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All you need to know about establishing a Cyprus company
That
has given the island a unique cultural mix, with all kinds of archeological and
historical wonders. Add some of the best beaches on the planet, and you'll see
why Cyprus is on the bucket list of thousands of people.
Mundo
brings you Cyprus, the land where Aphrodite was born and the saint of
zero tax, Saint Mamus, is revered. Now, you can fall in love with this amazing
island for the corporate freedom and low taxation it offers.
What
corporate advantages does Cyprus offer? In a nutshell:
- One of the lowest taxation rates in the EU
- Access to numerous double taxation treaties
- Great banking options
- Fully compliant with OECD substance requirements
- Full access to the European market
- Fantastic tourism, real estate, shipping, gas, and agroindustrial
investment possibilities
- Friendly financial environment
- Solid LLC legislation
- A top destination for holding companies
- We can offer all main corporate services from incorporation,
headhunting, and tax planning, to branching, accounting, and auditing
About
Cyprus
It is
believed that the first to arrive in Cyprus were the Greeks, who introduced
their language, religion, and customs to the islands. Later, the Phoenicians,
Assyrians, Egyptians, and Persians controlled the island. Passing through the
hands of Alexander the Great, it remained part of the Greek-Egyptian kingdom
until the Romans arrived, and Cyprus became a senatorial province. Cyprus was
conquered by the English king, Richard Lionheart, in 1191, during the Third
Crusade.
He
later sold the island to the Templars, who, in turn, sold it to the Franks
until they ceded the island to Venice. The Venetians were unable to resist the
invading Ottoman troops who conquered the island in 1571. Cyprus remained under
Ottoman rule until the arrival of the British in 1878.
Then,
the island became independent from Britain in 1960, but tensions between the
Greek and Turk inhabitants of the island led to a Greek-backed coup that was
followed by a Turkish invasion in the north. As of today, the island remains
divided.
Today,
the attraction that led so many to try to conquer the island continues.
Investors from all over the world and from all kinds of industries make Cyprus
the home of their business. Retirees choose the island as their place of
retirement, and every year more and more expatriates decide to leave their home
countries for Cyprus.
It's
clear why the Greeks believed Cyprus was the home of Aphrodite.
And, on
top of that, Cyprus has one of the most attractive tax regimes in the EU, has
become a top financial industry center, and offers an ideal environment for
FDI, which has turned it into one of the fastest-growing economies in the EU.
There
is no doubt that Cyprus has a financial, historical, and tourist attraction
that can blow your mind.
Effective
management and control of companies is the determining factor for tax residence
in Cyprus. The corporate tax rate is one of the lowest in the EU, at 12.5%,
with exemptions for participation in dividends, capital gains (under certain
conditions), and on profits from the disposal of securities. Another great
advantage is that the country has no withholding taxes.
The
country has no restrictions on foreign investment. Both EU and non-EU investors
can invest in, or set up, Cypriot companies, even if they own 100% of them.
All
this makes Cyprus a fantastic investment opportunity. This brought a lot of FDI
to the island, which continues to fuel the country's growth. In fact, according
to Global Finance, Cyprus has the 8th best return on FDI in the world.
Cyprus
the ideal country where to set up your business.
And
what investment opportunities you have in Cyprus? The first is clear: tourism.
The country enjoys 340 days of sunshine a year, has some of the best beaches in
the Mediterranean Sea, and some famous archaeological sites, such as the Paphos
Mosaics. Tourism represents more than 15% of the country's GDP and has the
potential to grow to contribute around 25% of the Cypriot economy.
Another
exciting investment opportunity is the shipping industry.
The
country has the third-largest merchant fleet in Europe and the eleventh largest
in the world. Cyprus is the largest ship management center in Europe and is
among the top five in the world. As such, the industry employs 3% of the
country's workforce. Similarly, the geopolitical pattern that has moved Brexit
has had a good impact on the industry as many shipping companies want a new
safe port in the EU.
But the
shipping industry isn't the only one that has had a positive impact from
Brexit. Brexit has benefited the financial business, especially e-payment
institutions. Cyprus offers a fantastic environment, legal framework, and tax
system to establish an investment firm or an EMI, especially after the UK, which
had in their hands almost three-quarters of the European EMI market, left the
EU.
Check
out our articles about our financial licenses' services and our Forex services in Cyprus!
Also,
Cyprus is an ideal place for establishing a holding company to distribute dividends
for a set of companies.
All
this makes Cyprus the best destination in Europe for your business. If you're
not still convinced, let's see if this helps.
Why Cyprus? Seven reasons to
start your company in Cyprus
First-level
tax system
A 12.5
% corporate tax rate, which is one of the lowest in the EU, sounds pretty good.
