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Editorial

A practical guide to re-domiciliation: Relocating from Greece to Cyprus

In the wake of the fallout from the global financial crisis and subsequent recession, businesses start reassessing their corporate affairs and company re-domiciliation comes as a trend amid escalating corporate tax rates and sweeping regulatory changes. Opting for its re-domiciliation, a company may shift its domicile from one jurisdiction to another by changing the country under whose laws it is registered, without losing its corporate identity.

 

 

A prime example of how re-domiciliation works in practice as a current trend is the company's relocation from a country of ongoing increasing taxation, such as Greece, to a more agile one, such as Cyprus. Such relocation turns out to be of considerable interest given that Cyprus has currently, according to Forbes, the European Union's most favorable tax system and one of the lowest corporate tax rates, standing out as a premium corporate tax planning jurisdiction.

The Cyprus Companies Act in 2006, as amended by Law 124 (I)/2006, implemented a new legislative regime in respect of corporate re-domiciliation, allowing companies to redomicile to or from Cyprus, provided that all relevant provisions of the law and regulations on application and registration procedures are fully observed. Therefore, a foreign company registered in a country that allows re-domiciliation and whose Memorandum and Articles of Association provide for the possibility of relocation, may apply to the Registrar of Cyprus Companies in order to be registered in Cyprus as a continuing company, under the provisions of the Cypriot legislation.

In terms of Greek law, the question that arises is whether the current Greek legal framework authorizes and facilitates such a re-domiciliation to take place. Although re-domiciliation as such is mentioned in Greek Company Law, in the absence of special provisions regulating the matter, the provisions on cross-border mergers are employed by the interested parties.  In particular, Law 3777/2009 implements the provisions of EU Directive 2005/56 of 26 October 2005 in relation to cross-border mergers of companies of different Member States.  Under the present legislation, for a Greek company to move its domicile abroad, it is necessary that a company with the same shareholders be established in the foreign jurisdiction, which will subsequently fully absorb the Greek one.

The provisions of Law 3777/2009, in conjunction with the European Directive and the Cyprus Companies Act, allow a Greek registered company to move its domicile to Cyprus, by using the regime of a cross-border merger, whereby 100% of the shares of the Greek company will be transferred to the Cypriot company, which will eventually absorb the Greek company, striking it off the Greek Companies Registry. In this way, the company remains the same legal entity and continues its legal existence with effect from the original incorporation date.

It comes as no surprise that, on the balance of any additional associated costs and risks, re-domiciliation from jurisdictions with high corporate taxation to more favorable ones, such as from Greece to Cyprus, appears to be currently the ideal scenario for all companies that are in seek of more attractive taxation systems and among the most popular global trends shaping today's business world.

 

Drakopoulos Law Firm 

Athens, Greece

 

Panagiotis Drakopoulos

Senior Partner

pdrakopoulos@drakopoulos-law.com

 

Mariliza Kyparissi

Senior Associate

mkyparissi@drakopoulos-law.com

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