Category Archives: General

Introduction of New Corporate Tax Residency Test & EU Blacklist Withholding Taxes

Brief

On the 21st of December 2021, the Cyprus Parliament, approved legislative amendments to boost Cyprus’ tax framework. The majority of amendments draw attention and directly impact companies from jurisdictions that are included in the EU blacklist of non-cooperative jurisdictions for tax purposes, with an introduction of new provisions for withholding taxes on outbound payments of dividend, interest and royalties to blacklisted jurisdictions.

The current EU blacklist is currently composed of the following jurisdictions: American Samoa, Fiji, Guam, Palau, Panama, Samoa, Trinidad and Tobago, US Virgin Islands and Vanuatu.

Furthermore, the amendments introduce a key change to the definition of Cypriot companies’ tax residency, with the addition of the ‘incorporation test’.

The Law amendment will enter into force on 31 December 2022.

Cyprus Tax Residency

The current Income Tax law states that a Cyprus company is considered as a Cyprus tax resident if the management and control is exercised in Cyprus. The amendments expand the definition of corporate tax residency for Cyprus companies and includes the incorporation test, this means that Cyprus incorporated companies, with

  • management and control exercised outside Cyprus; and
  • not tax resident in any other jurisdiction, will now be considered as Cyprus tax residents and as such, taxed in Cyprus on their worldwide income.

The existing corporate tax residency test will continue to apply, so that a company that has its management and control in Cyprus will continue to be considered as a tax resident of Cyprus i.e. its tax residency status will not be affected by the Law amendment.

EU Blacklist Jurisdictions – Withholding Taxes

The new amendments also introduce withholding taxes for outbound payments of interest payments, dividends and royalty payments to jurisdictions of the EU Blacklist.

Interest payments

Interest payments by a Cyprus tax resident company to another company will be subject to withholding taxes at the rate of 30% if paid to a company which is:

  • resident in any jurisdiction which is included in the EU Blacklist, or
  • registered in any jurisdiction which is included in the EU Blacklist and is not a tax resident in any other jurisdiction which is not included in the EU Blacklist.

Exclusions apply to situations where:

  • Interest payments are completed in relation to securities listed on a recognized stock exchange, and
  • Interest payments are made by an individual.

Dividends

Dividends paid by a Cyprus tax resident company to another company will be subject to 17% special defence contribution if paid to a company which is:

  • resident in any jurisdiction which is included in the EU Blacklist, or
  • registered in any jurisdiction which is included in the EU Blacklist and is not a tax resident in any other jurisdiction which is not included in the EU Blacklist.

Further, either of the below conditions must also apply:

The company receiving the dividend holds over 50% of the capital of the Cyprus resident company issuing the dividend, holds over 50% of the voting rights or is entitled to receive more than 50% of the profits in the company paying the dividend.

Royalty payments

Royalty payments by a Cyprus tax resident company to another company will be subject to withholding taxes at the rate of 10% if paid to a company which is:

  • resident in any jurisdiction which is included in the EU Blacklist, or
  • registered in any jurisdiction which is included in the EU Blacklist and is not a tax resident in any other jurisdiction which is not included in the EU Blacklist.

Exclusions apply to situations where:

  • Royalty payments are made by individuals.

What we do

Panayiotis Z. Toulouras LLC provides corporate services to clients worldwide. Our law firm, with it’s team of experts, provides strategic advice for individuals and entities, seeking the foreign interest company route, and ensures a smooth transition for all clients aiming to relocate an existing business or launch a new business in Cyprus.

  • Incorporation of a Cyprus company
  • Registration of a Foreign Interest Company
  • Business visa applications and other visas
  • Launch and Setting up consultation
  • Corporate Structuring
  • IP registration
  • Advice on all related tax aspects
  • Opening of corporate and personal bank accounts in Cyprus and abroad
  • VAT and TAX registrations
  • Relocation assistance and advice

FIC: The 10 advantages of a Cyprus Foreign Interest Company

A Cyprus ‘Foreign Interest Company’ (FIC) is an avenue that gives a Cyprus based company with non-EU shareholders the ability and priority to employ non-EU nationals instead of locals and EU nationals.

