Establishment of Corporate presence in Cyprus
Cyprus is increasingly becoming a jurisdiction of choice for many multinational companies, entrepreneurs and investors for establishing their corporate presence. The Cyprus company registration, being the preferred entity of most, provides numerous legal and tax benefits rendering it advantageous to act as a holding, financing, trading or licensing company. Developments in the international tax sphere, have rendered it imperative that many multinational companies, entrepreneurs and investors maintaining any operations should establish appropriate levels of substance to justify their corporate presence in any jurisdiction. Further to the rather obvious cost disadvantages of such developments it also provides for a good opportunity to concentrate certain activities in a jurisdiction which can reasonably support a fully operational business presence.
Cyprus has positioned itself as such a jurisdiction by enjoying the following characteristics:
- A strategic location;
- Being a full member of the EU;
- A developed and robust legal system;
- Competitive and stable corporate tax regime;
- Personal Tax incentives;Levels/Indicators of substance and appropriate corporate governance procedures
- Directors – management and control – strategic decisions locally
Establishing substance in Cyprus Cyprus’ strategic location, full EU membership, developed legal system, competitive corporate tax rate of 12.5%, personal tax incentives, well-educated local workforce and business-friendly environment make Cyprus an ideal country for this purpose. Under the Cyprus tax legislation a company is a tax resident in Cyprus if it is managed and controlled from Cyprus
In order to support company formation, the tax residency position of the company, appropriate corporate governance procedures and indicators of substance should be in place such as:
- Strategic decisions actually being taken by directors’ meetings in Cyprus;
- The board of directors including suitably qualified Cypriot resident individuals;
- The company maintaining employees and an office in Cyprus, through which day to day operational functions are exercised;
- Maintaining full documentation of the decision making process and administration of the company taking place in Cyprus.
In addition, taking the above and other measures in Cyprus can mitigate other tax risks such as potential challenges on beneficial ownership and transfer pricing, as well as controlled foreign company (“CFC”) rules.
O.Shambartas Law firm can provide a wide range of Cyprus company formation services to assist you in the implementation of the strategic objective of increasing business presence in Cyprus. Such services include:
- Diagnostic review of the current level of substance of companies in Cyprus and making recommendations based on best practices;
- Assistance with setting-up of an office, hiring local personnel, dealing with migration formalities and drafting of employment contracts;
- Tax and legal support regarding the redomiciling of companies to Cyprus;
- Real estate services: identifying suitable office space and residential accommodation;
- Support with respect to ongoing administrative functions of companies (accounting, payroll and HR solutions);
- Tax services: corporate, personal and indirect tax compliance and advisory;
- Audit and Advisory services.
In the light of the shifting international tax landscape, enhancing economic substance is becoming a key factor in the formulation of a redefined global tax strategy. B