Add to that, full tax exemptions on dividends, capital gains (under certain
conditions), withholding taxes, and profits from the disposal of securities.
Moreover,
Cyprus has a territorial tax system, which means it only taxes locally-sourced
income and a robust double tax treaty network of more than 60 countries.
All
this makes Cyprus not only ideal for any kind of company but especially for
holding companies.
An entryway to Europe
Cyprus
is a popular destination for businesses that are starting to operate in Europe.
In a continent where there's so much fiscal and bureaucratic pressure, Cyprus
is a breeze of fresh air. Moreover, starting and running a business is simple,
and if you wish to start a financial business, financial licenses in Cyprus are
reputable, offering peace of mind for investors, and have passporting rights.
That
means you can choose Cyprus as your European headquarters, and you can operate
your business from there without any additional licensing requirements on other
EU members or needing to establish branches or offices.
Pro-business
government
The
government took many business initiatives. For example, it introducedmany tax
incentives on the table and opened up the country to investors and established an
attractive non-dom status for foreigners, provided tax credits for fund
managers. As if that wasn't enough, it also created citizenship and residency
by investment programs, and reformed banking laws so that banks could
securitize loans, reducing their NPL exponentially.
Fantastic
investment opportunities
Cyprus
has all kinds of investment opportunities. It is one of the most touristic
countries in the Mediterranean and Europe as a whole; it is one of the global
shipping powers; it has a thriving real estate business, and its financial
business still has a ton of room to grow. And we haven'tyet talked about the
gas, agricultural, and fishing potential Cyprus has. There's room for all in
the home of Aphrodite.
Its
population
More
than 70 % of the Cypriot population speaks English, and the island has a
well-established expat community. More than half of the Cypriot residents hold
tertiary qualifications. That means the island has an apt public sector and
top-notch service providers of all kinds (accounting, legal services, tax planning,
and more) that can help you start operating in Cyprus.
Low
cost of living with excellent quality
When
compared to the services and easy life offered by the country, its cost of
living is among the lowest in the European Union. The country has a modern
infrastructure with great telecommunications. All this led to Cyprus being
named the 5th best relocation destination in the world by a report by Knight
Frank, one of the world's leading real estate consultants. This is why the
country has the second-highest percentage of foreigners in the EU, with almost
20%.
Corporate structures in Cyprus
Starting
a business in Cyprus is the best way to do business in the EU. If you are
looking for compliance with EU and international standards, tax efficiency, and
stable tax planning, Cyprus is your best choice. The country offers many
opportunities to reduce your tax exposure and optimize your taxes. Cyprus has
become an essential destination for companies looking for a legal way to
optimize their taxes, and the fact that the laws and regulations for foreign
investors are the same as for local investors makes it even better. Cyprus has
four main types of corporate structures:
- Cypriot company
- Branch of a foreign
company
- Partnership
- Sole Proprietor
An ordinary Cyprus company can be incorporated under the procedure established
by the Companies Law, which allows for three types of companies:
- Company limited by shares, which is further divided into:
- Private company: The limited liability company is the most widely used in Cyprus. It can be used as a holding company and take advantage of the tax benefits provided in Cyprus; it can be used as a trading company for commercial activities and can be used as a financial institution. There is no minimum share capital, and it can have from one to 50 shareholders with non-transferable shares. As usual, with LLCs or PCs, shareholders are responsible for the extent of their investment, but the company is a different legal person from the shareholders.This is the corporate structure that most foreign businesses choose in Cyprus.
- Public company: It's quite like an LLC.
Nevertheless, shares can be transferred at will, and the company can have as many share holders as wanted, starting with at least seven. The minimum capital must
be of €26,000.
- Companies limited by guarantee: They are usually
created for charitable or non-profit purposes. Each member can establish the
limit of their liability freely, which is subject to a previous agreement
between the members.
- Exempt private companies: These are companies
where no corporate body holds any of the company's shares, the number of
shareholders is less than 50, and the director isn't a corporate body.
- Unlimited companies: The liability of the
members is unlimited
Foreign companies that wish to set up a business in
Cyprus can be established as:
-Subsidiaries: they can be registered
as LLCs, which gives them the status of a resident company in Cyprus. They are
independent companies which can carry out activities other than those of their
parent company
-Branches: They depend entirely on
the parent company, and their activities cannot differ from those of the parent
company. It is considered a Cyprus resident company but is cheaper and easier
to establish than the subsidiary. They are fully protected by Cyprus' double
taxation agreements.
-Representative offices: They can only carry out
marketing and point of contact activities between the parent company and
potential customers and business partners in Cyprus.
Partnerships are divided into:
-General partnerships: They can be formed by
two to twenty partners who have to register with the Registrar of Companies.
