What are the benefits of a Cyprus Company?

• There is no longer a distinction between local companies and International business companies (IBC’s). The taxable profits of all Cypriot companies will be taxed at the rate of 12.5%. 

Dividend income from abroad and from Cyprus is wholly exempt from corporation tax.

VALUE ADDED TAX  

• According to the VAT law (Law No 95(I)/2000) adopted in June 2000 and which became effective 1st February 2002, the distinction between Cyprus IBCs and local companies has been abolished. 
• The VAT Law No. 95 (I) 2000 provides that International companies may be either entitled or obliged to register for VAT in Cyprus. This distinction will remain until the end of the transition period, on 31st December 2005. 

• International companies which are conducting trading abroad may apply for voluntary VAT registration. 
• International companies which are conducting trading in Cyprus or which receive income from services provided in Cyprus, if the value of the services received exceed EURO 17.000 in a calendar year, have to register for VAT. 
• According to the new tax legislation adopted, the VAT rate is 19%

TAX TREATIES

The existence of double taxation treaties combined with the low corporate tax paid by international entities offers tremendous possibilities for international tax planning through Cyprus in view of the fact that:

• Any tax paid in a country with which Cyprus has a treaty is deducted from the Cyprus tax payable on the same income; and
• Cyprus does not impose any withholding tax on dividends, interest and royalties paid by Cyprus international business companies.

What are the annual filing requirements?

1. Financial Statement and Audit The balance sheet and profit and loss accounts of a Cyprus Company must be submitted to the Registrar of Companies and the Income Tax Authorities annually.

2. Annual General Meetings The first AGM of the company is held within 18 months from the incorporation date and the following AGM's are held once a year.

3. Annual Returns The Company will file to the Registrar of Companies the Annual Returns.