Cyprus Company formation
Linkia Trust are specialists in Cyprus company formations and our offices are based in Nicosia, the capital city of Cyprus. We have an excellent knowledge and understanding of the Cyprus market.
- For a quotation to incorporate a company in Cyprus or for more information please click here.
- For a Cyprus ready made shelf company click here
- Double Taxation Agreements click here.
Corporate Profit Tax
Cyprus has become well known for offshore company formation due in part to its history as a low tax jurisdiction. Since it joined the EU in 2004, it maintains one of the lowest corporate tax rates in the EU with a rate of 12.5%.
Taxation does not depend on where your offshore or International business company (IBC) is registered, but where it is considered tax resident. An IBC is tax resident in Cyprus if it is managed and controlled in Cyprus. Management and control is usually determined by the residency of the majority of the directors and the place where board meetings are held. Cyprus resident IBCs benefit fully of the advantageous Cyprus double-tax treaty agreements with more than 60 countries.
Cyprus has currently the lowest tax regime in Europe and its role as an international financial centre is greatly enhanced. A single corporate tax rate is applicable for all companies. Cyprus clearly stands as a prestigious tax - incentive EU country.
- An International Business Company (IBC) will pay a tax of 12.5% on its net profits if it is a Cyprus resident.
- An IBC will pay zero tax if it is non-resident in Cyprus (management and control is outside Cyprus).
- Cyprus has over 60 Double Tax agreements which can be utilized to minimize tax.
- A non-resident IBC will not be able to obtain a Cyprus Tax residence certificate and cannot enjoy the extensive double-tax treaty network.
- There is no withholding tax on payment of dividends, interest and royalties by an IBC to non-resident individuals or companies, except in the case of royalties earned on rights used within Cyprus, which are subject to withholding tax of 10% (5% in the case of cinematograph films). Such Cyprus WHT on royalties for rights used within Cyprus may be reduced or eliminated by DTTs entered into by Cyprus or by the EU Interest and Royalty Directive as transposed into the Cyprus tax legislation.
- Dividend income received in Cyprus by an IBC may be under certain conditions wholly exempt from tax in Cyprus.
- Tax losses can be forwarded without restrictions. They can be carried forward indefinitely and set-off against future profits.
- Mergers and acquisitions, reorganizations of companies are implemented without tax implications.
- No capital gains tax. Capital Gains Tax (CGT) is only imposed (when the disposal is not subject to income tax) at the rate of 20% on gains from the disposal of immovable property situated in Cyprus including gains from the disposal of shares in companies which directly own such immovable property.
- Profits from the sale of shares are not taxable for all Cyprus tax residents.
- Cyprus has no exchange control restrictions - an IBC can open a bank account in any currency in Cyprus and abroad.
- Confidentiality and anonymity of beneficial owners is safeguarded (true identity is only disclosed to local banks, if a local account is opened and information is not disclosed to any third party or to other countries.
English is widely used and learnt throughout Cyprus, with most working Cypriots speaking the language either well or fluently.
Employing foreign workers is possible, but usually they are from within the EU, as obtaining work permits for workers outside the EU can be difficult and is normally only offered as a last resort when no local workers are available.
Cyprus uses the Euro and is economically speaking, strong, stable and developed offering a safe place to set up your international business company.
Rules and requirements of Cyprus International Business Companies
Regulatory requirements in Cyprus for company formation are standard with all EU countries.
- You must have at least one director in your Cyprus offshore company / IBC
- You must have at least one shareholder.
- Your director does not need to be local, and can be entirely foreign, but there must be an annual meeting of directors. In case management of the company is exercised outside Cyprus the company will not be considered as a tax resident of the Republic.
- Your director and your shareholder may be the same person.
- Your shareholder may be a person or a corporation.
- The name of the director, shareholder and secretary will be disclosed publicly on record.
- You must have at least one company secretary – either as an individual or as a corporate body who must be a resident.
- Audited accounts must be submitted annually to the Cyprus Inland Revenue department.
International Business Company formation in Cyprus is an excellent option for many businesses as the legal system is very similar to that of the United Kingdom.
Main types of International Business companies
The main formats for your international business company are limited company, branch and partnership and each of these types have their own rules and regulations.
There are many benefits to Cyprus Company Formation including the low tax rate which many companies see that as incentive enough.