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1) What are the tax rates of a Cyprus Resident Company? 2) What is the most popular form of using Cyprus companies? 3) Does Cyprus have a special tax regime for certain activities? 4) Why are Cyprus holding companies so popular? 5) Are nominee services provided in Cyprus? 6) Are there any requirements as to the number of shareholders or directors? Is it necessary to appoint a secretary? 7) Are there any restrictions on the persons who may be shareholders or directors of companies? 8) When is a Company considered to be Cyprus tax resident? 1) What are the tax rates of a Cyprus Resident Company? All companies are taxed at a rate of 12,5% (10% up to the year 2012). Exceptions:
The most popular form is the use of Cyprus companies as holding company. But Cyprus companies are also used a lot for trading, financing and licensing activities. 3) Does Cyprus have a special tax regime for certain activities? Yes, it does. Income from exploitation of intellectual property will be subject to an effective tax rate of 2% only. Income rom shipping activities may be subject to a very favourable tonnage tax regime. 4) Why are Cyprus holding companies so popular? Cyprus has a tax system that complies with EU legislation and OECD (Organization for Economic Co-operation and Development) requirement; Cyprus has concluded significant number of double tax treaties worldwide which offer important international tax planning opportunities and advantages; A uniform income tax rate of 12.5% (prior to 2012: 10%) is applicable for all companies; It is very easy for such companies to obtain tax exemption for income (dividends and gains) they generate; Profit from disposal of securities (shares, debentures, bonds etc) are exempt from taxation apart from the sale of shares in companies owing immovable property in Cyprus, which will be subject to capital gains tax; Cyprus does not levy withholding tax over outbound dividends, so people using Cyprus holding companies have full flexibility in repatriating their profits. 5) Are nominee services provided in Cyprus? If you are seeking anonymity and privacy, we can provide you with nominee directors, secretary or nominee shareholders for your company. The beneficiary’s ownership of the Company is secured by the execution of a Deed of Trust, between the beneficiary and each nominee shareholder appointed, giving the beneficiary full access to any future transfer of benefits derived from the shares in question. An indemnity letter address of the nominee director and secretary must also be signed by the beneficial owners. 6) Are there any requirements as to the number of shareholders or directors? Is it necessary to appoint a secretary? The minimum number of shareholders for incorporation of a private company is 1 (one). A private company may have only one director and a secretary but the sole director of the Company cannot also be the corporate secretary. Nevertheless, where a single member private limited liability company is concerned, the sole director may also be the secretary of the company. 7) Are there any restrictions on the persons who may be shareholders or directors of companies? The shareholders of a Cyprus company may be legal or natural persons and may be resident and/ or nationals of any country. They have to be the legal age of 18 and over, and in order to be a director, they should also be in sane mind and be able to contract under law. 8) When is a Company considered to be Cyprus tax resident? Companies which are tax residents of Cyprus are taxed on all income accrued or derived from all sources in Cyprus and abroad. A company must register with the Inland Revenue Department within 60 days of incorporation. A non-Cyprus tax resident company is taxed on income arising from immovable property in Cyprus and on income accrued or derived from a business activity, which is carried on through a permanent establishment in Cyprus. Permanent establishment is a fixed place of business through which the business of an enterprise is wholly or partly carried on. The term permanent establishment includes a place of management, a branch, an office, a factory and a workshop. A Company is a tax resident of Cyprus if it is managed and controlled in Cyprus. Under the Cyprus Law there is no exact definition of management and control. However, the basic requirements for management and control are as follows:
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