Cyprus offshore company : Offshore industry

Taxes

A general tax reform took effect on 1 January 2003 to conform the Cyprus tax system with European principles of equality and to demonstrate a commitment by Cyprus against harmful tax practices.

Dividends paid to non-resident shareholders are exempt from withholding tax in Cyprus. Also, no withholding tax is imposed on interest paid from Cyprus as well as on royalties paid from Cyprus in respect of intellectual property used or exploited outside Cyprus. The nil withholding tax rates apply regardless of whether the recipient is a corporate body or an individual, the country of residence of the recipient or whether a relevant double tax treaty exists.

Following the latest changes in the Cyprus Tax laws, a Cyprus registered company is taxed at 10% on its net profits provided that the company has management and control in Cyprus. Management and control is considered to be exercised in Cyprus if
(i) the important decisions about the company are made in Cyprus and
(ii) the majority of the members of the board of directors are residents of Cyprus for tax purposes (i.e. they live in Cyprus for more than 183 days a year).

In the case where a Cyprus company does not have management and control in Cyprus then the company is not subject to taxation in Cyprus. Therefore Cyprus IBC companies that are fully managed and controlled from outside Cyprus or by non-Cyprus residents are completely tax exempt

Banking

Commercial banking follows the British model and is of a very high standard. There are currently over 40 Cypriot and international banks operating in Cyprus and, of course, no exchange controls.


Cyprus has banking and legal structures based on the British model and a banking system that conforms to European Directives. It is a well regulated jurisdiction home to highly regarded –AA rated banks like the Bank of Cyprus for example, it is a nation aware of the importance of its banking business therefore it does not make opening an account difficult, clients’ privacy and security are highly respected, interest payable on certain account types can be extremely attractive, accounts can be 100% tax free depending on the residency of the account holder and offshore companies can hold offshore bank accounts in Cyprus allowing for even greater privacy.