Cyprus has proved its ability to offer a favorable economic climate for overseas investment and business activities. The island has established a reputation as a springboard for global investors accessing the large EU markets as well as the emerging economies of the Middle East, Eastern Europe, North Africa, India and China.
After a long journey of over three decades, Cyprus became a full member of the European Union on May 1, 2004, which is helping investors to better tap the country's geographical advantage as a natural bridge linking the three continents. With the dawn of 2008, Cyprus joined the Economic and Monetary Union, by demonstrating a robust economic performance marked by banner key indicators. Besides achieving and maintaining the indicators to meet the strict EMU entrance requirements, Cyprus enjoys another key advantage by having joined the euro zone: price transparency.
Cyprus' entry into the EU has also kicked off a new era of commitment to growth in Cyprus. Cyprus encourages Foreign Direct Investment opportunities in the priority economic growth sectors, highlighted in the country's Strategic Development Plan 2007-2013. In 2010 the top four FDI sectors were financial and insurance activities (34.1%), real estate activities (23.9%), professional, scientific and technical activities (19%) and wholesale and retail trade (2.6%).
Cyprus provides many advantages to the corporate sector, including the lowest corporate taxation rates in the EU (10%) and Double Taxation Agreements with 49 countries. Cyprus companies enjoy exemptions from any withholding tax on inbound dividends, interest and royalty payments. Taxation exemptions also apply with respect to dividend income, profits from overseas permanent establishments and profits from the sale of securities. Moreover, Cyprus offers relatively lower operating costs with high quality services, including banking, tax, accounting, auditing, business administration, legal, investment, and brokerage and funds management.
Cyprus also has a young, well-educated talent pool. The country is committed to education and is focusing on reforms to achieve sustainable growth. Since 2004 Cyprus has consistently allocated over 6% of GDP of public expenditure on education.
Cyprus inherited a legal system based on Common Law. The legal profession is long established and consists of many independent law practices. The accounting profession is very well represented, with many international companies operating on the island, as well as a number of private individuals providing accounting, auditing and consulting services. Most accountants are British trained and members of either the Institute of Chartered Accountants or the Chartered Association of Certified Accountants. The banking sector is well developed and caters to a wide variety of financial needs of both businesses and individuals. The commercial banks and specialized financial institutions offer full and varied local, national and international services on both the personal and corporate level. They offer a wide range of services including insurance, leasing, hire purchase finance, factoring, mutual fund management, investment and consulting as well as custody and asset management services.
Cyprus International Trusts are also widely used as a vehicle for international tax planning, offering a raft of tax advantages. Income and gains of a Cyprus International Trust, derived from sources outside Cyprus, are exempt from any tax imposed in Cyprus under certain conditions. Dividends, interest or other income received by a Trust from a Cyprus international business company are not subject to tax nor are they subject to withholding tax. No capital gains tax is charged on the disposal of assets of an international Trust.
Setting up a Company in Cyprus.
According to Cyprus's law, investors can set up the following five types of business entities: limited liability private or public companies, general or limited partnerships, business/trade names, European companies (Societas Europeas), and a branch of a foreign company. Among them, a limited liability private or public company is the type of business for which the overwhelming majority of registration applications are submitted.
Any physical or legal person, whether of EU origin or not, is entitled to form a company in Cyprus. An applicant needs simply to be able to submit all the information and documentation that his legal representative in Cyprus will request, in order to file a complete application to the Registrar of Companies. Under Cyprus legislation, parties interested in registering a limited liability company need the services of a lawyer licensed by the Cyprus Bar Association, or of a service provider cooperating with a lawyer.
In order to register a company, an applicant needs to submit a corporate name to the Registrar of Companies for approval. The applicant must provide the main activities of the company so that the Memorandum and Articles of Association can be drawn up for submission. In addition, a bank reference is needed for each beneficial owner, shareholder or director. Every company should have at least one shareholder.
As for international business companies, it is important for investors to know that the management and control of the company are implemented within the jurisdiction, with regard to the taxation and administrative purposes. Under such a scenario, it is advisable for not more than one director to be appointed from abroad. The company also needs to have a registered office.
- The general procedures of setting up a company in Cyprus include the following;
- The applicant engages the services of a lawyer or service provider;
- The lawyer/service provider obtains approval of the company name the applicant desires;
- The memorandum and articles of association of the company is discussed and agreed to;
- The applicant provides the lawyer/service provider with all information/documentation requested, which the latter uses to prepare and submit the registration application to the Registrar of Companies;
- The Registrar processes the application and, provided all the information and documentation submitted is complete and accurate, issues the company a registration certificate, bringing it into existence; and the applicant receives the company Registration Certificate.
Thanks to an accelerated procedure, the company name registration at the Registrar or the Point of Single Contact (PSC), takes approximately two to five working days. With the normal procedure, possible only through the Registrar, the duration is approximately one month. For the accelerated procedure, the Registrar or the PSC charge a fee of
