The establishment of a Cyprus business is a matter that you are almost certainly already considering. Moving your company to Cyprus is a quick, simple, and tax-efficient option to conduct business both within the European Union and outside of it if you’re thinking about expanding your business worldwide.
The professionals at CX Financia have compiled the following in this article:
- Which major business structure options are there in Cyprus?
- What are the most common business car types in Cyprus?
- What functions does a Cyprus corporation serve?
What are the main types of business structures available in Cyprus?
One of the EU’s most business-friendly environments is located in Cyprus. More specifically, Cyprus’s tax system has a number of exclusions and a 12.5% corporate tax rate. As a result, moving to or starting a business in Cyprus is the best option for tax optimization.
In addition to its solid legal system, which is consistently modernized and updated, Cyprus is enhancing and strengthening the foundations of its international business by providing investors with a prime location to conduct business and strike the perfect balance between their personal and working development.
What are the main types of corporate vehicles in Cyprus?
The main types of corporate vehicles in Cyprus are:
- Cyprus holding/subsidiary company;
- Branch of foreign company;
- Sole proprietor;
- Cyprus Trusts;
- Listed company in Cyprus Stock Exchange (“SCE”).
Cyprus holding / subsidiary company
Cyprus features three different kinds of businesses:
The liability of members is agreed upon and members “guarantee” the amount for which they will be liable in the event of liquidation in
(a) companies limited by shares, where liability for shareholders is limited to their shares;
(b) companies limited by guarantee; and
(c) unlimited companies, where members’ liability is unlimited.
The most frequent kind of business entity employed by investors and entrepreneurs in Cyprus is a private company limited by shares, which has a distinct legal personality. A single limited liability corporation can be organized in countless ways, such as as a holding or subsidiary business in a group structure. Cyprus businesses have one of the lowest corporation tax rates in the EU (12%) and may be qualified to take advantage of other benefits, such as the latest “Fast Track Business Activation Scheme,” which is aimed at international non-EU/EEA citizens.
A Cyprus corporation must adhere to specific requirements, including keeping a registered office there, appointing directors and secretaries, and paying an annual fee to the Cyprus Registrar of Companies (the “Registrar”).
Branch of an overseas company
A foreign business, or one that is not registered in Cyprus, is permitted to operate a “branch” there. Unlike holding/subsidiary businesses incorporated in Cyprus, branches of foreign corporations are essentially extensions of the parent organization and do not possess an independent legal identity. Cyprus branch profits are taxed at the same rate (12.5%) as corporate profits. Transfers of profits or funds to a foreign head office are not subject to additional tax withholding.
The establishment of a branch (place of business) in Cyprus requires an out-of-country company to fulfill requirements similar to those for a company registered in Cyprus. These obligations include, among other things, maintaining a location on the island (corresponding to the registered address of a Cyprus company), having directors and a secretary, and paying an annual fee to the Registrar.
Physical person (individuals) that operate their business only for their own benefit are known as sole owners. Even when they operate their firm under a trade name or another name, they are nonetheless individually responsible for all of its debts and liabilities. Profits made by a sole proprietor are taxed as income, not as corporations.
Cyprus offers three different kinds of partnerships:
(a) General partnerships, in which all partners are liable for the debts and obligations of the partnership equally and severally;
(b) limited partnerships, in which one partner (the general partner) is liable in full for all debts and liabilities of the partnership, but the liability of the limited partner(s) is only limited to the amount of their contribution; and
With the general partner having unlimited liability and the limited partner (sliability )’s being limited to the amount of unpaid on their shares, the (c) partnership limited by shares, which was first introduced in 2015, is comparable to a limited partnership.
One benefit of creating a partnership is that there are fewer expenses and formalities involved in doing so. Another benefit is that maintaining and exiting a partnership is less expensive (depending on the size and nature of the business activity the parties intend to carry out). On the other hand, a couple of significant drawbacks of partnerships include the partners’ unlimited liability and the taxation of the partnership’s income (partners are subject to the “income tax” regime). Larger and more intricate structures frequently decide to use a Cyprus company to structure their business.
The English common law framework serves as the foundation for the legislation governing trusts in Cyprus, which is made up of a combination of equity laws and statutory requirements. The trust’s beneficiaries hold the beneficial title, while the trustee holds the legal title. Although it is not required, some trust agreements choose to name a protector in order to safeguard the trust’s assets. Cyprus International Trusts are used, among other things, for corporate reorganization and tax planning. Taxes levied in Cyprus are not applied to earnings and gains derived from sources outside of Cyprus.
Listed company in Cyprus Stock Exchange (“CSE”)
Public corporations are those that are listed on the CSE. Companies have the choice to have more exposure to finance by listing on the CSE. Investing in the company’s share capital from the public or obtaining money through the sale of bonds are a few of financing possibilities for companies listed on the CSE.
What are the uses of a Cyprus company?
The most popular kind of corporate entity utilized by investors and businesspeople in Cyprus is a Cyprus company. A company can be used to manage and operate any type of business successfully, including:
- Group Financing Objectives
- Possession of a variety of rights, such as intellectual property rights
- Ship ownership and management
- Cyprus-based investing companies
- Alternative investment vehicles (e)
- founding a foreign interest firm with the intention of growing its business in the EU.
- Investing in large-scale projects and infrastructure, such as the oil and gas industry and the renewable energy industries.
What is CX Financia able to do for you?
Our area of expertise is company establishment in Cyprus. Our staff can assist you in choosing the ideal corporate structure for you and your future (or existing) business by establishing or moving your company to Cyprus thanks to our years of experience in the financial sector.
We provide a location for your registered office address as well as advising services like director and secretarial services.
Our experts can help you establish a physical presence in Cyprus for tax purposes so that you may take advantage of the country’s low corporate tax rate.
The tax professionals at CX Financia can also provide you with guidance on tax-efficient solutions that are specifically catered to your needs.
You can email us at [email protected] if you need any help or have any additional queries.