Areas of Practice

Categories of Companies

The corporate tax rate of 10% is the lowest in Europe. The tax rate for ship owning companies is nil. 

Trading

This category includes companies engaged in trade, marketing and distribution.

The reinvoicing of goods from one country to another is relatively easy task. By this method some of the trading profit may be allocated outside a particular jurisdiction, without necessarily violating its laws. Most of the formal documentation required, such as certificates of origin or legalization of invoices, may be obtained from the Cyprus Chamber of Commerce and Industry.

Transit trade via the island's seaports is carried out by company on a large scale. They may store, maintain, break bulk or repackage their own transit goods in rented general or private bonded warehouse, provided the handling does not result in any change in the goods' customs tariff classification.

Consultancy
This category includes firms engaged in activities like accounting and auditing, advertising and graphics, architecture and town planning, data managements, software production, marketing surveys, oil exploration, personnel recruitment and water treatment.

Ship owning /Ship management
The Cyprus Government's entry into various international treaties, the introduction of double tax agreements with other countries and the establishment of the Department of Merchant Shipping built up the necessary infrastructure for the enhancement of offshore Shipping and Ship management on the island.

Fiscal incentives to Ship owning companies with ships flying the Cyprus flag include the following:

  • • no corporate or income tax on profits or dividends
  • • no income tax on the salaries of officers and crew
  • • no capital gains tax on share transfers
  • • no estate duty on the inheritance of shares
  • • no stamp duty on bills of sale or mortgages

 

The corporate tax rate for ship management companies is 10%.

Cyprus ranks as the third biggest ship management center in the world.

Banking
The establishment of offshore banking units (OBUs), in addition to the Exchange Control and the Companies Laws, is subject to the Central Bank of Cyprus and the Banking Business (Temporary Restrictions) Laws.

Applicants are expected to enjoy a good reputation internationally and have an established track record of growth and profitable operations. The Central Bank favours applications by existing foreign incorporated banks for the establishment of branches, as opposed to locally incorporated banking subsidiaries or associated companies.

Financial services – CIF (Cyprus Investment Firms)
Financial services include: provision of investment services, exercise of investment activities, operation of regulated and other related markets, dealing in investments, managing investments, providing investment advice.

Companies may not render financial services to parties other than their shareholders or bodies corporate in their group of companies without the prior authorization and license from Cyprus Securities and Exchange Commission.

Apart from the setting up of a CIF to operate in and from Cyprus branches, subsidiaries or associate companies of overseas financial services companies, enjoying a good reputation internationally and established in countries where there is adequate financial supervision, may be considered as eligible for a license to render financial services in Cyprus. See financial services Law (hyperlink)

Insurance
Companies formed and registered with a view to carrying on insurance business in any part of the world other than Cyprus are treated as companies carrying on such business within the Republic. Their incorporation and operation is governed by the Insurance Companies Law, which is similar to the equivalent English law. It contains regulations relating to solvency margins, minimum subscription, financial reporting, investment of premiums and prohibition on loans to certain persons.

The incorporation of offshore captive insurance companies, which restrict their operations to insuring risk of the parent, holding or associated group of companies to which they belong, may be realized under more favourable conditions.

News agencies and publishers
Most international new agencies and numerous publishing firms cover the whole of the Middle East and North Africa from the island.
In addition to their editorial work, publishing firms may have their newspapers, magazines or books printed in Cyprus for distribution abroad, provided they obtain a permit under the Press Law.

Other
There are several thousand companies which maintain only a registered address in Cyprus.
One of their primary objects is the holding of assets on behalf of the ultimate beneficial owners. They are convenient vehicles for investing in shares, bonds, debentures, loans, patents and immovable property in many countries. See corporate and tax planning (hyperlink)