Presentation on theme: "Incorporating a Company in Cyprus Islands. Cyprus Islands Cyprus, officially the Republic of Cyprus is an island in the eastern part of the Mediterranean."— Presentation transcript:
Incorporating a Company in Cyprus Islands
Cyprus Islands Cyprus, officially the Republic of Cyprus is an island in the eastern part of the Mediterranean Sea, south of the Anatolian peninsula Asia Minor or modern-day Turkey and to the east of the Greek islands of Rhodes and Kastellorizo. Third largest island in the Mediterranean Sea. Republic of Cyprus is divided into six districts: Nicosia (the capital), Ammochostos, Keryneia, Larnaka, Lemesos, and Pafos. A former British colony, the Republic of Cyprus gained independence in Today the Republic of Cyprus is a developed country and a member of the European Union since 1 May 2004.
Benefits of Incorporating a Company in Cyprus Islands The Economy of Cyprus is based on a system of free enterprise. During the last ten years the economy of Cyprus has demonstrated spectacular economic growth with good infrastructure facilities. The islands EU accession led to the adoption of euro as a national currency on January 1,2008. A uniform corporate tax rate of 10% is introduced for all companies. Dividend income is exempt from tax in Cyprus irrespective of its source, provided certain conditions are satisfied. Where the exemption does not apply, 15% defence tax is payable but credit for foreign tax suffered is given irrespective of the existence of a treaty. Interest income is 50% exempt from corporate tax, unless it is received in the ordinary course of business in which case it is taxed like normal trade income. That portion of interest income which is exempt from corporate tax, is subject to defence tax at 10%, but credit is given for foreign tax suffered irrespective of the existence of a treaty. Continued…….
……..Continued Profit from the disposal of securities is exempt from tax in Cyprus. Profits of a permanent establishment maintained abroad by a Cyprus company are exempt from tax in Cyprus. There is no withholding tax on dividends paid to non resident shareholders. There is no withholding tax on interest payments made abroad. There is no withholding tax on the payment of royalties derived from outside Cyprus. Corporation or physical person of any nationality may act as directors. Minimum of one (1) director. Cyprus has over 30 double taxation treaties with many advantageous provisions. Among emerging markets there are also very advantageous tax treaties with China, India, South Africa and a number of Middle Eastern countries. Cypriot tax regime permits Losses to be carried forward indefinitely. The English Language being widely used and Known in Cyprus. Estate Duty is not charged on inheritance of Shares in offshore Companies. Offshore companies can also purchase many items for their own needs exempt from duty charges.
Company Incorporation The Principle legislation is the Companies Law, Cap. 113 (as amended) The International trade & investment Companies that can be incorporated under the Companies Law, Cap.113 (as amended) Private Companies – (up to 50 Shareholders) Public Companies Offshore Companies – the most interesting now for international corporations A Cyprus Private Company Limited by Shares-The relevant legislation is Cyprus Companies Law, Cap. 113, which is virtually a copy of the English 1948 Companies Act. A private company is one which by its articles: Restricts the right to transfer its shares Limits the number of its members to 50 Prohibits any public subscription to shares or debentures A Cyprus Public Company Limited by Shares Any company registered under the Act whose Articles do not contain the restrictions applicable to private companies is a public company. A public company may obtain a listing on the Cyprus Stock Exchange. A Cyprus “offshore" Company is defined as an otherwise normal Cyprus company which is owned by non-residents of Cyprus and does business mainly outside island.
Choosing a Company Name Company names are subject to following requirements:- Names may be expressed in any language that uses Latin or Greek alphabet. Any name that is identical or similar to an existing company name is not acceptable. Any name that implies illegal activity or implies royal or government patronage is not permitted. The following words or their derivates are restricted-Asset manager, assurance bank, Financial, Future, Insurance, Lending, Loan etc. The following names and foreign language equivalents require consent or a licence: Bank, Trust, Building Society, Insurance, Assurance, Reinsurance. The suffix Limited or Ltd denoting limited liability must be included.
Cyprus Offshore Company Formation – Requirements Step 1 Registration of Name – with Registrar of Companies procedure normally takes 2-3 days provided name is available. Step 2 Authorised Capital of the Company – Share Capital – In Cyprus Pounds No legal requirement as to Minimum Capital However, Central Bank of Cyprus recommends - Min Auth/Issued & Paid up Capital: CYP 1000 – For Cos Not estabilishing physical presence in Cyprus CYP – For Cos establishing physical presence in Cyprus The amount has to be deposited to a Company's bank account as soon as the registration is made. However, the amount of money deposited to the company's account may be used to pay company expenses. Step 3 Shareholders Minimum: ONE Shareholder Resident Shareholder not mandatorily required
…….Continued Documents required for each Shareholder: Full Name Residential & Business Address Date of Birth Nationality Occupation Copies of Passport or id if EU nationals In case of Corporate Share holders Copies of Statutory dues Most recent Financial Statements Step 4 Director Minimum of one Director. Corporations are permitted. Local Director available and advisable, so as to show that management and control is made from Cyprus. No Compulsory Requirement of Resident or Domiciled Director.
