For tax planning, the most popular is the registration of a company in Cyprus in the form of LTD (private company limited by shares).
The recommended authorized capital of the company is € 1000, payment of the authorized capital of the company is not required.
You can open a bank account both in Cyprus and outside.
The structure of the company:
• The minimum number of directors is 1. There are no requirements for residence. However, in order to obtain the tax residence of the company, its director must be a resident of Cyprus.
• The minimum number of shareholders is 1. Can be both a physical and a legal entity. Information about the shareholders of the company is publicly available.
• The requirement for the presence of a resident secretary. The secretary can be both a physical person and a legal entity.
There are requirements for the availability of a registered office in Cyprus.
Annual return, financial and tax reporting is required annually.
Publicly accessible register – yes.
1) Income tax – corporation tax.
Regulated by Income Tax Law of 2002, Law 118 (1) / 2002.
The tax rate for profit is 12.5%. Fiscal year – 01.01 to 31.12
This tax is imposed on residents of Cyprus and non-residents, if the profit is received in the territory of Cyprus. Income from operations with securities, dividends and interest from non-core activities are not taxed (but the last two income will be taxed on special contribution for defense).
Cyprus companies are not tax residents of Cyprus by default. The company is controlled and managed from the territory of Cyprus, if:
1) Cyprus is permanent residence for the majority of the company’s directors.
2) The main business decisions are made in Cyprus.
Tax residents of Cyprus are taxed on all incomes received anywhere in the world. Only resident Cypriot companies have the right to have benefits from the Double Tax Treaties.
VAT is regulated by the Law VAT Law 95 (I) / 00. This tax is imposed on goods and services. The usual rate is 19%, a reduced rate is 5% or 9%.
Rate 0 applies to:
1) the sale of goods and services to the EU countries, when the counterparty has a VAT number in the country of registration
2) when services are provided outside the EU (for example, in the CIS countries).
If company sells goods and services to European counterparts, it must obtain a VAT number. VAT declaration is submitted every 3 months.
Advantages of jurisdiction:
• Favorable business climate and taxation – there is one of the lowest corporate tax rates in the EU.
• The opportunity to register a company and open an account in one country, get a VAT number.
• Possibility of obtaining the tax resident status and using the advantages of double tax treaties.
• Access to EU directives and the European market.
• Is not a classic offshore.
• Anonymous ownership of the company through the use of a nominal service.
• There is no exchange control.
• Foreign dividends are not subject to taxation.
• Income tax on dividends, interest and royalties paid in favor of non-residents is 0%.
A Cyprus company may be useful for import-export operations, holding activities, for owning real estate or intellectual property. Also, the Cyprus authorities offer prospective investors favorable programs for obtaining a residence permit or a European passport.