Despite various changes to the law, companies in Cyprus remains a suitable choice for offshore outsourcing.
Cyprus is situated to the south of Turkey, and around 300 km west of Israel. The island has a population of just over 800,000 inhabitants. Cyprus has been a full member state of the European Union since 2004, and its official currency has been the EURO since 2008. Greek and English are the most commonly spoken languages.
The Cypriot government strongly encourages economic growth, and the country is continuing to enjoy positive levels of growth thanks to its desire to maintain attractive rates of taxation. The number of newly created companies is growing at an exceptionally high rate.
Because of its numerous treaties and tax savings (dividends, royalties, interest…), Cyprus is also widely used as an area of jurisdiction for overseas finance and investment. For example, the largest overseas investor in Cyprus is Russia.
Creating a company in Cyprus will offer you the following advantages:
- Companies in Cyprus enjoy a rate of income tax equal to 10% (the lowest in the EU)
- Local companies are subject to a VAT rate of 15% (the lowest in the EU)
- In the majority of cases, dividends are tax-free
- There is no capital gains tax imposed on securities
- In the majority of cases, there is no tax imposed on the payment of royalties, interest, and dividends
- Companies in Cyprus can benefit from many agreements which assist in avoiding double taxation
- The costs associated with creating and maintaining companies are highly competitive
- The Cypriot government is stable and introduces a fiscal policy which particularly favours entrepreneurs
- Limited companies in Cyprus can be owned and administered by a single individual
- The entire legal framework is founded on the British model, i.e. is both simple and modern
- Local banks are both efficient and safe
- Comprehensive guarantee by appointing a “nominee” to act on behalf of managers and shareholders
Creating an offshore holding company: intermediate holding companies provide a good way to optimise taxes
A company may wish to invest in a country without a tax treaty within its own country of residence. Taxes on this investment can have a detrimental effect.
Under these circumstances, the intermediary offshore holding company may be perfectly well established in an area of jurisdiction which has favourable bilateral tax treaties and has been incorporated between the two countries in question.
For example, Cyprus has signed a series of bilateral agreements with countries in Eastern Europe, and countries belonging to the former USSR. This is why the Cypriot jurisdiction is frequently used by entrepreneurs who wish to invest in these countries as a result of their favourable tax systems.
The cost:
- Incorporation: €4,800.00
- Costs for maintenance and domiciliation: €2,500.00
- Accounting and auditing: €3,800.00