The conditions and regulations of International Business Incorporation in Cyprus

Cyprus is a Mediterranean island country that lies in the gateway to three continents (Europe, Asia and Africa). Cyprus has been an important trade centre historically because of its strategic location. Currently, Cyprus is a member of European Union and still a very important international trade, finance and logistics centre.

In the past few years, Cyprus has changed its taxation and corporate structure for Cyprus International Business companies to come in line with EU. Cyprus now charges 10% tax on all national and International Business companies alike. Company shareholders are notified to the Registrar of Companies upon incorporation and upon subsequent change of shareholders, however anonymity of shareholders can be provided by appointing nominee shareholders

However International Business companies (IBC’s) are still very popular in Cyprus and number well in hundred of thousands. The reason is that Cyprus is the only EU member country, which still offers many tax and trade benefits to International Business companies. What Cyprus has done is to develop its economy in a way to make it very attractive for the International Business companies while at the same time do away with the laws that may contravene international financial practices. One of the main advantages has been the double taxation treaties with very favorable returns for Cyprus International Business incorporation. Cyprus currently has double taxation treaties with Azerbaijan, Armenia, Austria, Belarus, Belgium, Bulgaria, Canada, Czech Republic, China, Denmark, Egypt, France, Germany, Hungary, India, Ireland, Italy, Kuwait, Kyrgyzstan, Lebanon, Malta, Mauritius, Moldavia, Moldova, Norway, Poland, Qatar, Romania, Russia, San Marino Serbia and Montenegro, Seychelles , Singapore, Slovakia, South Africa, Sweden, Syria, Tadzhikistan, Thailand, Ukraine, Union of Soviet Socialist Republics, United Kingdom of Great Britain and Northern Ireland, United States of America, Uzbekistan and Yugoslavia.

One of the main users of International Business companies are the FMCG and other multinational companies with operations in Europe. An International Business company in Cyprus gives them the benefits of lowest tax rates in Europe (10%) and double taxation treaties ensure that the wealth is not corroded in taxation. The geographical location of Cyprus is suitable for the companies that wish to enter the markets of Middle East and Central Asia. Cyprus is very popular with European companies with markets in these regions as they can enjoy the benefits of European business environment and good banking systems and enjoy low taxes. For trading companies without any operations, in Cyprus, no local taxes are payable and the withholding taxes are considerably lower than in the rest of the countries.

International banks also use Cyprus to enter into the European markets. Opening a branch of a bank in Cyprus is very easy as Cyprus does not have strict liquidity or risk maintenance requirements for branches. However, the regulations for incorporating a subsidiary of a bank are much more comprehensive whereas other options like representative banking offices and administrative banking units are also available.

Cyprus International Business incorporations are also useful as holding and investment companies in Central Asia, Europe, US, Canada, Russia, India and China. The International Business company gains advantage of the lower tax regime, and the double taxation treaties insure that the income is not taxed twice. There is no withholding tax on dividends received from foreign investments in Cyprus and the withholding tax cut in the country of origination of dividends is available as tax credits in calculating the final tax liability. Furthermore, the currency exchange control regulations are not applicable on the International Business companies and hence it is easy to move funds outside the country or open bank accounts out of Cyprus. Furthermore, the Government of Cyprus gives full tax exemption on capital gains, which makes it particularly attractive for holding companies dealing in property and assets.

Cyprus is also one of the most favored locations for Shipping and Maritime operations. Certificate of registration of ships and their quality inspection is acceptable around the world. The ship registration fee is very low and there are no stamp duties on mortgage deeds. Furthermore, no VAT is applicable on the shipping operations and International Business companies and their employees (non Cyprus residents) are exempt from Income tax. Furthermore, Capital Gains and Estate Taxes are also exempt. Cyprus boasts one of the largest registrations of shops alongside Liberia and Panama because of the attractive policy for the Shipping and Maritime Industry.

Individuals involved in professional services and commodity brokerages also choose to incorporate an International Business company in Cyprus because of the low corporate taxes and tax exemptions on the salaries of international employees of the company and the profits to the owners.

Overall, Cyprus is still a very attractive option to for incorporation of an International Business company. Whereas it does tax International Business companies and cannot offer anonymity as provided in some other countries, unless nominee shareholders are appointed, it on the other hand covers it with many investment opportunities, favorable double taxation treaties, good business environment and governance and most importantly, acceptance of its laws and regulation as legal and not breaching international or regional laws.

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This article is brought to you by the DeltaQuest Group. For more information regarding Incorporating an International Business Company in Cyprus please visit My Offshore Companies.