Non-EU shareholders are able to reside and set up shop in Cyprus by relocating their existing business from a non-EU country or launching a new business from scratch, whilst simultaneously hiring their key personnel from around the world and taking advantage of the island’s many benefits  i.e. lifestyle, cheaper operating costs, EU membership and tax advantages – find out Why Cyprus here.

We break down the 10 advantages of a Cyprus Foreign Interest Company:

Residency, Family & Key Personnel

  1. Non-EU Shareholders of a FIC can apply for a business visa (work permit) and residency through employment in their Cyprus registered company. This allows any non-EU citizen to live and work freely in Cyprus for as long as the FIC is active, with them employed at the FIC.

This provides non-EU individuals or groups of individuals with the ability to relocate their existing business or launch a new business in an European Union member country.

2.  Non-EU Shareholders of a FIC are also eligible and allowed to move their families to Cyprus, with their children able to attend any public or private schools available. Their spouses are also allowed to work in Cyprus.

This allows non-EU shareholders the ability to live and work freely in Cyprus without having to constantly fly back to their families. This also allows families the ability to enjoy the exquisite lifestyle of Cyprus with no concerns or worries regarding their residency.

3.  A FIC can register and hire up to 5 non-EU employees as senior management, who are able to obtain a business visa (work permit), allowing them to live and work in Cyprus.

4.  A FIC can register and hire up to 10 non-EU employees as middle management or other administrative, secretarial or technical staff, who are able to obtain a business visa (work permit), allowing to live and work in Cyprus.

5.  All non-EU employees hired by the FIC are also eligible and allowed to move their families to Cyprus, with their children able to attend any public or private schools available.Their spouses are also allowed to work in Cyprus.

This allows all non-EU employees hired by the FIC the ability to live and work freely in Cyprus without having to constantly fly back to their families. This also allows families the ability to enjoy the exquisite lifestyle of Cyprus with no concerns or worries regarding their residency.

Additional Key Personnel (Specialists) 

6.  A FIC can register and hire up to 200 or even more additional non-EU employees which are considered as Specialists (e.g., tech industry, marine industry, pharmaceutical industry). The amount of additional non-Eu employees considered as Specialist that a FIC can hire, depends on the annual turnover of the company and the overall operations, and needs of the FIC.

This allows a FIC to invest further into its relocation or launch, by hiring more non-EU employees that are needed to push for growth.

Citizenship, Social Insurance & National Health System (GESY)

7.  Non-EU shareholders and FIC employees, and their families, can benefit from Cyprus’ social insurance schemes and register to the Cyprus national health system for subsidized medical care.

8.  Non-EU shareholders and FIC employees, and their families, are able to apply for citizenship after a period of 7 years, if they resided fully for the 7 years (more information can be provided on this)

This allows all non-EU individuals with the ability to enjoy the full benefits of being a Cypriot citizen, with a Cypriot passport, which includes all the benefits of Cyprus being a member of the European Union.

Tax Benefits – Corporate and Individual

9.  Non-EU shareholders who register their companies as foreign interest can benefit both individually and corporately from Cyprus’ advantageous tax benefits (see in detail below) for companies and individuals.

10.  All non-EU employees hired by the FIC can benefit individually from Cyprus’ advantageous tax benefits (see tax benefits here)

Eligibility Criteria:

Criteria that companies must meet in order to benefit from this decision, and the categories of staff and the maximum numbers of third country nationals who can be employed are all described below.

Eligibility Criteria In order to register a Cyprus company as a foreign interest company:

  • Non-EU shareholder/s should own the majority of the company’s shares. (more than 50%),
  • Foreign direct investment of capital amounting to at least €200.000, legally admitted to a Cyprus bank account from abroad. This amount can be used for company’s activities.

Staff Categories:

a) Senior Management – Directors, General managers, Heads of Departments, Project Managers

Maximum number of third country nationals employed: 5 persons (unless the Civil Registry and Migration Department is satisfied that the employment of a greater number is justified, depending on the circumstances of each company.)

Minimum Acceptable Gross Monthly Salary: €4.000

b) Middle Management – Upper / middle management personnel, Other administrative, secretarial or technical staff

Maximum number of third country nationals employed: 10 persons (unless the Civil Registry and Migration Department is satisfied that the employment of a greater number is justified, depending on the circumstances of each company.)

