Cyprus is one of the most famous resorts, but this country is known to businessmen as a zone where you can open a company to reduce taxation. Not only Russian companies seek to open offshores in Cyprus – in this way businessmen from other countries try to lower taxes. There is no need to have a huge amount of start-up capital – 2 thousand euros are enough to register here. Advantages to open a company in Cyprus:
- The lowest tax rates in the whole of Europe (about 12.5%);
- the exception of double taxation;
- access to beneficial cooperation with the European partners;
- There is no need to pay taxes on dividends paid to Cyprus resident shareholders.
Registration of offshore companies in the Cyprus territory allows you to register any form of activity – partnerships, LLC, branches of the companies owned by foreigners. Most often LLC is registered here with the ability to carry international commercial business.
Requirements for opening offshore in Cyprus
There are a number of requirements that apply to those who wish to open an offshore in Cyprus. Compliance with these requirements is obligatory for all. The first condition concerns the name of the future company, which the registrar has to approve. You cannot register the names that have a similar sounding with the existing ones, or those that can mislead. It is about the banning to use the names of well-known trademarks and brands, as well as religious appeals.
The second condition concerns the existence of the capital. Its size is defined only by the minimum framework, and there are no restrictions on the maximum amount in euros. Share capital is classified as authorized and issued. The first one is specified at registration, the amount can be changed at the shareholders’ meeting. The second one is allowed to conduct operations. Any persons regardless of nationality can become the shareholders.
The next condition is the presence of a manager (director). It can be a private person or legal entity from any country. The best option would be to put forward the citizen of Cyprus as a head, and then the company will take advantages of tax benefits in the country. Additionally, the staff must have a secretary who can provide information to the citizens of Cyprus about the company’s activities. The offshore should have an office on the island of Cyprus, otherwise, the registration authority will refuse to execute documents. All data on the company will be stored in electronic files under confidentiality conditions – they are not available even to the judicial authorities of the Russian Federation.
A small fee is annually charged from each company which is registered here, the payment term is June. Overdue payments are subject to a fine, which amount is reviewed every year.
Cyprus offshore and taxation
The current taxation of Cyprus offshores is considered the most elaborate and fair to the owners of the companies. Taking into account the nature of the registration, the status of the company may be non-resident and resident. Tax residents manage the company directly in the territory of the country. For this purpose, the board of directors must have persons who have local citizenship.
The agreement on the exception of double taxation is fully in force here and extends to 48 countries, including Russia. Companies which are not residents of Cyprus are exempted from income tax if the income is received outside the zone covered by Cyprus offshore.
Among the taxes to be paid here are the following:
- income tax. Is charged from persons who have income in the country. Legal entities pay 10%, while the sale of a property is charged by 20%;
- stamp tax. Is charged for any transactions, including registration and purchase of shares. The amount is 2 cents;
- for issuing shares. It is established in relation to LLC;
- for Social Cohesion Fund. It is provided for the citizens who earn a salary in the territory of the country. The amount does not exceed 2% of the funds received during the reporting period. If the foreign employs work in the company, the tax is not charged;
- VAT. It is paid from each item sold or service rendered in Cyprus. There are 3 options of a VAT rate – standard (up to 15%), reduced (5%) and zero.
Sequence of actions
You can buy offshore in Cyprus or register a brand new company, and in each case, there are its own advantages and special features. The purchase of a ready-made business is much more expensive, so it is not used so often. Regarding registration, a number of activities are to be completed:
- To choose a suitable name. According to local laws, 2 companies with the same name cannot be in operation in the country. Therefore, if the selected name is already listed in the state register, you will have to create something else. Verification of compliance is carried out within 2-3 days.
- Legalization of the corporate documentation. The process takes for about a week.
- Opening a company account in a local bank. The procedure lasts for about a week, but the account details are usually issued after a day from the date of application. Despite the availability of the details, it is impossible to carry out financial transactions until the official opening of the current account is confirmed.
- The choice of a legal address in the country.
After that, it remains only to wait for receipt of the documents confirming the registration of the company. This is a Charter, a set of certificates and a set of stamps to them.
What the assistance of lawyers is
Annually, an increasing number of foreigners are interested in how offshore registration in Cyprus is carried out. Especially it is interesting for Russian businessmen, as the income tax in Cyprus is much lower, and many businessmen seek to increase income by registering a company here. Additional advantages include the neighborhood with Africa and Europe, which expands and simplifies trading activities. By law, Cyprus does not apply to countries with currency regulation, therefore, currency transactions are allowed in unlimited amounts. All activities are confidential, dividends from holding companies are not taxed.
Besides, each company which is registered here has intellectual property rights. The conclusion of a contract between the company and the tax-free zone of Cyprus on the right to use objects that are not listed as the intellectual property of the company implies paying 18% of royalties. But even if to calculate all tax liabilities, including royalty, registration of a company in Cyprus will be more profitable than paying taxes in Russia.
It is difficult to assess and weigh independently all the pros and cons of an offshore company in Cyprus. Therefore, in this matter best of all is to get legal advice. People contact RPI Solutions to receive professional assistance at any stage of the procedure, which will allow to avoid any claims from regulatory authorities and other structures, as well as to resolve any legal issues. We will help you to choose the fair form of activity, will secure transactions and predict prospects. Contact our consultants to get more information on a matter of concern.