Company Formation and Management Services
A Cypriot company can either be a private company established by one or more persons, or a public company established by any seven or more persons, who cooperate for any legal purpose and form a limited liability company, by signing the Memorandum of Association and by complying with the provisions of the Cyprus Companies Law. There is no minimum required issued and paid up capital for a private company, however it is common to have share capital of at least €1,000.
Every company is required to have a company secretary and a registered office address in Cyprus, which may also be used as the business address of the company. Although not a requirement, it is common practice for the majority of the directors to be Cypriot residents. Every Cypriot company is required to maintain proper books of account, prepare audited financial statements and submit an annual corporate income tax return.
Specialist uses of Cyprus companies include:
- Holding companies – Cyprus serves as an effective gateway to the EU, receiving dividends free of withholding tax and paying dividends to shareholders without deduction of withholding tax. Cyprus also has particularly advantageous tax treaties with Russia and Ukraine, receiving dividends suffering no or little withholding tax and paying dividends without deduction of withholding tax.
- Finance and treasury companies – a Cyprus company can receive interest on loans to EU group companies with no withholding tax and can pay interest without deduction of withholding tax. Other key jurisdictions with no withholding tax on interest include Russia and Ukraine. Cyprus companies trading in securities (e.g. shares, bonds, repos) have no tax liability because income and gains on disposal of such securities are exempt from tax.
- Ship owning and management companies – Cyprus has the only EU-approved “Open Registry” regime with a very wide and legally endorsed Tonnage Tax System (TTS), which was introduced with the Merchant Shipping Law in 2010 and covers the three main “maritime transport” activities: ship owning, ship management (crew and technical management), and chartering. Other than “Tonnage Tax”, there is no tax on shipping profits (including profits from the sale of ships), dividends paid from shipping profits, estate duty or capital gains tax and no stamp duties on documents or mortgage deeds. There s also no income tax for seafarers on Cyprus-flagged ships.
- Oil and gas exploration and extraction companies – combined with Cyprus’s permanent establishment exemption, exploration and extraction activity can be undertaken free of Cypriot tax.
Sovereign provides ready-made or customised incorporation of all types of Cyprus companies. Once incorporated, we provide a domiciliary service, which includes the provision of company secretarial, registered office and nominee shareholder services. Full management services from our own licensed corporate directors are also available and highly advisable in most cases. Re-mailing services are available at modest cost for all companies established by Sovereign.
Note: Ancillary services
In addition to providing incorporation, domiciliary and management (directorship) services, a range of ancillary services at competitive prices is available on request. These services include, but are not limited to: provision of dedicated telephone lines; office and personnel assistance; designated staff members (temporary or permanent availability); assistance with office relocation, introduction to real estate agents, government agencies and other third parties.
Trust Formation and Trustee Services
Trusts have many applications and advantages, including the protection and preserving of assets, tax planning or just avoiding the expense and delays of obtaining probate under a will. They also provide a high degree of confidentiality.
The procedure for establishing an international trust in Cyprus is straightforward and can be arranged in a relatively short period of time. Cyprus trust law is contained in both statute and case law with many of the principles of equity and English law. The primary statute for Cyprus international trusts is the International Trust Law, which defines a Cyprus international trust as a trust in which:
- The settlor is not a resident of Cyprus in the year preceding the year of settlement of the trust;
- The beneficiaries are not residents of Cyprus in the year preceding the year of settlement of the trust;
- At least one of the trustees is a permanent resident of Cyprus.
The settlor may retain or be granted powers, rights and interests in the trust property allowing great flexibility to adapt to changes in circumstances or objectives. The validity of a Cyprus international trust and the disposition of property to the trust are protected against claims brought for contravention of any foreign laws nor are they affected by the inheritance or succession laws of Cyprus or of any foreign jurisdiction.
Cyprus international trusts enjoy a tax status that provides significant opportunities. Non-resident beneficiaries are subject to tax in Cyprus on income and profits of the trust derived only from sources within Cyprus, while resident beneficiaries are subject to tax in Cyprus an income and profits of the trust derived from sources within and outside Cyprus.