Minimum Acceptable Gross Monthly Salary: €2.000

c) Support Personnel

  • A company may employ third country nationals in support positions by first securing the positive recommendation of the Department of
  • A company may staff up to 30% of its total personnel with third country nationals in posts in this category.

d) Additional personnel: Exceeding the maximum allowed number of employees from third countries in each category

To employ more third country personnel, requests by the company must be submitted to the Department for approval. The requests must include information on the salary offered along with:

  • The requests must include information on the salary offered as well as:
  • The company’s turnover
  • The ratio of third country employees to Cypriots / EU Nationals and
  • The company’s operating time in

e) Specialists 

Companies are entitled to employ a number non-EU nationals, up to 200 or even more, over and above the categories stated above, if they fall within the professions/skills listed below.

Minimum Acceptable Gross Monthly Salary for Specialists: €2.000.

Professions / Skills

  • Software and System Engineers
  • Application and Data Architects
  • ICT and Enterprise Solution Architects
  • Technical Assurance Professionals
  • Telecom and Space Engineers
  • Data scientists
  • Machine Learning Engineers
  • Web Developers and designers
  • UX User Experience Professionals
  • Quantitative Analysts
  • Quality Assurance Analysts
  • Mobile Application Developers
  • Augmented Reality/ Virtual Reality Programmers
  • Digital Marketing Specialists
  • Video Production Multimedia Specialists for Mobile Apps and Software
  • Analysts for Mobile Apps and Software
  • Designers of Prototype for Mobile Devices
  • DevOps Engineers
  • Cyber Security Specialists
  • Artificial Intelligence, Robotics and Big Data Specialists
  • Pharmaceutical Formulation Technologists
  • Pharmaceutical Engineer Validation Specialists
  • Pharmaceutical Patents Specialists
  • Pharmaceutical Regulatory and Quality Assurance Professionals
  • Marine Engineers
  • Naval Architects

Maximum number of third country nationals employed as Specialists

The number of non-EU Specialists allowed is based on the annual turnover of the company, as following (unless the CRMD is satisfied that a FIC requires a number higher than 200 employees):

Foreign Interest Company Specialist

Number of Specialists permitted based on turnover.

 

 

 

 

 

 

 

 

 

What we do

Panayiotis Z. Toulouras LLC provides corporate services to clients worldwide. Our law firm, with it’s team of experts, provides strategic advice for individuals and entities, seeking the foreign interest company route, and ensures a smooth transition for all clients aiming to relocate an existing business or launch a new business in Cyprus.

  • Incorporation of a Cyprus company
  • Registration of a Foreign Interest Company
  • Business visa applications and other visas
  • Launch and Setting up consultation
  • Family reunification
  • Employment agreements
  • Purchase and/or rental of commercial and residential premises
  • Applications for permanent and temporary residence
  • Applications for naturalization
  • IP registration
  • Advice on all related tax aspects
  • Opening of corporate and personal bank accounts in Cyprus and abroad
  • VAT and TAX registrations
  • Processing of investment and lending facilities
  • Relocation assistance and advice

 

 

 

5+2 Reasons why Lebanese Clients choose Cyprus!

5+2 reasons why Lebanese clients choose Cyprus!

Since the end of the Special Permission requirement for the Lebanese traveling to Cyprus, on the 1st of April 2021, the island has received a large influx of Lebanese individuals, families, and companies seeking a new home away from the current turmoil plaguing Lebanon’s economy and society.

Our firm has been advising and assisting Lebanese clients as they embark on shifting their residency and business activities to the robust economy of Cyprus.

Cyprus has strategically established itself as an attractive destination, both within the EU and globally, through its competitive, modern, and transparent legal, financial and regulatory framework. The country’s advantageous tax policy and strong banking system have made Cyprus attractive for all types of businesses and individuals.

Individuals and Families

Temporary Residence

  • Valid for 1 year & renewed yearly,
  • Holders are allowed to live in Cyprus as visitors without the right to work,
  • A spouse, children (under 18 years old), and parents (parents of the couple) are able to apply as dependents,
  • Eligible through renting or purchasing a property.

