules as a General Partnership. A sole proprietor has unlimited liability for his debts, and any business name (other than his own) must be registered with the Registrar of Partnerships.
Local Trust: It is governed by the Cyprus Trustees Law Cap 193, which closely follows the English Trustee Act 1925. The settlor and beneficiaries are normally residents of Cyprus, and the trust and its property are subject to exchange controls, although these are vestigial since Cyprus joined the EU.
Offshore Trusts: Offshore Trusts are the same as local trusts, but their beneficiaries must be non-resident, and all the trust’s activities must be outside Cyprus. As with ‘offshore’ companies, the special tax status of offshore companies has ceased with Cyprus’s accession to the EU.
International Trusts: The International Trusts Law of 1992 brought Cyprus trust law into line with that of other major international trust jurisdictions. Both settlor and beneficiaries must be non-resident, although one Trustee must be Cypriot. International trusts may have many tax and legal advantages.
The formation and registration procedures, including various administrative needs such as printing of the company’s letterheads; opening of statutory books and the opening of the required bank accounts, up to the time the certificate of incorporation is issued, can normally be completed within a period of two weeks in Cyprus.