There is no capital requirement, no auditors, and the partners are liable to
the extent of their private assets.
-Limited partnerships: They are virtually the
same as general partnerships. However, they must have one partner who is fully
liable for the partnership's obligations (general partner) and at least one
partner who is liable only to the extent of his investment (limited partner).
Lastly, sole proprietors are persons who conduct
their business with or without additional employees. It is the simplest
corporate structure in Cyprus. They can trade under the name of a business but
are solely responsible for the debts of the business. There are no statutory
requirements for their accounting records or the audit of their annual
accounts.
Holding companies in Cyprus
Cyprus is one of Europe's top destinations for
holding companies. As you may know, holding companies don't offer products or
services, but exist only to own and control other companies through share majority.
Thus, they are generally the parent company of a group of companies. Their
primary income source is the dividends from the disposal of capital to its
subsidiary companies.
Holding companies are vital for investors with
different companies as the risk and liability of the parent company is
distributed and diversified between its subsidiaries. Also, it limits your tax
liability as you can both base your holding and your subsidiary in different
jurisdictions with beneficial tax rates for them.
This means selecting a solid jurisdiction for your
holding company is probably one of the most significant considerations you must
make as an investor. Thus, you probably have five main criteria from which to
choose your jurisdiction:
- Incoming dividends (withholding taxes on
foreign jurisdiction)
- Outgoing dividends
- Dividend income received
- Capital gain tax
- Other tax considerations such as
re-organization rules, group relief, controlled foreign company rules, etc.
This means that jurisdictions that offer friendly
rules to the above criteria are prime locations for your holding company. And
Cyprus is one of them.
It's one of the top choices for businesses in
Europe, Africa, Assia, and the Middle East. Companies can be incorporated at a
surprisingly low cost and overhead expenses and have a marvelous corporate tax
rate (12.5 %). Holding companies are usually incorporated as a private company
limited by shares.
A Cyprus Holding company provides you:
- A tax exemption on the disposal and trading
of securities.
- A tax exemption on dividends received from
Cypriot companies or the foreign permanent company of your holding company
(with certain exemptions, such as income arising from jurisdictions with lower
tax rates or foreign companies with mostly passive income).
- Dividends, royalties (except for intellectual
property), or interests paid by the holding to non-residents are not subject to
withholding tax.
- Re-organization is tax-exempt.
- Losses can be carried
forward for five years.
- No Controlled Foreign
Company laws.
All this have made Cyprus one of the top
jurisdiction for holding companies in Europe and one of our favorites in Mundo.
Who are we, and what can we do
for you?
In
Mundo, we have more than two decades committed with your freedom. Along with
NTL, we've offered top financial, immigration, wealth management, banking, and
investment services for family offices, high net worth individuals, and
investors around the world.
In this
time, we've built a paramount network of experts.
That's
why we can provide you with top financial and corporate advice in Cyprus. Our
experts on the island form an unparalleled multidisciplinary team that offers
the best services in Cyprus.
Among
them is helping you open and operate your business in Cyprus.
Cyprus
is in the 54th position of the Doing Business ranking. That means it's
not difficult to do business in Cyprus, but counting with a helping hand is the
best way to go.
How to
register a company
Registering
a Cyprus company takes
somewhere between a week and ten days, we can help you with this process, so
you don'tecouner any unpleasant issues.Let's walk you through it:
- Register the company name and receive the approval from the Registrar
of Companies (this process costs €30).
- Our legal team prepares the Memorandum and Articles of Association.
- Register the company at the Registrar of Companies. You must submit:
- Declaration form
- Office address
- List of directors
- Original or scanned copy of the memorandum and articles of associations
- Company name registration document
- Payment of registration fees (€205+€100 if you want the fast-track
process)
1)
Register at the tax authorities for tax and VAT and get a taxpayer
number.
2)
Register for social security at the Ministry of Labor.
You
should also know that:
- The legislation requires a company to at least have one director, one
shareholder and a secretary
- The registered office address must be in Cyprus.
- The standard authorized share capital is €1,000, but there are no
requirements for minimum paid-up capital.
- Companies must file accounts and prepare yearly audits
Our
corporate services sin Cyrpus
Our
experts in Cyprus can help you with all primary corporate services in Cyprus,
such as:
- Opening a company in Cyprus for you
- Company maintenance services, accounting, shareholding, and
directorship services
- Due diligence services
- Tax planning
- Legal support
- Headhunting for your company personnel and finding an adequate office
space
- Virtual/physical office support
- Mediation and arbitration services
- GDPR audit and auditing advisory
- Opening a corporate bank account
- Establishment of branches and offices
Want to know more about our corporate services in Cyprus? Don't waste any more time and hire a professional, enquire now!
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