| CYPRUS COMPANIES BENEFITS |
| :: | 10% - Company Tax Rate (lowest in Europe) |
| :: | 4,25% - Tax Rate for ship management companies |
| :: | 0% - Tax Rate for shipping companies for operations in international waters |
| :: | Protected by the European Treaty from efforts by other more Highly – taxed European countries to infringe their citizens’ rights to establish companies in low tax jurisdictions – Cadbury Schweppes |
| :: | Applicability of the following directives to Cyprus companies: |
| | :. | Parent/subsidiary directives |
| | :. | Mergers and Acquisitions Directive |
| | :. | Interest and Royalties Directive |
| | | |
CYPRUS COMPANIES NON - TAXABLE INCOME |
| :: | No tax on profits from trading in Securities |
| :: | No tax on dividends received from a Cyprus Resident Company |
| :: | No tax on dividends received from a non-resident company if holding > 1% |
| :: | No tax on profits from a permanent establishment a company maintains abroad |
| :: | No capital gains tax on gains arising from non-Cyprus sources |
| | | |
INCENTIVES – COMPANY REORGANIZATION |
| :: | Introduction of provisions for company reorganisations without tax cost - (Company reorganisations include mergers, transfer or assets and share exchange) |
| :: | The transfer of assets and liabilities creates no taxable profits to the transfer company |
| :: | There is no tax on the exchange of Shares |
| | |
OBJECT TO TAX |
| :: | A Cyprus resident company is taxed on worldwide income (i.e. 10%) |
| :: | A Cyprus non-resident company is taxed only on income that arises in Cyprus (i.e. 10%) |
| :: | A company is considered Cyprus resident if the management and control is exercised in Cyprus |
| | |
MANAGEMENT AND CONTROL |
What does it mean? |
| :: | Residence of the majority of Board of Directors |
| :: | Board meetings in Cyprus |
| :: | Major policy decisions taken in Cyprus |
| :: | Major contracts signed in Cyprus |
| :: | Wide and general powers of attorney to non-residents should be avoided |
| :: | Bank accounts in Cyprus managed from Cyprus |
| :: | Memorandum and Articles of Association must eliminate risk of appearing to have a taxable presence in another country (e.g. Requirement that all board meetings held in Cyprus) |
| :: | Company seal authorised to be used only in Cyprus |
| | |
DOUBLE TAX TREATIES |
| :: | Cyprus has concluded Double Tax Treaties with the following 40 countries: Armenia, Austria, Belarus, Belgium, Bulgaria, Canada, China, Czech Republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Kyrgyzstan, Lebanon, Malta, Mauritius, Norway, Poland, Romania, Russia, Serbia and Montenegro, San Marino, Seychelles, Singapore, Slovakia, Slovenia, South Africa, Sweden, Syria, Tajikistan, Thailand, Ukraine, UK, USA, Uzbekistan |
| :: | Current negotiations with: |
| | :. | Portugal, San Marino, Finland, Algeria, Bahrain, Bangladesh, Brazil, Indonesia, Iran, Iceland, Jordan, Libya, Malaysia, Netherlands, Pakistan, Spain, Sri Lanka, U.A.E. |
| | | |
TAX PLANNING ILLUSTRATIONS |
| :: | Cyprus Holding Company |
|
| | :. | Cyprus Co can be an attractive holding company |
| | :. | No tax on dividends received |
| | :. | Above, coupled with Cyprus treaty network i.e. direct dividends through treaty countries |
| | :. | Payment of dividends abroad tax free |
| | | |
| Provisions: |
| :: | Minimum 1% holding in the dividend paying company |
| :: | Paying Company must not carry on more than 50% investment activities and foreign tax is not substantially lower than tax burden of Recipient |
| | |
Trading in securities completely exempt from tax |
| :: | Cyprus Co (Trading in Securities/Profit on disposal Exempt) |
| :: | Dividends - No withholding tax To Overseas Company |
| :: | Profits can be from capital nature or trading |
| | | |
Non-resident Company |
| :: | Cyprus Co |
| :: | Managed and controlled outside Cyprus |
| :: | Derives income from outside Cyprus |
| :: | NO TAXATION IN CYPRUS |
| | |
No withholding Tax |
|
| | | |
Loan Provisions (Financing Operations) |
|
| | |
Royalties Income |
|
| | |
Profits from permanent establishment abroad- Tax exempt |
|
| :: | May use double tax treaty to avoid tax in the place of the permanent establishment |
| | |
Transportation Companies |
| :: | Company registered in Cyprus |
| :: | Transportation license in Cyprus |
| :: | Trucks registered in Cyprus |
| | |
BENEFITS |
| :: | Low road tax €500 Vs €5.000 in rest of Europe |
| :: | Social insurance 16,3% Vs 40%+ in rest of Europe -Truck drivers enjoy all medical benefits as if paying social insurance in their own Countries |
| | |
INTERNATIONAL TRUSTS |
| :: | Cypriot Trust Law based on the English Trust Law |
| :: | The international Trust Law opened the way for the creation of International Trusts in Cyprus |
| :: | Settlers is not a permanent resident in Cyprus |
| :: | One trustee is a permanent resident |
| :: | No beneficiary is a permanent resident |
| | |
Benefits: |
| :: | Registration is optional. Confidentiality safeguarded (except under a disclosure order by a court in Cyprus) |
| :: | No taxation of International Trusts or their income in Cyprus |
| | |
Tax Planing: |
| :: | May use to reduce or eliminate inheritance tax of the settler |
| :: | May be used to distribute untaxed income in Cyprus to the beneficiaries i.e. family member |
| :: | Ideal for “high worth” individuals |
| :: | Especially ideal for “high worth” individuals with slightly complicated family structures i.e. divorced and children from different spouses |
| :: | Trust may hold shares of Cyprus company with Cypriot nominees for confidentiality |
| | |
INDIVIDUALS – General Rules |
| :: | Individuals staying in Cyprus for more than 183 days are taxed in Cyprus on their world wide income May claim as a tax credit tax already paid on overseas income |
| | |
Tax Planning |
| :: | Foreign people with income from high tax jurisdictions may stay in Cyprus for at least 183 days and be taxed at maximum 30% (with the first €19.500 tax free)
|
| :: | Foreign pensioners residents of Cyprus can elect to have their foreign pension taxed at only 5% (with €3.417 tax free) |
| | |
CONCLUSION |
| :: | New tax regime in Cyprus has become more attractive than before to foreign investors |
| | |
The above coupled with Cyprus’: |
| :: | Good location (crossroads between Europe and the Middle East) |
| :: | Very reasonably priced and excellent accommodation (to rent or purchase – offices and housing) |
| :: | Excellent climate, high standard of Banking and wide choice of professional advisors, further reinforce Cyprus’ dominance in the routing of investments into various locations |
| | | |
