Articles | Cyprus company registration: A tax efficient proposition for international activities

If you are a business owner with international activities, looking for a tax efficient jurisdiction, there is no need to look any further. Cyprus is currently the main jurisdiction offering unparalleled tax benefits in relation to other offshore tax jurisdictions. These benefits transformed Cyprus to a major European business center and Cyprus company registration the main activity on the island. The provision of solid Cyprus fiduciary services coupled with the professionalism of Cyprus legal services providers aided this unravelled success.

Cyprus was an offshore company registration jurisdiction since the 70’s, but it became a mainstream jurisdiction after its introduction to the European Union and its subsequent adoption of the Euro in 2004 and 2008 respectively. The 45 double tax treaties signed with countries like US, Canada, UK, India, China, Russia and CIS Countries and the European Directives for the avoidance of double tax within Europe, make the jurisdiction relevant to almost all parts of the world. With a flat corporate tax of 10% on profits Cyprus maintains the lowest tax rate in Europe. However with proper structuring advise the effective tax could be even lower reaching even 0%, utilizing a regime for blanket tax exemptions for international transactions.

As an example one of the most efficient uses of Cyprus companies is the Cyprus Title Trading company. The Cyprus Title Trading company takes advantage of a tax exemption in Cyprus tax legislation providing that title trading activities of a company are fully exempted from capital gains tax. In the category of “Titles” almost anything that is traded is included like shares, bonds, debentures etc. The use of Cyprus company registration and Cyprus company administration for investment purposes in this respect is widespread.

Usually such tax benefits are obtained through Cyprus company registration from one of the law firms headquartered in Cyprus. The instructed Cyprus law firm will also provide Cyprus company administration services which includes the provision of a company secretary, office, directors and generally whatever is required to administer the company smoothly for the years to come. Cyprus fiduciary services, which are also to be provided by the instructed Cyprus law firm, will include the provision of nominee or trustee shareholders, the setting up and maintenance of the trust and also services related to the provision of a bank signatory. The picture is complete only with the obvious provision of other legal services where is required, like representation of the company to the bank, preparation of international transactions and other ad hoc legal services.

It is important for an interested investor to understand certain aspects of the international structure to set up and the legal and tax implications and benefits stemming from the use of its Company. For instance one aspect that needs to be explained and thoroughly understood is the extend of confidentiality that is enforced in Cyprus. In general fishing expeditions are not allowed in Cyprus and there must be a specific incident investigated in order to raise the confidentiality principle in relation to a Cyprus company beneficial shareholders. This is especially true where the trusts to shareholders is on a lawyer or lawyer related interests where confidentiality is incidental to their profession, and virtually impossible to raise. These issues and many others need to be explained during the company incorporation process.

LLPO Law Firm is a Cyprus law firm headquartered in Nicosia with offices in London, UK, Athens, Greece and Bucharest, Romania. LLPO Law Firm is regulated by the Cyprus Bar Association and is working in the field of Cyprus company registration and Cyprus company administration for the last 13 years. Our Cyprus fiduciary services and offshore tax services are provided as a turn key solution and in such a way as to cover the interested investor for all aspects relating Cyprus as an offshore or low tax jurisdiction.