Permanent Residency (Normal Option) – click here 

  • Main applicants and qualifying dependents can apply and stay as permanent residents in Cyprus indefinitely,
  • Approval within 12 months,
  • The P.R. does not expire and the holder does not need to renew it,
  • Eligible through purchasing a property of ANY value.

Permanent Residency (Fast Track) – click here 

  • Main applicants and qualifying dependents can apply and stay as permanent residents in Cyprus indefinitely,
  • Approval within 2 months,
  • The P.R. does not expire and the holder does not need to renew it,
  • Eligible through purchasing investing at least €300,000 (excluding VAT) in one of the following options (a) residential properties (b) commercial properties (c) company share capital and (d) Cyprus investment funds,
  • Option (c) investing at least €300,000 (excluding VAT) in a company share capital gives the right to the main applicant to work in Cyprus,
  • All options give the right to applicants to be shareholders in Cyprus.

Personal or Joint Bank Account in a Cyprus bank 

  • Lebanese individuals, both residents, and non-residents are eligible to open a personal or joint bank account in Cyprus at one of the local banks our firm cooperates with.

Companies

Register a Cyprus Company

  • A company registered in Cyprus enjoys all the advantages of operating in an E.U. country
  • Registration of a Company is quick and easy for all Lebanese clients
  • A Cyprus company benefits from an advantageous 12.5% corporate tax (one of the lowest in Europe) on profits, with possibilities for further reductions in taxation
  • Shareholders benefit from no withholding tax on dividends paid to them (if non-residents)

Foreign Interest Company – click here

  • A Cyprus company with a majority of non-EU shareholders (over 51%) is eligible to employ up to 15 non-EU employees (including the shareholders themselves),
  • All 15 non-EU employees are able to work and live freely in Cyprus whilst they are employed for the Cyprus Company through receiving residency cards,
  • A direct deposit of capital amounting to at least €200.000, deposited into the Cyprus company’s bank account from abroad, is required to be eligible. This amount can then be used for company activities in Cyprus and abroad,
  • The company can also employ additional Specialists that have specific skills (click here for more info),
  • Family members (spouse, children, parents, and in-laws) of the Employees can also work and reside in Cyprus through family reunification,
  • The foreign interest company benefits from an advantageous 12.5% corporate tax (one of the lowest in Europe)

Corporate Bank Account for a Lebanese Company 

  • Lebanese companies are eligible to open a corporate bank account in Cyprus at one of the International Business Units that our firm cooperates with.

Our areas of work include: 

  • Real Estate acquisition or rental
  • Company Registration and Nominee Services
  • Investment Advice
  • Permanent and Temporary Residence Applications
  • Employment permits
  • Registration of foreign interest companies for the employment of Lebanese nationals in Cyprus
  • Visa Applications
  • Advice on all related tax aspects
  • Facilitating online bank facilities
  • Opening of personal and corporate bank accounts

Find out why Cyprus is the best option for British companies to set up an EU base.

Find out why Cyprus is the best option for British companies to set up an EU base.

With the full impact of Brexit still unclear for many businesses, British businesses exporting into the European Union are being encouraged to set up a separate entity in an EU Member State to help avoid the extra charges, paperwork, and taxes resulting from Brexit, as revealed by the Guardian newspaper.

Trade advisers at the British Department for International Trade (DIT) have advised businesses, that the best way to avoid border issues and VAT problems, is for them to register new companies in jurisdictions within the EU single market, such as Cyprus, which would allow them to operate more freely and with less bureaucratic hassle.

 So, now that the Transitional period is over, what happens to companies?

The UK is no longer in the EU-wide VAT system, which means UK retailers that want to import the goods into the EU and sell them to customers will have to register in the EU member state of the consumer, pay import VAT, and charge local VAT.

  • UK businesses will have to consider VAT registering in Europe immediately. Any UK business with a foreign VAT registration in the EU may now face the obligation to appoint a special VAT fiscal representative. These agents will hold direct liability for any unpaid VAT, and therefore require cash deposits or bank guarantees in exchange.
  • End of zero-rated B2B intra- community supplies, all movements are now considered imports or exports, which are subject to U.K. or E.U. import VAT. Businesses that move goods are now required to have two EORI numbers to move goods between the UK and EU.

