Cyprus An Excellent European Option For International Trade

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The Use Of The Cyprus International Trading Company In International Tax Planning

Cyprus International Trading Companies

Cyprus' a well-established international centre, has been critically assessed as constituting an attractive location for international trading companies from a tax perspective, among others. This is due to the the enactment of the new Cyprus tax legislation, which is now compatible with the acquis communautaire. Cyprus laws and practices are now harmonized with the EU Laws and Directives, the Code of Conduct and the Organization for Economic Cooperation and Development's recommendation on Harmful Tax Corporation, and more over its tax exemption on all incomes generated outside Cyprus.

New Tax Legislation

A uniform 12.5% corporate tax rate, applicable to the worldwide income, is now levied on all resident companies. This is the lowest corporate tax rate in the European Union and thus the most advantageous standard rate of corporation tax for Cyprus.

The new taxation status on Company is residence-based. A company is only 'resident in the Republic' if its business is centrally managed and controlled in Cyprus.

Therefore, under the new rules, a resident corporation is taxable on its worldwide income accrued or arising from sources both within and outside Cyprus if it is managed and controlled from Cyprus.

In view of the new tax legislation, also its Holding International Business Companies operating from Cyprus are now in a much more beneficial position because they can enjoy the benefits deriving from the tax exceptions as well as the corporate tax benefits by virtue of the new tax legislation.

Cyprus Limited Liability Company

Cyprus is a member of the European Union and is situated in the Eastern Mediterranean, lying at the hub of 3 continents and close to the busy trade routes linking Western Europe with the Arab World, Africa and the Far East. The legal system is based on the English common law. The national currency is the European currency which is the Euro. The official languages are Greek and Turkish, while English is widely used within the business environment.

The Cyprus Resident Vs. Non-Resident Company

A Cyprus company, under the Income Tax Law of 2003 (118(I) 2002) can be either Tax Resident in Cyprus or Non-Tax Resident.

Tax Resident Company

A tax resident company is a company whose management and control is exercised in Cyprus. Hence the majority of directors must be in Cyprus. It pays 12.5% tax on its worldwide business profits (5% on interest income, 0% on dividend income). It can claim relief under the Cyprus double tax treaty network.

Non-Resident Company

A non-resident company is a company where the management and control is exercised outside of Cyprus. Hence the majority of the directors must be outside Cyprus. A non-resident company is taxable at 0% on its worldwide income. Any income generated in Cyprus is taxed at 12.5%.

Company Compliance

Authorised And Issued Share Capital

The share capital must be expressed in Euros. The usual authorised share capital of a Cyprus IBC company is € 5,000 and the minimum issued capital is € 1,000.

Classes Of Shares Permitted

Registered shares of par value, preference shares, redeemable preference shares and shares with no voting rights.

Financial Statements Required

Amendments made in 2003 to the Companies Law as part of the EU accession process included the following changes:

Every company must prepare a full set of financial statements in accordance with International Financial Reporting Standards, and every parent company that has one or more subsidiaries, other than a company which is itself a wholly owned subsidiary, should present consolidated financial statements

Under article 120, every company must complete an annual return within a period of 42 days from the date of its Annual General Meeting and must file immediately with the Registrar of Companies, a copy of the annual return, signed by a director and the company secretary. Under article 121, the annual return filed with the Registrar of Companies must be accompanied by the full set of financial statements

Directors

The minimum number of directors is One. They may be natural persons or bodies corporate, be of any nationality and need not be resident in Cyprus.

Company Secretary

All Cypriot companies must appoint a company secretary, who may be a natural person or body corporate. It is advisable to appoint a resident company secretary.

Shareholders

The minimum number of shareholders is One.

Corporate Services

Annual Fees

Under the Companies Law all companies must maintain a physical presence on the Jurisdiction via a registered office. At Atrium we view this an integral part in the efficient and effective administration of a Company and as a consequence we have built up an experienced team of professionals and robust IT support infrastructure in order to provide the highest level of service to our clients.

As registered office we typically provide the following:

Provision of a Registered Office address with or without a mail forwarding service, depending on each Client’s request;

Attending to the payment of the Annual Government License Fees and other government fees;

Submission of the company annual return to the Local Registrar;

Maintenance of the statutory records of the company including the Register of Directors, the Register of Members and the Register of Mortgages & Charges;

Attending to routine compliance matters (inclusive of periodic file reviews), reviewing official correspondence received and other routine matters incidental to good corporate governance;

Provision of ad-hoc services as requested from time to time by our clients, such as the provision of certificates of incumbency or certificates of good standing;

Filing of Statutory documents;

Company Searches;

Legalisation of documents;

Regular client updates and memo's on Local regulatory developments.

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