INTERNATIONAL ACTIVITIES

As stated above the most common type of company used for local or international activities by non-residents is the private limited company.

Due to the low tax corporate rate (10%) and many other tax advantages as well as due to the geographical position of Cyprus, its infrastructure and the other advantages many foreign enterprises consider the Island as an ideal place for business in Europe, Middle East and Arab Gulf and also in Africa and West Asia.  The following categories of international companies are currently operating in Cyprus:

Advertising & Marketing
Architecture & Engineering
Captive Insurance Companies
Construction & Drilling
Employment                
Finance           
Holdings                                 
Investment funds
Leasing
Magazine & Newspaper
Management
Real Estate & Land Development
Royalties
Sales
Shipping & Shipmanagement
Trading
Trusts

International companies may also be formed for the management and control of affairs of any other company.  They may also buy and use their own premises such as offices, stores, flats and houses for accommodation of their directors, employees, etc.  They can also store goods in transit or in bonded stores, and proceed with repacking and crating processes etc.  They may proceed with opening documentary credits, obtaining certificates of origin of the goods from the Chamber of Commerce, legalisation of the documents, employ any type of employees, clerical, technical, either local or foreign etc.

Cyprus after being a full member of the EU (2004) brought its tax system in line with EU requirements and also within the OECD requirements against harmful tax practises and therefore, Cyprus is considered to be the most ideal location for the formation and operation of all types of companies but mainly for Holding companies, especially when dealing with countries which Cyprus has a double tax treaty (Cyprus has over 43 double tax treaties) for the following reasons:

• A company is considered as tax resident in Cyprus when its management and control is exercised in Cyprus.

• All Cypriot residents (individuals or corporations) are taxed on their worldwide income.  (an individual is considered as tax resident if he/she spends more than 183 days per calendar year in Cyprus)

• The corporate tax rate is 10% (the lowest in the EU)

• No withholding tax on dividends, interest and royalty payments made to non-residents (individual or corporation recipients)

• There is no tax on dividends received from other Cyprus resident companies.

Dividends received by Cyprus resident corporations from foreign corporations are exempt from tax when the following requirements are met.  The dividend receiving company must own at least 1% of the share capital of the paying company.  The exemption will not be grated if:

(1) Directly or indirectly more than 50% of the activities of the paying company result in investment income

(2) The paying Company is subject to tax at a rate substantially lower then the Cyprus tax rate.

The exemption from tax also applies to profits of a permanent establishment the Cyprus
Company has in another jurisdiction.

• Losses are carried forward indefinitely;
• Group companies can consolidate their accounts allowing losses of one company to be set off against profits of another company;
• No tax costs on mergers, acquisitions and spin offs;
• No tax on disposal of shares of a Cyprus Company