..INTERNATIONAL
..[OFFSHORE]
..BUSINESS
..COMPANIES

CYPRUS, THE EUROPEAN INTERNATIONAL [OFFSHORE] BUSINESS CENTRE .

Cyprus, is a reputable international [Offshore] jurisdiction, not only due to the favorable tax regime and its wide network of double tax treaties but also due to the island’s privileged position, the low operating costs and the high standard of professional services.

The entry of Cyprus to the European Union and the new tax reform in our legislation gives added value to Cyprus [Offshore] International Business Companies [IBC’S] as there is no distinction between local Companies and IBC’S. All companies have a European status and still enjoy low tax rates. This reform enhances Cyprus position as an international financial centre as it remains a right location for investments to and from other European Union countries, Russia, CIS and many other locations as Cyprus based companies enjoy the lowest tax rates in Europe. Free from the usual suspicions that accompany other Offshore Business Centres which carry the “tax heaven” label, Cyprus has a very good reputation as a well established International Business Centre.

Cyprus has advantages that not a lot of other Offshore Business Centers can offer. Its prime location as a stepping stone between three continents Europe, Asia and Africa, the excellent infrastructure, the high standard of the services industry and the favorable tax legislation establish Cyprus as an ideal Business Centre.


FISCAL ADVANTAGES OF OFFSHORE BUSINESS IN CYPRUS.
The major fiscal advantages for the International Business Companies are as follows [IBC]:
• There is no distinction between local Companies and IBC’S. Net profits of IBC’S and international branches managed and controlled from Cyprus are taxed at 10%
• No tax on profits from the operation or management of a Cyprus-registered vessel
• 4,25% Corporation Tax if the vessel is not registered under the Cyprus flag
• International business branches which are managed and controlled from abroad and international business partnerships are totally exempt from corporation or income tax
• No withholding tax on dividend distribution and payments of interest and royalties
• Profits earned from a permanent establishment abroad are fully exempt from Corporation Tax
• Dividend income and profits from the sale of shares are exempt
• Can use to there advantage a large number of double tax treaties
• No capital gains tax except on sale of immovable estate situated in Cyprus
• Income derived by a way of interest on foreign capital imported and deposited to banks in Cyprus is tax
exempt. Other interest received is subject to defense contribution at 15%. Interest earned from trading or closely
related trading activities is liable to 10% tax
• No time restrictions on carrying forward tax losses
• Group relief for utilization of tax losses
• VAT system not applicable on offshore activities
• Capital allowances and expenses for the purpose of the business are allowable for tax purposes
• No stamp duties on normal trading activities
• Exemption from estate duty on shares in offshore companies inherited in Cyprus
• No exchange control restrictions (bank accounts in any currency, anywhere in the world)
• Confidentiality and anonymity of the beneficial owners is assured by disclosing their details only to the
Central Bank of Cyprus
• Employees of foreign entities can get a work permit visa in Cyprus, provided they work in executive positions or in
positions where similar skills cannot be found amongst the Cyprus labour force.
• Foreign employees resident in Cyprus will be taxed the same way as the local employees. If employed outside Cyprus, the salaries are tax exempt provided they are remitted through Cyprus

DOUBLE TAX TREATIES.
Due to the favourable tax regime, a large number of individuals use Cyprus as a base for holding and managing their own investments worldwide. The 32 double tax treaties (see table below) covering 40 countries which Cyprus has ratified are particularly useful for this type of activity. The existence of these treaties, combined with the low tax paid by IBC’s, offer significant possibilities for international tax planning through the island The main objective of the Double Tax treaties is to avoid the double taxation of income earned in any of the two contracting countries. IBC’s are considered Cyprus resident Companies by reason of their incorporation (domicile) for the purposes of the double tax treaties, thus they are eligible to claim relief under the treaties.

Double Tax Treaties have been ratified with the following countries:

EU’S PARENT - SUBSIDIARY DIRECTIVE.
As a member of the EU Cyprus is governed by the provisions of the EU’s Parent-Subsidiary directive whose effect is that where a Cyprus holding company controls at least 25% of the shares of an EU subsidiary for a minimum period of 12 months any dividends remitted by the EU subsidiary to the Cyprus holding company are free of withholding taxes.

Yiallourides&Partners can advise you in establishing an optimal business structure, designed to mitigate your tax burden by utilising the benefits of double tax treaties that exist in various jurisdictions. Our Department offers services ranging from international tax planning, Company formation [both in Cyprus and abroad], assistance in setting up an office and arranging for work permits and residence permits of expatriate staff.

Once the structure is implemented we can undertake the administration of the Company affairs including corporate secretarial services, management and book-keeping services.

We will be more than happy to answer any of your questions. Contact us.