Cyprus, one of the smallest European low tax jurisdictions, is suitable for establishing a company company due to the combination of tax treaties and low-tax regime. Dividends can flow through Cypriot companies totally tax free and companies can be used in order to benefit from the extensive network of double tax treaties.
Dimitris Michail & Associates LLC provides legal advice and assistance to clients wishing to register any Cyprus International Business Entity in order to benefit from the tax incentive regime of Cyprus as well as its network of Double Tax Treaties.
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In order to establish a Cypriot company acting as an International Business Activities Company the following information and procedures are required:
(a) Approval of the proposed name of the company by the Registrar of Companies.
(b) Description of the main purposes of the company.
(c) The amount of the nominal capital of the company, and the amount of shares each shareholder will obtain.
(d) The names, passport details, dates of birth, addresses, occupations and nationalities of the proposed beneficial shareholders as well as the proportion in which they will hold the shares of the company.
(e) The names, passport details, date of birth, addresses, occupations and nationalities of the proposed directors and secretary of the company.
(f) The proposed address of the registered office of the company in Cyprus.
A Cypriot Tax Resident company is charged only 12,5% of corporate tax. However, for a company to be considered as Tax Resident in Cyprus, we need to show to the Tax Authorities that the management and control of the company is effected in Cyprus. In order to achieve that, a company must fulfill certain criteria such as:
- The majority of the directors must be of Cypriot citizenship and/ or
- The general, annual and board meetings as well as the decisions and the supporting minutes must take place in Cyprus
Non-resident Cyprus Companies are taxed at 0% annually, but do not have the benefit of Double Tax Treaties.
Foreigners who do not wish to appear as registered shareholders may appoint nominees to act for them as registered shareholders, whilst the actual ownership shall always rest with the foreigners, non-resident beneficial owners of the shares. It is common to appoint the firm which undertakes the registration/formation of the Company to settle the nominee shareholding through its members or through companies fully controlled by it. Our law office can provide nominee shareholders, directors, secretary and registered office upon request.
Our annual retainer fee covers all the services we provide to the company during the year, except for items of a truly extraordinary nature, which we would only charge separately upon agreement with the clients.
Director and shareholder
The minimum number of directors is one, who can be either an individual or a legal entity. The same requirement applies to shareholders. The nationality of directors and shareholders is immaterial. Usually members of our firm are appointed as nominee directors in order to execute board meetings and resolutions in Cyprus. In this way management and control is made in Cyprus for tax purposes.
Secretary
The appointment of the company secretary is required by the Law and can either be an individual or a legal entity. 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 a company to be a resident in Cyprus.
Nominees
It is common for an IBC to employ Cypriot residents to represent them as nominees. Members of our firm can undertake this by registering their names in the articles of association and memorandum. After the incorporation of the company, the nominees transfer their subscription shares to the actual shareholders by issuing instruments of transfer or the nominees continue to hold the shares on trust on behalf of the beneficial owner.
A nominee acts on behalf of the beneficial owner. At the same time the appointed nominees are not actually entitled to manage the company without the approval of the beneficial owner. Holding the shares in trust on behalf of the beneficial owner, guarantees a high level of confidentiality.
The following documents are provided by the nominee to protect the security of the beneficial owner:
- The trust deed
- Undated Instruments of transfer
- Directors’ resolution approving the transfer of shares to the actual shareholder
- The original share certificates issued in the names of the nominal shareholders
- Undated letters of resignation of the nominee directors
Registered office
The Cyprus Company Law requires the registered office of the company to be within the territory of Cyprus. Our firm acting as the IBC’s registered office, offers the services of a virtual office with telephone, fax and all other relevant facilities to assist in the administration of the IBC.
Registration and Management of Companies in Other Jurisdictions
Our law office will also provide assistance for the registration and maintenance of any international business entity in any jurisdiction. Our list of corporate agents covers the jurisdictions of Belize, British Virgin Islands, Isle of Man and Mauritius.
These jurisdictions have double tax treaties with Cyprus and therefore when management and control criteria are fulfilled (same principle as with the formation of a Cyprus International Business Entity), in any of those jurisdictions, the corporate tax will be nil.
The procedure for the incorporation can be achieved within 24 hours, however, it will take approximately five working days for documents to arrive from the jurisdiction. We do keep ready-made companies in stock, available for immediate purchase.
Banking
In addition to the incorporation of international business entities and investment services our law office arranges introductions to offshore and onshore banks as well as the opening of offshore and onshore banking accounts for personal or corporate use.