Example: UK importers will have to pay the import VAT at the point of importing goods from Cyprus, while importers may also have to make import declarations, paperwork, and all necessary customs procedures should be properly applied as well.

  • UK has already introduced a Postponed VAT Accounting import VAT deferral scheme, meaning no cash VAT payment has to be made by business importers to UK customs.
  • Many EU countries do not offer the same referral scheme for UK businesses importing their goods, thus impacting their cash flow.

Digital Services

UK sellers of digital services to EU consumers

  • UK is no longer a member of the EU Mini One-Stop-Shop (MOSS) single VAT return scheme.
  • UK sellers of electronic, broadcast or telecoms services to EU consumers will need to register in any other EU state, as a non-Union business, to continue to file their VAT declarations for EU e-service sales.

EU sellers of digital services to UK consumers

  • Have to register with the UK’s HMRC to file their VAT declaration.

Third-Country sellers of digital services to consumers

  • Any non-EU business which used the UK MOSS registration now has to re-register for MOSS in the EU and separately in the UK under a regular VAT return.
  • Any non-EU business will no longer be able to report their UK sales on their Non-Union MOSS return. They will have to register for UK VAT and report UK sales on a UK VAT return.

Since 1 January 2021, if you are a UK, EU or US seller of digital services to, then you will need new VAT registrations to avoid being fined by the tax authorities.

This includes cross-border sales to UK and EU consumers of downloadable or streaming media, apps, online software, e-learning; e-books, online journals, and dating or similar membership websites.

As of 1 January 2021, a UK business should register with a new EU VAT MOSS in the non-union scheme, by choosing which of the 27 member states they would like to serve as their ‘’base’’ in the European Union.

B2B Transactions

If a UK business only sells digital products in B2B transactions, then they do not need to register for EU VAT as Reverse Charge applies.

When the Reverse Charge applies, the responsibility for the recording of a VAT transaction from the seller to the buyer for that good or service.

CYPRUS UNIQUE SELLING POINTS

Why Cyprus?

Cyprus has strategically established itself as an attractive jurisdiction, both within the EU and globally.

The competitive, modern, and transparent legal (based on the English Common law system), financial and regulatory framework along with the highly skilled and multilingual workforce that Cyprus possesses has established Cyprus as a credible and highly reputable jurisdiction for companies to set up a trading or holding company.

The country’s stable and advantageous tax policy has made Cyprus attractive for all types of businesses and individuals. As Cyprus is a European Union member, companies can enjoy all the advantages of operating in an E.U. country.

Tax Advantages

  • Corporation tax only 12.5%
  • Profits generated from transactions in shares, bonds and other qualifying securities are exempt
  • Exemption from dividends paid by a foreign subsidiary to a Cyprus Holding Company
  • No withholding taxes on dividend distribution to foreign non- resident shareholders whether corporate or individual
  • No withholding taxes on royalties and interests paid to non-resident shareholders, whether corporate or individuals.
  • No Capital gains tax on sales of shares
  • Extensive Tax Treaty network with more than 60 countries
  • Tax losses are carried forward for 5 years.

 Cyprus & UK Connection

Cyprus has a competitive advantage of having an effective legal system based on English Common Law principles.

Government departments, financial institutions and local authorities accept documents in English. This provides bureaucratic transparency and clear regulations for UK businesses wishing to set up shop in Cyprus.

With English being a predominant language spoken between businesses, when setting up your business you can benefit from the island’s high percentage of English-speaking citizens:

  • 73% of Cypriots speak English – official language due to British colonization
  • English widely accepted for business transactions, government services, contracts, banking and other day-to-day operations
  • Cyprus trade relations existed before the EU and will continue strongly after Brexit as Cyprus belongs to the Commonwealth and has sovereign British Bases on the island
  • Key legislations such the Companies law, Contract law and Tort law are modelled on the British law. The Cyprus courts follow the precedents of the English courts and in general Cyprus can be characterized as UK-friendly country, this results in more clarity and certainty in the legal system and a preferred jurisdiction for U.K. companies

European Union Member

At the core of the EU is the single market – the programme of freeing up the trade of goods and services and the movement of people between EU countries. Cyprus has access to 40 + EU trade agreements with countries outside the E.U along

Intellectual Property

Cyprus IP box regime provides a tax benefit of up to 80% for the IP profit that qualify. As corporation tax is Cyprus is 12.5%, this will result to a tax rate of up to 2.5%. The IP box regime has been reviewed by the EU Code of Conduct and is fully compatible with EU standards.

