Characteristics of the Cyprus Company
Cyprus offers significant advantages to companies looking to reduce their overall tax burden, whether they do so by using the island as a springboard from which to launch their products or services into regional markets, or whether they choose to use Cyprus to set-up a holding company for their international operations. A company set up in Cyprus can be resident or non-resident. A company is considered resident if it is managed and controlled in Cyprus. A resident company is taxed on its worldwide income. A non-resident company is only taxed on income derived in Cyprus but does not qualify for the purposes of Double tax treaties.
The most popular vehicle for carrying out business in and from Cyprus is a Private Company with limited liability by shares. The main characteristics of such a company are:
- The liability of its members is limited to their share participation. The Company has its own legal personality and this personality is distinct from its shareholders.
- The minimum number of shareholders is one and the maximum number is fifty.
- Shares cannot be issued to the bearer.
- There is no minimum issued and paid up share capital for companies. For substance purposes though it is common to have a share capital of at least €1.000.
- Nominee shareholders can be used where anonymity and confidentiality is desirable.
- General meetings of the shareholders of the company may be held either in Cyprus or abroad.
- The Company must have a registered office in Cyprus.
- The Company must appoint one Secretary, who may be local or foreign, physical or legal person.
- The minimum number of directors is one and there is no maximum number. Directors may be local or foreign, physical or legal persons. Alternate directors should be appointed in order to insure a professional and timely service.. In order to ensure that a company is managed and controlled in Cyprus (so as is considered resident for tax purposes), it is common practice for the majority of directors to be Cypriot residents.
- Meetings of the Board of Directors and General meetings may be held either in Cyprus or abroad.
- The company must have a Memorandum and Articles of Association prepared by a lawyer in Cyprus, which must be signed by the subscribers and deposited with the Registrar of Companies
- Bank accounts of any kind may be opened in any currency, either in Cyprus or abroad. Bank accounts opened in Cyprus are operated without any exchange control restrictions.
Possible international business activities of a Cyprus Company:
There are a number of business activities which are best suited to be operated through an international entity, thus taking advantage of the opportunities offered.
Examples of such activities are listed below (the list is by no means exhaustive):
- Financial Services such as Investment banking, brokerage, asset management etc
- Investment Funds registration
- International trading (an international company can be used as intermediary to re-invoice exports and imports)
- International services companies (re-invoice services through an international company)
- International construction and / engineering companies
- International transport/distribution companies
- Royalty companies
- Real estate companies
- Shipping and ship management companies
- Commission agents
- Holding companies (receiving dividends from foreign subsidiaries)