Sovereign Trust (Cyprus) Limited
TYPES OF CYPRUS COMPANIES
Holding Companies
Finance Companies
Royalty Companies
Trading Companies
Cyprus has over 40 Double Taxation Treaties (DTTs) and is an EU member-state. There are various types of Cyprus Company that can be used when taking advantage of this factor:
Under either the EU-Parent/Subsidiary Directive, or agreeable double taxation treaty, dividends paid to a Cyprus Company by a subsidiary may be subjected to low or nil withholding tax in the treaty country.
Under most circumstances, there is no tax on dividend payments received in Cyprus. There is also no WHT charged when further remitting dividends from Cyprus to a parent company registered in a zero tax jurisdiction such as BVI.
Companies may take advantage of the Cyprus' double taxation agreements by providing loans to operating companies registered in treaty countries or other countries where withholding tax on interest is low or nil.
For example, a series of loan agreements may be made between a low-tax jurisdiction, Cyprus and a foreign operating company.
Thanks to agreeable withholding tax rates to and from Cyprus, taxes in both Cyprus and the foreign operating vehicles may be reduced substantially when interest payments are made between the companies.
Rights for intellectual property can be owned by, or assigned, to a Cyprus Company which may be interposed between a company registered in a low-tax jurisdiction and an operating foreign company which would typically have a beneficial tax-treaty with Cyprus.
Under the EU treaty or double taxation agreement, there may be reduced Withholding Tax on the payment of royalty payments to Cyprus. Furthermore, there are no Withholding Taxes on paying royalties from Cyprus to a low-tax jurisdiction.
Some countries have specified requirements when utilising a Cyprus entity to take advantage of a tax-treaty; however, Sovereign Trust (Cyprus) has successfully established a special purpose vehicle that may provide a solution in any scenario.
Cyprus has a corporate tax rate of 10% which is one of the lowest in the EU; it is also a member of the Customs Union. With its excellent geographical location and communications infrastructure, Cyprus is the ideal choice to setup a trading company.
Cyprus companies can be used for the invoicing / re-invoicing of goods and services when trading between countries A and B, and may assist in substantially reducing taxes in high-tax jurisdictions.
Typically, with intelligent structuring, it is possible to further reduce Cyprus tax to levels well below the usual 10% charge.
It must be noted that, due to the complexity of utilising Cyprus in a tax-structure, it is advisable to contact our Cyprus office for further information:
Sovereign Trust (Cyprus) Limited
Geopyxis Centre, 4th Floor
168 Makarios Avenue
3027 Limassol
Cyprus
Tel: +357 25733440
Email: cy@SovereignGroup.com