Qualifying assets under IP BOX regime:

  • Patents
  • Software programs with a copyright
  • Other intangible assets that is not obvious but are useful and novel.

The new IP regime is compliant with the provisions of the revised ‘Nexus approach.’

Banking

The European Union has a well-developed and regulated banking sector, thus opening a bank account with a Cyprus bank will allow companies a swift process when opening bank accounts in other EU nations.

Bank transfers or payments from any EU bank account can be transferred to any other country in the world without any restrictions or limitations. A Cyprus company will be able to trade and open a bank account in various currencies as there are no exchange control limitations.

Foreign Interest Company

Cyprus companies with non-EU shareholders that provide a paid-up capital of the company of minimum EUR 171.000 can employ up to 15 non-EU persons in management positions, and many more in specific specialists positions, with residence and work permits issued by the Cyprus authorities. Family members can join by way of family reunification.

Setting Up Costs

Launching and running your business in Cyprus reduces your overall set-up costs compared to other EU countries resulting in more budget being allocated other segments of your business.

  • Lower labour costs – costs for technical and professional talents lower than other EU countries
  • Lower office rental costs – office rental rates among lowest in Europe, range of serviced offices and co-working spaces make initial office setup easy
  • Lower business support costs – services like I.T., accounting, legal are greatly affordable

 Lifestyle

Choosing Cyprus ensures you and your teamwork in a Mediterranean island that provides you with a very high standard of living that includes:

  • One of the EU’s best all-year climates and one of the best worldwide
  • Over 65 Blue Flag status beaches for all tastes (highest % per capita) – sports, entertainment etc,
  • High level public & private healthcare services
  • Short distances – can travel from one side of the island to another in 2 1⁄2 hours
  • Considered one of the world’s safest countries with one of the lowest crime rates in the EU
  • Reasonable cost of living with great choice fresh products always available – both local and international
  • Quick access to three continents –Europe, Asia and the Middle East.

 What we do

Panayiotis Z. Toulouras LLC provides legal services to clients worldwide. Our law firm, with the assistance of our vast network of associates, provides strategic legal advice for:

  • The incorporation of a Cyprus company
  • Setting up a branch/subsidiary in Cyprus or outside of Cyprus
  • Opening of bank accounts in Cyprus and abroad
  • Business visa applications and other visas
  • Work permits
  • Employment contracts
  • Purchase/rental of property for commercial purposes
  • Purchase/rental of property for residential purposes
  • Applications for permanent & temporary residency
  • P. registration

Contact us for more information:

Telephone: +357 24 623 800

Fax: +357 24 332 991

Email: info@toulouraslaw.com

Website: www.toulouraslaw.com

 

 

 

Redomiciliation into Cyprus: The life jacket your company needs!

Cyprus Law permits the redomiciliation process which allows a company to transfer its jurisdiction of incorporation to Cyprus, in accordance with Companies (Amendment) Law of 2006, Law No. 124(I)/2006).

Directors and shareholders of foreign companies aiming to take advantage of Cyprus’ pro-business tax regime, E.U. status, global economic links, and lifestyle should start considering the redomiciliation of their company to the Republic of Cyprus.

Cyprus is included in the list of very few countries that permit the redomiciliation of Non-EU companies into and out of the Republic of Cyprus.

Redomiciliation into Cyprus: What does it mean?

Redomiciliation is the procedure where a company transfers its registration from one country to another. This allows an existing company to transfer its registered office and address it to a new jurisdiction by acquiring all the benefits there. This differs from a company incorporating a subsidiary in a foreign country or setting up a branch overseas.

For example, when a BVI registered company aims to become a Cyprus company, this is possible through redomiciliation, and essentially, they are converting the BVI company into a Cyprus-registered company with the former ceasing to be active. This results in all rights and liabilities of the BVI company transferring over to the Cyprus company, with the newly domiciled company being regulated by Cyprus law.

Redomiciliation into Cyprus: What does it achieve for your company?

