Offshore companies, companies in Cyprus

The Republic of Cyprus is the third-largest island in the Mediterranean Sea. Its area is 9,251 sq. km, extending 240 km from west to east and 100 km from north to south. Cyprus, with its capital in Nicosia, is well located between Europe and Asia in the north-eastern Mediterranean, 75 km from Turkey, 105 km from Syria and 312 km from Egypt.

A former British colony, Cyprus became independent on 16 August 1960. The main population of Cyprus is 793 thousand people, of whom 81% are Greek Cypriots, 11% Turkish Cypriots and 8% foreigners permanently resident on the island (British, Russians, Armenians). On 1 May 2004 the Republic of Cyprus joined the European Community. Since 1 January 2008 the official currency has been the euro, while exchange of the former currency, the Cyprus pound (CYP), continued.

Cyprus trust law developed during the island's colonial period on the basis of the British legal system. However, the changes and restrictions to trust principles that occurred in the United Kingdom after the island became independent did not affect Cyprus law. In 1992 the International Trusts Law was adopted on the island. Under this law, an international trust must meet the following conditions: the settlor may not be a resident of Cyprus and the beneficiary also may not have permanent residence in Cyprus. However, at least one trustee must be a resident of Cyprus. Trust property must not include any real estate in Cyprus. The law specifically states that a Cyprus offshore partnership or offshore company may also act as trustees of a Cyprus offshore trust.

Russian entrepreneurs chose Cyprus for offshore company registration in the early 1990s. Thanks to the double-taxation agreement signed between the USSR and Cyprus in 1982, its convenient geographical position and visa-free entry, the republic became a main base for Ukrainian business people.

Every year, billions of dollars were transferred to offshore companies in Cyprus, and some of this money returned home after some time. Formally, almost all transactions with shares of Ukrainian companies are made between non-residents, even if both the seller and buyer are Ukrainian investment companies.

After Cyprus joined the European Union on 1 May, the republic began to lose its attractiveness as an offshore zone. The first sign was the 2002 tax reform carried out to meet EU requirements, which removed Cyprus's status as a tax haven. From 2003 the profit tax was increased from 4.25% to 10%.

Cyprus is currently not an offshore zone in the strict sense, because all Cyprus companies must complete full state registration, submit financial statements to the tax authorities and hold shareholder meetings at least once a year. The special feature of the Cyprus tax system is that companies carrying out investment, trading or other activity abroad may have zero tax rates, which is why they are commonly called offshore companies in Cyprus.

Company law

The Republic of Cyprus Companies Law, Cap. 113 regulates the creation, operation and liquidation of companies.

Historically, this Law is connected with the British Companies Act 1948, because after independence from the United Kingdom the company law was not rewritten from the beginning. As a result, many amendments and additions were made.

The latest and most important amendments to the Companies Law were made while Cyprus was preparing to join the EU, date from 2002 and came into force on 1 January 2003. As a result of the latest changes, local organisations and offshore companies in Cyprus have no tax difference. The key factor is whether the company has resident or non-resident status.

A company is treated as a Cyprus tax resident if its management is located in Cyprus. For this, it is enough for the company directors to be tax residents of the country or citizens of Cyprus, and for board meetings and decisions to take place in Cyprus. An individual is treated as a tax resident if present in Cyprus for more than 183 days per year.

Registration offshore companies in Cyprus is carried out only in the form of a limited liability company and its name must end with “limited” or “ltd”.

Offshore company registration in Cyprus is carried out without a statutory minimum authorised capital for a private company.

Cyprus law provides one general profit tax rate of 10% for all types of companies — the lowest rate among EU countries.

Offshore companies in Cyprus with non-resident status pay tax only on income from Cyprus sources. Therefore, if there is no such income, there is no tax.

Offshore company registration in Cyprus is attractive because, under the Republic's Income Tax Law, income from the sale of securities is exempt from tax. Securities in Cyprus include shares, bonds and interests of participants in companies or other legal entities.

VAT is in the range from 0 to 15% and is paid only if the company sells goods or provides services in Cyprus to residents of Cyprus and EU countries.

All offshore companies in Cyprus must submit annually:

1. A tax return and financial statements with an independent auditor's report to the Cyprus Tax Department.
2. Financial statements in Greek and an annual return with information about shareholders, directors and secretaries to the Cyprus Registrar of Companies.

Offshore companies in Cyprus must submit reports and have them certified by an auditor even if there is no activity and no tax due.

Offshore companies in Cyprus must have a local secretary, individual or legal entity, and a registered office where registers of shareholders, directors, secretaries and creditor claims must be kept.

At the request of third parties, information about directors, shareholders and secretaries, the Articles of Association, Memorandum of Association and registered office is provided.

Confidentiality of offshore companies in Cyprus is provided through the use of nominee directors and shareholders.

Offshore company registration in Cyprus is often used to establish subsidiary companies in Europe or European countries. This is useful because Cyprus is a full EU member and has double-taxation agreements with a number of countries, including European countries. Income received by offshore companies in Cyprus from Ukrainian sources is exempt from taxation in Europe. With this approach to business organisation, offshore company registration in Cyprus allows the use of all benefits established by EU Directives concerning movement of capital and receipt of income.

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Additional services for your company

Nominee shareholder of the company	300 €
Nominee shareholder of the company Individual (resident of the European Union) Individual – legal entity (Panamanian)	415€ 300 €
General Power of Attorney	400 €
Minutes of the directors' meeting with apostille	100 €
Open company account (Alpha Bank, Cyprus)	415€
Account with a payment system (EMI, Online bank)	220 €
VISA Virtual payment card	300 €
Certificate of Good Standing (CGS) from the register	415€
Tax certificate UTR, TIN, Tax Certificate	490 €
Delivery of documents by DHL courier	12 €
Company registration with the tax authority	412 €
Notarised translation of the company's registration documents	450  €

More details about the procedure, timing and cost company in the Cyprus offshore zone can be confirmed with our specialists.