Cyprus International Business Companies / Cyprus Offshore Company
Title 1: Cyprus International Business Companies
In simple terms, a Cyprus International Business Company (IBC) is a normal limited liability company which is used as a tool, legally, by corporations and individuals throughout the world to direct profits out of high tax countries into international financial centers, thus taking advantage of low tax and double tax treaties. The beneficial ownership and business activities of the Cyprus International Business (offshore) Company lie outside Cyprus.
A Cyprus IBC enjoys substantial tax incentives:
- Flat rate of 12.5% tax on net profits, the lowest “non-offshore” tax jurisdiction in the EU, fully compliant with EU directives, OECD, FATF and PSF
- Accelerated capital allowances on fixed assets used in the business
- Zero tax if management and control is outside Cyprus
- No withholding tax on payment of dividends, interest and royalties
- Dividend income received is wholly exempt from Cyprus tax
- Profits from sale of shares and other securities is wholly exempt from Cyprus tax
- Interest received is wholly exempt from Cyprus tax (unless it arises from the ordinary course of business)
- Profits from a permanent establishment abroad are tax free in Cyprus.
- No tax on foreign exchange gains with the exception of gains arising from trading in foreign currencies.
- No exchange control restrictions.
- Special tax and VAT regimes for Cyprus International Trusts, Investment Funds, Shipping Companies, Yacht VAT Leasing Scheme, VAT Private Aircraft Scheme.
- Losses can be carried forward and set off against future profits for tax purposes.
- Group tax relief available.
- Any foreign tax paid on income subject to income tax in Cyprus is credited against any Cyprus income tax payable on such income, irrespective of the existence of a tax treaty.
- 80% of the profit generated from the disposal of an IP owned by a Cypriot resident company (net of any direct expenses) is exempted from any form of taxation.
- Any expenditure of a capital nature for the acquisition or development of IP is claimed as a tax deduction over a five year period on a straight line method.
- Tax exempt gains on the disposal of subsidiaries.
- Advance tax rulings.
- Absence of strict transfer pricing rules.
- No capital gains tax on sale of immovable property situated overseas.
- Wide network of Double Tax Treaties to avoid double taxation.
Global Consultants can assist you in registering an IBC efficiently, timely and at low cost. Normally it will take approximately five working days to register an IBC.
The following information is normally required in order to register an IBC:
- Proposed name of company
- Brief description of main activities
- Amount of initial share capital (normally € 10000)
- Beneficial shareholders (names, nationality, occupation, passport no., residential address, number of shares to be subscribed)
- Directors (names, nationality, occupation, passport no., residential address)
- Registered office address (must be in Cyprus)
- Company Secretary (name, nationality, passport no., residential address)
Note: For each beneficial shareholder and director a copy of his passport together with a utility bill as proof of his residential address and a CV must be forwarded to us together with the above information.
Where confidentiality is important, Global Consultants can assist clients in providing fiduciary services such as nominee directors, nominee shareholders, company secretary and registered office for a small annual fee. Furthermore, it is important for tax purposes to establish that management and control of the company is exercised from Cyprus by using local resident directors. The local directors will act always upon receiving authorization and instruction from the beneficial owners. A series of documents such as trust deeds, undated blank instrument of transfer of shares and undated letters of resignation by the local nominee directors and nominee shareholders are drawn up and are in place in order to safeguard the interests of the beneficial owners.
Upon registration of the Cyprus International Business Company, the following legal documents are issued by the Registrar of Companies:
- Memorandum and Articles of Association
- Certificate of Incorporation
- Certificate of Registered Office
- Certificate of Directors
- Certificate of Shareholders
Global Consultants can also assist clients, once the IBC is registered, in such necessary initial administrative matters as:
- Opening of corporate bank accounts in Cyprus and worldwide
- Vat Registration
- Tax Registration
- Ministry of Labour and Social Insurance registration
Global Consultants can, furthermore, undertake to perform the daily routine activities of the IBC, which may include:
- Monitoring of corporate bank accounts
- Processing bank transfers
- Bookkeeping and administration support
- Preparation and filing of VAT returns
- Payroll preparation
- Preparation of management accounts and reports
Annual Requirements by Law
A Cyprus International Business Company is legally required to prepare and file, on an annual basis, normally at 31st December each year, the following statements and results:
- Audited Financial Statements. The audit must be carried out by an auditor authorized under Cyprus Law;
- Annual Tax Returns. The Returns have to be completed and certified by an authorized public accountant under the Cyprus Law, and then submitted to the Commissioner of Income Tax for approval;
- Company Annual Return. Return which has to be submitted to the Registrar of Companies together with the Audited Financial Statements.
Global Consultants and its business partners, associates and alliances can assist clients to ensure compliance with all of the above statutory and regulatory requirements.