Since entering the European Union on May 1st, 2004, Cyprus has consolidated significant advantages as a location of international business. The legal status of an International Business Company (IBC), formerly known as an “offshore company”, is that of a limited liability company (LLC) and offers a number of important advantages:
An LLC is taxed at the rate of 10% on corporate profits per year. The tax year is set at the discretion of the shareholders. If the shareholders are not resident in Cyprus (see below), then there is only a single tax level: 10%. No other dividend taxes or levies apply.
Full EU and non-EU ownership
EU and non-EU nationals can own 100% of the shares of an IBC. There are no ownership restrictions, providing that the owners are not resident in Cyprus. Tax residency in Cyprus is determined by whether the owner spends over 180 business days in Cyprus per year. For EU nationals, residency is easily arranged if requested, including with a full work and residency permit.
Corporate Ownership through Nominee Shareholding
If requested, a nominee shareholder can be assigned. Such a shareholding is desirable if the real shareholders do not wish their names to appear on the company share certificates. A private agreement is made with a nominee, who agrees to hold the shares for an agreed period of time. This arrangement is made in full confidence, since a legal contract is then signed between the nominee and the company owner; the nominee has no authorisation over company transactions or bank accounts, unless authorised by the shareholder using a power of attorney.
Full Corporate Domiciliation
The shareholders can request full corporate domiciliation services. Domiciliation services provide a low-cost means of solving several legal requirements, namely:
- Provision of a corporate address
- Provision of a Company Secretary and Company Director
Secure, Online Bank Accounts
Banking has fully migrated to the internet. Company shareholders control the access to their bank accounts using secure, online access. If desired, no other people have access to the company bank accounts: no other transactions can be authorised.
Integration into EU Accounting and Financial Reporting Systems
As a full member of the European Union, Cyprus conforms with all accounting and financial reporting obligations. It has adopted the IAS Regulation, and the IFRS supplement. As a result, all financial accounts are submitted in English and/or Greek, according to IAS and IFRS standards. Cyprus’s wide network of double taxation treaties assure favourable tax treatment—but also tax transparency—within the EU, and with certain non-EU countries.
Value-Added Tax (VAT)
A 15% of Value-added Tax (VAT) is levied on all transactions to service or goods providers in Cyprus. VAT returns (refunds) occur quarterly: the government refunds VAT on time and in full.