……Continued Step 5 Mandatory requirement of Company Secretary who must be a natural person, need not be resident in Cyprus. should preferably have legal knowledge. Usually firms acts as the company secretary to handle all the secretarial work (the statutory book, the minute book, keep the Seal under safe custody, etc) of the company. Step 6 Registered Office Of The Company Company is required to have a register office to handle all its legal correspondence with the government's authorities (writs, summons, notices, orders and other official documents can be served upon the company). Usually Firm usually acts as the registered office of the company. After the above information is provided, complete the required documents and submit them with the Memorandum and Articles of Association to the Registrar of Companies. The Memorandum of Association includes the name of the company, the objectives of the company and the number, value of the shares issued. The Article of Association includes the internal rules of the company
…….Continued Step 7 Approval of Central Board is Required The approval can be obtained provided that: the activities and aims of the company are confined solely to business outside Cyprus. All local expenditure of the company is provided by funds from external sources. The company will obtain all its financial sources from abroad, and The company submits its annual audited Financial Accounts to the Central Bank of Cyprus.
Reporting Requirements The directors of every company have the obligation under the Law to prepare audited financial statements, not later than eighteen months after the incorporation of the company and subsequently once a year, to lay before the company in a general meeting a set of financial statements consisting of the directors' report, the auditors' report, a profit and loss account and a balance sheet. These financial statements must be also submitted to the Tax Authorities and the Central Bank, not later than 12 months after the year-end. Filing Requirements. Offshore enterprises are subject to the same reporting requirements as all other local business entities.
Tax Structure in Cyprus Islands Progressive Tax System Reduced rate and/or exemptions that are granted for certain forms of income. Cyprus is a low tax country rather than a no – tax country. There are more than 55,000 offshore enterprises registered in Cyprus and many international investors choose Cyprus as the location of choice for financial holding and investment companies because of the jurisdiction’s attractive combination of tax treaties and tax regime. Corporate taxation is levied at 10% on business turnover for both resident companies and offshore entities making Cyprus the lowest rate in the European Union, after Ireland (12.5%), with the exception of the Isle of Man, which has just announced a nil rate.
Corporate Tax Structure in Cyprus Islands Basis of Taxation Corporation Tax is imposed on every legal entity which is a tax resident of Cyprus on its worldwide income. A Company is considered to be a tax resident if it is managed and controlled in Cyprus. Non tax residents are only taxed on their income that is accrued or derived from a business activity which is carried out from a permanent establishment in cyprus. Basic Tax Rate is 10%. The Tax rate for semi –government bodies is 25%. Shipping Companies sailing under Cyprus flag pay zero tax on profits and dividend paid.
Exemption of Tax on certain Incomes Dividend Income Profits from sale of securities Interest Income (under certain Conditions) is 50% Profits of a permanent establishment abroad(under certain conditions)
Capital Gains Tax Capital Gains Tax is on gains from disposal of immovable property situated in Cyprus including gains from the disposal of shares in companies which own immovable Property in Cyprus and not listed in any stock exchange. Profits from buying and selling of shares are also exempt. Sale or transfer of Assets (other than Cyprus real estate) is also exempt from Capital Gains Tax.
Tax Benefits in Cyprus Cyprus has the lowest tax rate in the EU(10% on Net Profits). It has an extremely sound banking system-one of a few banking systems in the world that have had no direct negative implications on its banks. Key features of Tax System in Cyprus:- The tax system in Cyprus is progressive-the higher your income, the higher rate at which you will pay tax. In 2008 the tax rates for an individual are 20%-30%. The Standard rate of Cyprus Corporate Tax for 2008 is 10%. There is a reduced rate and/or exemptions that are granted for certain forms of income. The profits of a company that were registered in Cyprus before 12/2001 were charged at a final tax of 4.25%. This tax rate ended on ,from International Business Companies (IBC) are tax at the rate of 10%. Residents are subject to defense contribution for passive income, e.g. rental, dividends etc. The rates are 3%-15%. Non residents are exempt from this tax.
Annual Taxation and Fees Cyprus is a low-tax country rather than a no-tax country. One of the great benefits of Cyprus is that Cyprus has signed a large number of double treaties which provide for reduced or zero withholding taxes on dividends, interest or royalties paid to a Cyprus company. There are treaties with Austria, Canada, China Germany, India, Itlay, Poland, Norway and in various other countries. Licence fees are not applicable in Cyprus. An Annual Return giving Details of all those who have held shares throughout the year and the current directors must be filed and submitted to the Cyprus Tax Authority and the Central Bank of Cyprus. In addition every Cyprus Company must prepare audited accounts and submit these to the Central Bank and their tax office.
Corporate Documents Required It is advisable to ensure that upon the incorporation of the company its beneficial owners or other appropriate officials are provided with copies of all corporate documents, properly legalized and translated where appropriate, from Greek into English or any other language. Corporate documents normally required are:- Certificate of Incorporation issued by the Registrar of Companies(ROC). Memorandum and Articles of Association-official copy certified by the ROC. Address of the Company’s registered office issued by the ROC. The list of Directors, secretary and shareholders issued by the ROC. A Declaration of Trust, a pre-signed blank Instrument of Transfer and the Share Certificates certified at The Ministry of Foreign Affairs for authenticity. Statutory and other necessary minutes of the meetings of the directors and shareholders, letterheads, invoices and other company stationery. Any other documents pertaining to company’s activities up to the date of its establishment.