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Business & Corporate Structures

Cyprus Companies have many competitive advantages when compared with companies from other global business centres. Attracting thousands of investors to set up companies here every year that are interested in the flat, 10 per cent, corporate tax rate together with a network of 45 double taxation treaties, highly professional services and a business-friendly operation environment, Cyprus offers considerable, EU compliant opportunities to minimise tax exposure.

Cyprus is the location of choice for the international business community as well as for reputable multinationals seeking a tax- efficient jurisdiction. The laws and regulations for setting up and administering Cypriot entities are the same for foreign investors carrying on international business activities as they are for local investors. Cyprus Companies can be used as Holding, Finance, Investment, Trading and Shipping Companies. Companies are registered with the Department of the Registrar of Companies and Official Receiver. The law caters for the concept of re-domiciliation of foreign companies from other jurisdiction to Cyprus under certain terms and conditions. 

Entities may be registered in the following legal forms under Cypriot company law, which is almost identical to the UK’s former Companies Act.

The main types of business entities in Cyprus are:

• Cyprus Company
• Branch of a Foreign Company
• Partnership
• Sole Proprietor
• Cyprus Intentional Trust
• Cooperatives

COMPANY COMPLIANCE

Every Cypriot company is required to maintain proper accounts, to prepare financial statements and to be audited in accordance with IFRS standards. In accordance with Cypriot tax return. There is also the requirement for annual financial statements prepared in Greek and a company annual return to be submitted to the Registrar of Companies. The translations are often undertaken by the local advisers at a favourable cost.

BUSINESS RESTRICTIONS

Unless a company is seeking to provide banking, insurance, financial or investment advisory services from Cyprus or undertake professional or medical services, there are no licences or permissions required to commence business in Cyprus.

KEY FEATURES OF THE CYPRUS TAX SYSTEM

• The lowest effective tax rate in the European Union
• 10% headline corporate tax rate
• Foreign source income generally tax exempt
• Profits on transactions in shares tax-exempt
• Generous tax deductibility rules reduces effective tax rate
• No withholding taxes on outbound dividends, interest & royalties, irrespective of the country of destination i.e. tax free exit
• EU tax directives apply
• Parent / Subsidiary
• Interest / Royalties
• Reorganisations
• Unilateral credit relief for foreign taxes
• No CFC legislation
• No thin capitalisation rules
• No detailed transfer pricing rules (arm’s length principle only)
• No capital gains tax (except on real estate situated in Cyprus)
• No taxes on entry, reorganisations and exists
• No wealth taxes and only minimal stamp and local taxes
• No exchange controls
• Most international transactions free of VAT
• Low personal tax regime – top rate 30%
• OECD approved / EU compliant system
• A tax administration that wants to help foreign investors
• Wide network of favourable tax treaties with 45 countries

Double Taxation Treaties 

Cyprus has concluded double taxation treaties with 45 countries which provide important tax advantages to Cyprus Companies. Treaties with the Central and Eastern European countries, China and India contain no anti-avoidance provisions and Cypriot companiess may therefore be used beneficially as holding, licensing and financing enterprises in those countries. Of the treaties now in force, only those with Canada, Denmark, Germany, France, Sweden, the UK and the USA contain limitation of benefits which only affect the distribution of income from these countries to Cyprus and not incomee flows from Cyprus to other countries.

COUNTRIES WITH WHICH CYPRUS HAW AGREEMENTS IN PLACE INCLUDE:

Armenia India San Marino
Austria Indonesia Serbia
Azerbaijan Ireland Seychelles
Belarus Italy Singapore
Belgium Kuwait Slovakia
Bulgaria Kyrgyzstan Slovenia
Canada Lebanon South Africa
China Malta Sweden
Czech Republic Mauritius Syria
Denmark Moldova Tajikistan
Egypt Montenegro Thailand
Estonia Norway Ukraine
France Poland United Arab Emirates
Germany Qatar United Kingdom
Greece Romania United States
Hungary Russia Uzbekistan


CYPRUS – PUSSIA DOUBLE TAXATION TREATY

Cyprus and Russia have a long history of friendship and mutual cooperation which dates back to 1960. Russia was one of the first countries to recognise the newly established Cypriot state following independence from Britain. Cyprus’ double taxation agreement with the USSR, which maw first signed in 1982, was published as a new Cypriot – Russian version in 1998. The text, which was updated by a Protocol in October 2010, continues to provide a preferential tax rate on dividends, no withholdings tax on interest and royalty payments.