Cyprus has maintained its allure for several businesspeople despite being compelled to forego its nominal offshore status after its entrance to the EU. Among EU member states, it is now among the most business-friendly today.

Every month, around a thousand new businesses are established here. Preferred tax treatment for businesses is the basic secret to success.

Why are more and more businesspeople choosing Cyprus as their company incorporation destination? 

Cyprus has a tax policy that is among the most lenient in all of Europe. There will be no taxation on profits made by business owners (depending on several factors) from:

1. Investments involving securities
2. Real estate re-registration
3. Functions of affiliated companies

The government went to great lengths to get merchants to settle on the island and establish business there. Cyprus is proud of its cheap technological maintenance expenses, which are particularly low compared to other European nations, and its commercial potential.

Cyprus firm incorporation benefits

Cyprus company formation main benefits:

• Full EU member—can operate in any EU country
• One of Europe’s lowest corporation tax rates—12.5% on net profits.
• Affordable company setup
• Quite a few international agreements to prevent double taxation
• The choice to create a bank account in Europe
• The choice to establish the business and open a bank account in a single nation
• Official document verifying taxpayer status
• There is no offshore jurisdiction in Cyprus.

Distinctions of a Cyprus limited liability corporation

When the majority of the board of directors resides in Cyprus and the firm has its meetings there often, it is referred to as a “resident” corporation. Double taxation treaties only apply to resident corporations.

Audits and taxes in Cyprus

Every year, businesses in Cyprus are required to submit:

1. Income tax. Accrual accounting documents accompanied by a report from an impartial auditor
2. Statements of financial status in Greek. The yearly report that details the directors, secretaries, and shareholders
3. The corporate tax is 12.5%. Resident enterprises pay corporation tax on earnings from Cyprus and foreign commercial activity.

Cyprus imposes a corporation tax on profits made by non-resident enterprises. However, banks treat non-residents poorly and prevent them from benefiting from double taxation arrangements.

Corporations are not required to pay taxes on profits made from investing, dividends, and non-essential business operations.

Unique tax considerations IP Container

Cyprus enterprises may choose to optimize their taxes in Cyprus and get a 2.5% income tax reduction if they earn money from IP ownership.

Corporate tax may therefore be applied at a rate of 12.5% on the remaining 20% of IP ownership earnings, with 80% of those profits being exempt.

In order for the Cyprus firm to be eligible for the concessions, it must be involved in the establishment of the relevant intellectual property rights and have its principal operations linked to the IP.

Proof of Cyprus residence for tax purposes

This certificate verifies that the business is really paying taxes in Cyprus and establishes its status as a tax resident of Cyprus. Companies based in Cyprus are automatically considered residents.

An important factor in deciding tax residence is the location of the company’s management and controls. One must meet the following primary criteria in order to get the certificate:

• Cyprus must be the location of the company’s management.
• If an attorney represents the corporation under a power of attorney, it must include specific powers.
• Companies formed over a year must report financials.

INTELIUMLAW attorneys would gladly register your business in Cyprus or elsewhere. An optimal solution tailored to your requirements and specifications will be created.