The first step to incorporate a Cyprus company is to receive approval of the company name. This step takes around 2 – 3 working days. Thereafter, the relevant application documents reflecting the director, secretary, shareholder and registered office may be filed with the Registrar of Companies. Along with these documents, the memorandum and articles of association of the company including amongst others, the amount of authorised and issued shares should also be filed. Once the company is approved by the Registrar of Companies, the company will receive the relevant certificates including its registration number.
GENERAL TAX ADVANTAGES
– 12.5% corporate tax on profits
– A combination of wide network of favourable tax treaties with almost 50 countries
– Profit from the sale of securities is 100% exempt from corporation tax with the exception of gains derived from immovable property situated in Cyprus.
– No withholding tax on dividends and interest paid to non- residents of Cyprus.
TAX ADVANTAGES FOR INTELLECTUAL PROPERTY
Businesses need to take advantage of their most valuable assets which depending on the activity of the company may be its intellectual property. Following the introduction of the IP Box in Cyprus, considerable savings can be achieved by using a Cyprus company as the owner of the IP and having it license the use of the rights direct to the end users.
The so called IP Box, which contains a package of measures to promote economic growth and aims to boost Cyprus’ predominantly service-oriented economy, has a number of very attractive tax incentives including but not limited to:
• 80% of worldwide royalty income generated from IP owned by Cypriot resident companies, net of any direct expenses is exempt from income tax
• 80% of profit generated from the disposal of IP owned by Cypriot resident companies, net of any direct expenses is exempt from income tax
• any expenditure of a capital nature for the acquisition or development of IP is claimed as a tax deduction in the year in which it was incurred and the immediate four following years on a straight-line
Companies registered in Cyprus have obligations imposed on them regardless of whether a company is active or dormant.
1. An annual levy of EUR 350 needs to be paid to the Registrar of Companies.
2. Every new company is required to register with the Inland Revenue Department which issues a Taxpayers Identification Code to the company.
3. VAT- Companies may be legally obliged, either now or in the future, to register for VAT, and/or to charge VAT on the goods or services they supply depending on a variety of factors.
4. Audited financial statements need to be prepared and filed. When the company is a newly registered company, the first financial statements need to be filed at the Registrar within eighteen months of its incorporation. After this, the company needs to file its financial statements every 12 months (by the end of each tax year which is December).
5. Every company having a share capital must file an annual return with the Registrar of Companies including details of registered office, shareholders, director, secretary etc. This must be accompanied by a copy of the financial statements of the Company of the previous year translated into Greek.
6. Incorporation tax of 12,5 %
Disclaimer: Any tax advice contained herein is intended to provide a brief guide. Appropriate professional advice should be obtained.