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Cyprus > Legal Developments > Law firm and leading lawyer rankings

Editorial

Why Register a Cyprus Company

Anarticle by Mr. Michalis Economides, CEO | Advocate & Legal Consultant ofthe International Law Firm Chambersfield Economides Kranos

Business nowadaysoperates in an interconnected world, without any boundaries or limitations toprotect brands and companies from the merciless competition. 

In our era, due totechnological breakthroughs, competition is thriving and multi-attacking companiesand brands from various channels of communication; therefore entrepreneurs findthemselves in the difficult position of searching and finding the mostfavorable path to follow, for the achievement of economies of scales.

Currently, manyentrepreneurs are in the process of searching various ways on how they canmaximize their productivity and enhance their profitability by minimizing theiroperational costs.  One of the main scenarios they examine, due to itsendless possibilities, is the reincorporation or re domiciliation of theirbusiness activities in favorable markets. Even though this practice is verycommon, entrepreneurs should cautiously consider their options, since this pathcan be very costly, multifaceted and time consuming. 

Consequently, whenentrepreneurs decide to pursue this course of action not only do they have toprepare their business plan but they also have to include the nature ofactivities and purposes of their company and simultaneously proceed with thepolitical, economical, social and technological environment analysis of thetarget market. 

Additionally, theyshould examine important economical parameters of the targeted country such asthe taxation regime scheme, processing time of company formation or redomiciliation and the terms and conditions of the exchange regulations, as wellas, the transaction flexibility, assets, personal information protection andrequirements for opening corporate bank accounts etc. 

In summary,entrepreneurs should thoroughly assess the business law frame work under whichtheir company will operate.

Even though variouscountries are renowned for their favorable tax regime scheme, Cyprus isconsidered to be one of the most reputable and strongest jurisdictions for manytypes of company formation, incorporation, trusts and investment offering oneof the lowest corporate tax rates in Europe. 

Cyprus is a countryisland situated in the Eastern Mediterranean area, at the heart of threecontinents; Europe, Africa and Asia thus rendering it a favourable choice.

It is a full member ofthe European Community and completely aligned with the EU regulations. Itscurrency is Euro and the official language is Greek while English is spoken byalmost everyone and Russian by a significant percentage of the population.

In addition, Cyprus hasone of the lowest crime rates in the world. It has an excellent transportationstructure and infrastructure that support the entire spectrum of businessactivities which take place on the island.  It has a trustworthy andadvanced private banking and medical system. Cypriot people are well manneredand are famous for their hospitality.  

The Legal System ofCyprus is based on Common Law.  Its economy operates based upon an open,market driven principle, with favorable tax regimes for the incorporation ofcompanies and investments. Moreover, Cyprus is characterized by a high percapita income and renowned as a European Union centre for foreign investments,offshore businesses and activities.

Also, it is important tonote that the Government authorities of Cyprus are promoting heavily theincorporation and foreign investments, as well as, allowing the purchase /ownership of property under favorable conditions.

Consequently, Cyprus Government authorities engage in non - stop negotiations for forming doubletaxation treaties with non European countries, in order for the Cypriot activecompanies to enjoy an important competitive advantage. Currently, Cyprus is anaffiliate to more than 50 double taxation treaties based on the OECD includingthe EU, China, India, Kuwait, Russia, Singapore, Thailand, USA, Azerbaijan,Lebanon, UAE, Georgia and other important hub countries. 

Furthermore, otherimportant advantages of Cyprus are the low corporation tax rate, the very shorttime frame for company registration, as well as, the low annual maintenancefees of corporations. Cyprus offers one of the lowest corporation tax rates inthe EU, which is 12.5%.  The time frame for the registration of a newcompany is very short, approximately 7-9 days.

Hence, Cyprus allows theuse of nominee Directors, Secretary and Shareholders therefore there is noobligation of exposure of the Ultimate Beneficial Owner (UBO) in the publicCompany Registrar Record. Anonymity rights are fully safeguarded and there isno need for the owner to be present during the process of the incorporation oropening of a corporate bank account. Bank accounts can open between 2 - 5working days with full online electronic banking and digital pass as well as adebit card.

Cyprus is considered tobe the most well-known EU country for offshore company formation and Trusts.The Cyprus International Trusts are exempted from income tax, capital gainstax, special contribution or any other taxes. Additionally, there is no estateduty or inheritance tax in Cyprus, there is flexibility for relocation, thereis no exchange control regulation and trusts can operate internationally withno disposal tax of securities.  Thus, there are no withholding taxes ondividend payments, interest or royalties to non residents (subject toconditions).

In addition, the profitsfrom the sale of shares in the stock exchange are tax free, whereas, the lossesof a company can be carried forward opposed to future profits for an indefiniteperiod. Besides those very important advantages, Cyprus is also offering theGroup relief option, whereby the loss of one company can be covered by theprofits of another since both of them are under the Cyprus residential taxscheme.

Moreover, CyprusPermanent Residence and Citizenship Schemes are considered to be one of thestrongest in the world since they provide several significant benefits to theinvestors, as well as, an advantageous flexibility towards the investors thatare reside in non EU member states, which includes, their family members under18 years old as well.

To sum up, Cyprus tax law is characterized by its simplicity,straight forward approach and effectiveness.  Subsequently, entrepreneursshould consider Cyprus as a favorable market for incorporation or re -domiciliation of their business activities, since their companies will enjoyinstantly, among other important advantages, low corporate taxation rates andannual maintenance corporation costs.

In addition,entrepreneurs will have the option of forming an offshore company or a trust soas to protect their assets, companies' strategies and personal information byenjoying a very beneficial taxation regime with no exchange control regulationthat would limit international operation.

Justifiably, Cyprus isconsidered to be an EU Tax Heaven island country. Cyprus companies enjoysafety, stability and flexibility, as well as, overall low tax rates whilehaving the opportunity to trade not only in the EU but in other countries byenjoying the advantages of over 50 double taxation treaties. 

Cyprusis globally an ideal investment and incorporation gateway, offering to theinvestors a market right of entry to more than 500 million EU citizens, theMiddle East and China.

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