Business Continuity

Companies redomicile from a commercial perspective as redomiciliation allows a company to continue their business with only its place of incorporation shifting.

The total continuity of the business results in matters such as goodwill, bank accounts, credit ratings, assets, liabilities, and performance records remaining intact and thus avoiding the administrational headaches of ‘starting again’ in a new jurisdiction.

Special purpose vehicles (SPVs) holding property  will only need a certificate of continuation to inform their local authorities of the change of jurisdiction.

Tax advantages

Cyprus’ corporate tax is at an attractive rate lower than many other developed countries.

The increase of stringent rules on the taxation of cross-border transactions between companies in the same corporate groups has heightened the demand for redomiciliation.

If, for example, your company’s original place of jurisdiction has started to impose stricter and unfavourable regulatory conditions, such as a higher corporate tax rate and increased administrative requirements, resulting in a detriment to your business, then redomiciling to Cyprus could allow your company to avoid having to abide to those requirements.

Cyprus offers many tax advantages and incentives, for companies and individuals, making it extremely attractive to redomicile into Cyprus.

Cyprus companies benefit from:

• Low corporate tax rate of 12,5% on profit, one of the lowest within the EU with the possibility to enjoy a much lower effective tax rate
• Simple, transparent and EU harmonized tax system following recommended OECD practices

Cyprus holding companies benefit from:

• No withholding tax on dividends, royalties, and interests paid to non-resident shareholders, whether corporate or individuals
• Tax exemption when a company receives dividends from another Cyprus company
• Tax exemption on dividends Cyprus companies receive as shareholders of other subsidiaries situated abroad
• Tax exemption on any income arising from trading in securities such as shares, bonds, etc
• No withholding tax on royalties paid from Cyprus based companies in respect of intellectual property exploited outside of Cyprus
• 80% tax exemption on any qualifying profits generated by intellectual property owned by companies in Cyprus
• Group relief laws allowing for Group to carry forward losses
• No Capital gains tax from the disposal of any immovable property held by the Company outside of Cyprus or disposal of shares in companies situated outside Cyprus
• Extensive Tax Treaty network with more than 60 countries

Individuals will benefit from:

  • Being considered non-domiciled in Cyprus for a maximum of 17 years once they relocate to Cyprus
  • No Special Defence Contribution Tax for non-domicile personnel who become tax residents
  • Tax exemption on dividends and interests earned by non-domicile individuals
  • The first €19,500 of taxable income being tax-exempt for individuals
  • 50% exemption for the remuneration of individuals from employment in Cyprus who were residents outside Cyprus before the commencement of their employment. The exemption applies for 10 years commencing from the year of employment if such income exceeds €100,000 per year
  • 100% exemption on lump sum repayments from life insurance schemes or from approved provident funds
  • No Capital Gains Tax on the sale of immovable property located outside Cyprus
  • No Wealth-tax for High Net Worth Individuals

European Union

Redomiciling to an E.U. member state, like Cyprus, allows companies to benefit from the single market, freeing up the trade of goods and services and the movement of people between E.U. countries.

The aim of the E.U. is that doing business with other EU countries is like doing business within your own country.

Cyprus has access to more than 40 E.U. trade agreements with countries outside the Union.

Standard of Living

Cyprus enjoys a very safe and high standard of living that includes:

  • One of the EU’s best all-year climates and one of the best worldwide
  • Over 65 Blue Flag status beaches for all tastes (highest % per capita) sports, entertainment, etc
  • High level public & private healthcare services
  • Short distances: Can travel from one side of the island to another in 2 ½ hours
  • One of the world’s safest countries with one of the lowest crime rates in E.U.
  • Reasonable cost of living
  • Real Estate available to cater to all needs – city centre, beach, countryside etc
  • High Level of Education: Private schools and private institutions offering a high level of education in English

Brexit & the U.K. Connection

U.K. – Cyprus trade relations existed before the E.U. and will continue strongly after
Brexit as Cyprus belongs to the Commonwealth and has sovereign British.

Cyprus being an ex-British colony, the judicial and legal system is very much aligned with that of the United Kingdom.

