We provide businesses with cost effective services, tax efficient strategies and sound business advice.
Our firm undertakes the entire process of incorporating limited liability companies in Cyprus.
The Cypriot Companies Law is based on the English Law with several amendments made due to the entry of Cyprus in the European Union (EU).
Our clients are utilizing Cyprus companies for private or business purposes for carrying out, amongst others, the following activities:
- Trading in goods
- Consulting/ Provision of services
- Financing of related parties
- Holding subsidiaries
- Investing in financial instruments (shares, bonds, funds)
- Holding Intangible Assets (Patents, Copyrights, Software)
- Shipping activities (shipowning, ship management, ship chartering)
- Construction and/or holding of real estate
A Cyprus company is recognized as a legal entity, and it has a separate legal personality which is separate and distinct from its owners. Private Limited Companies are considered as one of the most easily managed and cost-effective business structures. Some of the main tax incentives for utilizing a Cyprus company are as follows:
- Low corporation tax at the flat rate of 12.5% on net profit.
- Dividend income is generally exempt from corporation tax.
- No withholding tax on payments to non-residents (dividends, interest, and royalties).
- No capital gains tax on profit from the sale of securities.
- Non-resident entities are only taxed on their Cyprus-sourced income.
- Profits from overseas trading permanent establishments are exempt from corporation tax.
- Restructuring legislation in line with the EU Merger Directive extending to non-EU companies.
- Share Capital: Although there is no minimum initial share capital requirement, our firm’s practice is to incorporate Cyprus companies with 1.000 Euros authorized share capital of which the whole amount is issued in shares of 1,00 Euro each.
- Shareholders: The minimum number of shareholders is one (1), and this can either be a physical person or a corporate entity. Our firm offers nominee shareholders to hold shares as trustees of the client.
- Directors: The minimum number of directors one (1), and this can either be a physical person or a corporate entity. Although there is no legal requirement for the nationality of the directors, we advise that if the Cyprus company intends to be a tax resident in Cyprus, then at least the majority of the board of directors should be comprised of Cyprus resident directors. Our firm offers nominee directors, corporate and physical persons. It is possible to arrange for the appointment of professional directors at a fee to be discussed according to the circumstances of each client.
- Secretary: Although there is no legal requirement for the nationality of the secretary, we advise that for practical purposes, the secretary is a Cyprus resident. This can either be a physical person or a corporate entity. Our firm offers nominee secretary services.
- Registered office: The registered office is the official physical address of the company and must be in Cyprus. The statutory books and seal of the company must be kept at this location. Our firm can provide a registered office service upon request.
- Tax Registration: It is obligatory for all Cyprus companies to be registered with the Tax Authorities within 60 days of their incorporation.
- Financial Statements: Audited financial statements have to be submitted to the Cyprus Tax Authorities within 18 months from the incorporation of the Cyprus company and once every 12 months thereafter.
A trust is an arrangement, a legal agreement, whereby a person (the trustee) holds and deals with property (trust property) as its nominal owner for the benefit of persons (the beneficiaries).
In simple terms, a trust is created when a settlor transfers ownership of certain assets to a trustee and the trustee then manages them for the benefit of the beneficiary/ies in accordance with the wishes of the settlor.
There are various reasons for establishing a trust. It could be for charitable or personal reasons as well as for commercial and business purposes. For example, a trust may be created:
- For estate planning purposes e.g. for one to arrange the management and disposal of his/her estate after death and to name specific beneficiaries for which the trustee will provide benefits
- For asset protection purposes e.g. the trust property becomes property of the trustee and is no longer in the possession of the settlor who may operate in a litigious employment
- To holding property for which the settlor does not wish to hold ownership
- For tax planning purposes, e.g. elimination of inheritance tax, capital gains tax, transfer fees and other
- For confidentiality reasons e.g. a person may not want his/her name to appear as owner of an asset
- To protect property against spendthrift people
- To enable charitable objects to be carried out
- To hold property for minors or successive generations of a family
- To provide pensions for employees and dependents
- To provide an incentive to the workforce: e.g. via employee trusts of various kinds
- To provide secretly for others
- As the top holding investment vehicle for a group of companies
- As part of commercial arrangements to protect certain interests
- to establish a fund for the benefit of family members according to future needs as and when they arise
- to make provision for abstract purposes which are not charitable through a purpose trust
- Residency provisions: The settlor and the beneficiaries of the CIT must not be tax residents in Cyprus during the year preceding the year of creating a CIT (they may become tax residents subsequently)
- Exclusion of overseas law: Succession, heirship or other laws applicable in foreign jurisdictions or court judgments or orders or decisions by foreign competent authorities do not affect the validity of a CIT or the transfer of property to the trustee of a CIT. Cyprus law governs exclusively the trustees’ fiduciary powers and duties, and the powers and duties of any protectors of the trusts
- Reserved powers and interests: The settlor has the right to reserve many powers including, retain a beneficial interest in trust property, act as protector or enforcer of the trust, the powers to revoke or amend the terms of the trust, to instruct the trustee, to appoint and remove trustees, the protector or the enforcer, to change the law regulating the CIT or the place of its administration and others
- Investment powers of trustees: the trustees have the same investment powers as those of an absolute owner, allowing them to invest in a broader range of investments for the best interests of the beneficiaries, including investments in movable and immovable property both in Cyprus and overseas and shares in companies incorporated in Cyprus and abroad.
- Public order: For a CIT expressly governed by Cyprus Law, the provisions of the International Trusts of Cyprus apply without reference to other applicable rules of conflict and as a matter of public order.
- Confidentiality The trustees of a CIT are bound by confidentiality and cannot disclose information or documents unless they are ordered by a Cyprus Court or are required by law in certain defined circumstances
- All matters in relation to a CIT are determined in accordance with Cyprus Law and the Cyprus Courts have jurisdiction
- A CIT may be challenged only on defraud of creditor grounds with a two year limitation period
- A CIT may last for an indefinite period
- A CIT may be created for charitable or any other purpose
- The law regulating a CIT may be changed to another foreign law
Cyprus trusts are transparent for Cyprus tax purposes, meaning that the tax liability (if any) is assessed on trustee on behalf of the trust beneficiaries. The trust itself is not subject to tax.
A Cyprus International Trust which does not earn any Cyprus sourced income (e.g. rental income from property situated in Cyprus) and does not have any Cyprus tax resident beneficiaries is not subject to any tax obligations in Cyprus.
In case the CIT has Cyprus resident beneficiaries or earns Cyprus sourced income, there shall be Cyprus tax obligations and potential tax liabilities depending on the circumstances (e.g. type of income, the form of beneficiaries and other).