Cyprus - International Business Company

Cyprus

General information

Cyprus, an island situated in the south-eastern corner of the Mediterranean sea, at the crossroads of Europe, Asia and Africa, has established itself as a reputable international centre for offshore business, commercial regional activity and professional services. The strategic position of the island, the general business environment and supporting facilities, its modern, high standard and efficient legal, professional and banking services, the commercial infrastructure and its excellent telecommunications, the European living of standards, combined with the generous tax incentives and concessions available to foreign investors, have been the major factors in shaping the development of the island as one of the booming international business and financial centres. The success of this programme is attested by the nearly 50,000 offshore companies registered in Cyprus since 1975.

Incorporation Fees - from £ 1,975
Renewal Fees - from £ 1,550

£ 1,975

Cyprus has signed 34 double tax treaties with: Austria, Bulgaria, Belarus, Belgium, Canada, China, the Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Mauritius, Norway, Poland, Romania, Russia, (including most of the CIS countries, i.e. Azerbaijan, Armenia, Kyrgyzstan, Moldova, Uzbekistan and Ukraine), Singapore, Slovakia, Slovenia, South Africa, Sweden, Syria, Thailand, United Kingdom, USA and the former Yugoslavia.

The legal system is based on that of the United Kingdom and all statutes regulating business matters and procedure are based on English Law. The official languages of Cyprus are Greek, Turkish and English. English is widely spoken in commercial and government sectors.

Cyprus IBCS

A Cyprus International Business Company (IBC) is one of the most popular and effective methods of tax planning. The basis of this method is determined by the Cyprus legislation containing the right of taxation on preferential terms for the companies belonging to non-residents.

An IBC can either be resident in Cyprus (provided its management and control is in Cyprus) or it can be non-resident (if its management and control is outside Cyprus).

The key condition of incorporating the IBC by a non-resident is the presence of the treaties for the avoidance of double taxation between the country of registration and the countries where the IBC or its subsidiaries will have activities. The existence of these treaties, combined with the low tax paid by a Cyprus company offer the possibilities for effective international tax planning. The main objective of the double tax treaties is to avoid the double taxation of income earned in any of the two contracting countries. This is done through the tax sparing provisions whereby tax is credited against the tax that must be paid in the contracting state.

In respect to International law an IBC is an independent legal entity which conducts its business activities in accordance with the law of the country of its registration. The principal corporate legislation under which companies are incorporated and administered in Cyprus is The Companies Laws, Cap 113 of 1951, which basically duplicates the Companies Act of 1948 of the United Kingdom.

The registration of an IBC

A certain procedure is followed for the registration of the company. The first step in the process is the choice of the name of the company.

Name of the company : A company name must be chosen and approved by the Registrar of Companies. The name must include the word "Limited" or its abbreviation "LTD" to signify limited liability status. The period for the approval of the name is 4-5 business days.

Memorandum and Articles of Association : Once approval for the company name is obtained, the memorandum and articles of association of the company are prepared and submitted for registration to the Registrar of Companies together with the information regarding the officers and shareholders of the company. The Registrar of the Companies usually gives a registration number within 4-5 working days and then the corporate certificates are issued either in English or in Greek.

Shareholders : The number of shareholders in a private Limited Liability Company may be from 1 to 50. In the case where there is a sole shareholder the Memorandum and Articles of Association should include a special provision stating that there is only one shareholder in the company. The names of the shareholders, their address and nationality must be submitted to the Registrar together with copy of their passports. A beneficial owner of an IBC has the option not to disclose his details should he wishes so. The beneficial owner may use nominee shareholders provided by our firm based on a personal agreement or a deed of trust.

Directors : The minimum number of directors is one. The full name, nationality, residential address and occupation together with copy of the passport are required.

Secretary : The existence of the company secretary is required by the Law. The secretary of the IBC must be appointed by the directors. Although the nationality of the secretary is immaterial it is recommended the secretary of the company to be a resident in Cyprus. Our firm can provide you with a company secretary at a reasonable fee.

The minimum share capital : A Cyprus limited liability company should have a minimum authorized share capital of 1,000 Cyprus pounds. The minimum issued capital is one share of 1.00 Cyprus pound.

Registered office : Every company is required to have a registered office and address in Cyprus which should be notified at the Registrar's Office.

Basic Tax Principles : Following the latest changes in the Cyprus Tax laws, a Cyprus registered company is taxed at 10% on its net profits provided that the company has management and control in Cyprus. Management and control is considered to be exercised in Cyprus if (i) the important decisions about the company are made in Cyprus and (ii) the majority of the members of the board of directors are residents of Cyprus for tax purposes (i.e. they live in Cyprus for more than 183 days a year).

Non-resident status : In the case where a Cyprus company does not have management and control in Cyprus then the company is not subject to taxation in Cyprus. However, it should be noted that in such a case the company might not take advantage of Cyprus double tax treaties network. Further it should be noted that in some rare cases the company may be subject to taxation at the jurisdiction were management and control is exercised.

Audit and financial returns : An IBC must submit accounts with the Tax authorities and the Registrar of Companies. The submission of the first audited accounts may be made for the first time in up to 18 months from the date of incorporation of the company. Following that an annual submission is necessary.

Offices in Cyprus : An IBC may be operated from abroad or may have a fully-fledged office in Cyprus. There are certain regulations and procedures that must be fulfilled in the case were a businessman wishes to establish a fully-fledged office in Cyprus.

Meetings : Company meetings need not be held in Cyprus

Time needed for formation : From 2 weeks.