International Business Companies

A summary of the advantages of International Business Companies registered in Cyprus

Low tax on the net profit after deducting all expenses incurred in the course of business and capital allowances.

Companies who have their Control and Management outside Cyprus are exempt from Cyprus taxation. Companies who have their Control and Management in Cyprus pay tax at 12.5% on the net profit after deducting all expenses incurred in the course of business and capital allowances on fixed assets. Control and Management generally means where the majority of the Directors reside and where the major decisions are made.

Low tax on the salaries of employees.

Salaries from services outside Cyprus for more than 90 days in a non Cypriot resident employer or in a permanent establishment of Cypriot resident employer are not taxed in Cyprus.

Employees being taxed in Cyprus and earning a salary exceesing €100,000 per year, have a 50% exemption from income tax.

Social insurance contribution is lower than other EU countries at 8.3% for employees and 15.6% for self-employed individuals.

The social insurance contributions are capped at €54,648 of income per year.

Dividend Income

Corporations do not pay tax on dividends received from other Cypriot tax resident companies. Dividends received from foreign corporations are exempt unless:

a. Directly or indirectly more than 50% of the activities of the paying company result in investment income, and
b. The paying company is subject to tax at a rate substantially lower than the Cypriot rate
When dividend income is not exempt, there is a 17% defense tax contribution. Tax credits for taxes paid abroad are available.

Other significant provisions

Companies part of a group, can consolidate their results and set off losses of one company against profits of another company. Losses can be carried forward indefinitely. Mergers, acquisitions and spin offs, can be effected without tax cost.

Expense Deductibility

According to the Income Tax law all expenses incurred for the production of income, subject to certain restrictions, are deducted before arriving at the taxable income.

VAT

If the company is a holding company without any other activity, it will not be a taxable person under the VAT legislation.

However, if the holding company is involved in other activities as well, such as management services, then it may be entitled to register and to deduct VAT that it suffers on expenses incurred in Cyprus.

Work and residence permits can be obtained for the company’s foreign employees.

No exchange control restrictions.

Advantages arising from the double tax treaties Cyprus has signed with many countries.

Nominee shareholders may be used thus securing the confidentiality of the real shareholders.

Profit from sale of titles

Profit from sale of titles, such as ordinary shares, preference shares, is exempt for income tax purposes. Please contact us for the complete list of titles which are exempt.

Use of nominee shareholders and directors

In case where the real shareholders and directors of the company wish to retain their anonymity nominees may be appointed. Appropriate documents are given to the beneficiaries to secure them and enable them to run their business smoothly. For the shareholders Trust deeds and blank instruments of transfer of shares are provided. For the directors Power of attorney is given.

Minimum requirements

• Shareholders (1)
• Directors (1)

What is needed to incorporate a company

For the beneficial shareholder:

1. Photocopy of passport
2. Short biography
   1. Address
   2. Business
   3. Qualifications
3. Bank references
4. Must state how long the bank knows the person.
5. A utility bill showing the address and name.

Steps for incorporating the company

a. Approval of the name.

Three suggested names must be given. Ready names are available.

b. After receiving the approval of the name all documents are submitted to the Registrar of companies for registration.

This will take approximately two weeks.

Ready made companies

Ready made companies can be provided.

These companies are already registered and what is merely required is the change of the shareholders and directors.