Key legislation such as the Companies law, Contract law, and Tort law are modelled on British law. The Cyprus courts follow the precedents of the English courts and in general, Cyprus can be characterized as a UK-friendly country, this results in more clarity and certainty in the legal system and a preferred jurisdiction for U.K. companies.

Lower Costs

Moving your company to Cyprus reduces your overall set-up costs compared to other EU countries, with lower labor costs compared to other E.U. countries, lower office rental costs and a pool of highly skilled support services such as legal and accounting services at lower fees than other E.U. countries.

Redomiciliation into Cyprus: Is your company allowed to redomicile?

Before deciding on redomiciliation it is a necessary precondition that the legislation of the initial jurisdiction allows your company to transfer to Cyprus and that the company’s memorandum of incorporation permits the possibility of its continuation under the legal system of another approved country or jurisdiction such as Cyprus.

Furthermore, it is a condition that no procedures must have commenced for the dissolution of the company, nor any insolvency proceedings, arrangements or compositions, or proceedings for the execution of a court judgment or other similar procedures against your company, in the initial jurisdiction.

In case where your company wishes to enter into an activity where a special license is required under Cyprus legislation such as Financial Services Companies, insurance Companies etc. , then such license must be obtained by the relevant authorities in Cyprus. Also your company must produce a consent authorising the redomiciliation by the respective authorities of the initial jurisdiction.

The above are the key conditions that need to be met, to be granted consent to redomicile, with other administrative requirements also required to be followed also.

Redomiciliation into Cyprus: What we do

Panayiotis Z. Toulouras LLC provides legal services to clients worldwide. Our law firm, with the assistance of our vast network of associates, provides strategic legal advice for:

Redomiciliation: 

  • Assisting with any amendments required in order to permit redomiciliation.
  • Submission of name application with Cyprus Companies registrar
  • Assisting in the collection and preparation of all required documents for the redomiciliation process from the origin country to redomicile country
  • Submission of application and permit required for the company’s redomiciliation.
  • Liaison with any authorities and business support companies in the origin country
  • Liaison with banks and any other authorities in order to organize and ensure a smooth transition of the redomiciled company’s activities
  • Guidance through financial and compliance requirements

General:

  • The incorporation of a Cyprus company
  • Opening of bank accounts in Cyprus and abroad
  • Business visa applications and other visas
  • Work permits Employment contracts Purchase/rental of property for commercial purposes
  • Purchase/rental of property for residential purposes
  • Applications for permanent & temporary residency
  • Applications for naturalization
  • Cyprus international trust creation
  • I.P. registration

British expats in Cyprus face losing their UK bank accounts post-Brexit!

British expats in Cyprus face losing their UK bank accounts post-Brexit!

UK Banking Institutions have recently announced the likely closure of bank accounts held by British Nationals currently living in Cyprus, and all other EU nations, at the end of the ‘Transition Period’ on the 31st of December 2020.

Once the Transition Period ends, on the 1st January 2021, the United Kingdom will officially depart from the European Economic Area (EEA).

With no trade agreement yet reached between the EU and UK to set new revised banking rules, this will likely result in the subsequent closure of bank accounts of British expats.

According to EEA policy as it stands, the UK banking institutions will not be allowed to accommodate the banking needs of British Nationals living permanently in the EU. UK banking institutions will need to apply for new banking licenses, if they wish to resume providing banking services for British clients living in the EU. As an EU member, the UK institutions would have been able to provide banking services in other EU nations through the EU passporting rules. However, this will all change once the UK has officially exited the EU at the end of the Transition Period.

On the contrary, this may all change if a trade agreement is reached to permit the UK banking institutions to conduct such banking activities within the EU.

Lloyds, Barclays and Coutts have already informed their clients living in parts of the EU about the closure, whilst Natwest and Santander are still considering how to handle the current situation.

What we do

Panayiotis Z. Toulouras can assist UK Citizens, living in Cyprus and the rest of the EU, in finding the right bank institution suiting their banking needs and assist them in opening bank accounts in Cyprus and the rest of the EU.

Contact us today for all information

Address: Faneromeni 106, Office 201, 6031, Larnaca, Cyprus

Telephone: +357 24 623 800   Fax: +357 24 332 991

Email: info@toulouraslaw.com

Website: www.toulouraslaw.com