The Cyprus Holding Company: Benefits at a glance

In our article “A Step by Step guide for forming a Company in Cyprus” published in August 2017 we demonstrated to the reader a detailed approach of the benefits and procedure to be taken in setting up a Company in Cyprus. In continuation to this article we decided to provide a further analysis of the benefits surrounding a Cyprus Holding Company.

Cyprus as a member of the European Union and a member of the Whitelist of OECD has an excellent reputation of a reputable financial center with a solid commitment to act against harmful Taxation practices via the Conduct for Business Taxation. Thus, in real essence Cyprus as a jurisdiction has become an attractive financial center for businessmen to setup their Companies.

As demonstrated in previous articles the procedure for forming a Company in Cyprus can be completed within a timeframe of 7 – 10 working days. It is rather simple and straight forward and the same applies for a Cyprus Holding Company as detailed below:

Company Name  

The first step the applicant must follow is to choose the name of his/her Company. In order to avoid any synonymity with other Company names, the applicant should submit at least three alternative Company names either in Greek or in Latin characters (whatever Company name is submitted the word ‘’Limited’’ is placed at the end of each Company name).

Memorandum of Articles and Association 

Upon approval of the Company name, the applicant shall submit in detail the Company activities, the amount of the share capital, the internal Company regulations etc., to the lawyer in order to prepare the Memorandum of Articles and Association.

Shareholders 

By law, each Company should appoint at least one Shareholder. The Shareholder may be either a physical person or a legal entity.

Board Members 

All Cyprus Limited Companies are obliged in appointing at least one Director and one Secretary. It is recommended that the majority of Directors are of Cypriots Residence or foreigners staying permanently in Cyprus. By doing so, the Company will not lose its tax advantage of a low tax rate of 12, 5% since management and control will be taking place in Cyprus. In the case of the Secretary, it is recommended also to be of Cypriot Residence for practical main reasons i.e. immediate signatures of various main Company documents.

Registered Office

It must be noted that the Registered Office of the Cyprus Company must be any address located in Cyprus.

Benefits of a Cyprus Holding Company

1. It has all the tax advantages of setting up a Cyprus Limited Company being:

a. The Corporate tax rate of 12, 5% on net profits; one of the lowest rates in the EU.

b. The legal framework of Cyprus is based on the principles of the English common law, recognized for its transparency and credibility in business practices.

c. The dividends of the Shareholders are excluded from the Tax Authorities as long as they are not tax residents of the Republic of Cyprus.

d. There are in place a great number of double taxation treaties with various countries.

e. There is absolute freedom of movement of foreign currency which allows the maintenance of a bank account in foreign currency anywhere in the world.

f. Losses from a company in Cyprus may be transferred to the next year and also group relief may be claimed.

2. There is no tax on revenue from sale of securities (i.e. shares, bonds, debentures etc.)
3. No tax on dividends received as a shareholder for other subsidiary Companies (Note that for dividends from abroad certain conditions apply)
4. Dividends or Royalties (except intellectual property utilized in Cyprus) paid by a Cyprus Company to non-resident shareholders will be effected without cutting any withholding tax (subject to double tax treaties between countries)

It should be clearly understood that when forming a Cyprus Holding Company a businessman not only enjoys the benefits described above but may opt also to move in Cyprus with excellent infrastructure, education system and a healthcare. By also moving in Cyprus and reaching to substance taxation terms the Company has an access to highly educated personnel who are open to multiculturalism.

We can assist you in forming a Cyprus Holding Company in order to be in compliance with all requirements set up by the Cyprus Authorities.

For your Tax planning solution and further detailed analysis please contact us.

The content of the above article is to provide a general guidance in forming a ‘’Limited’’ Holding Company in Cyprus. Specialized, tailor made advice is given on each scenario and specific needs accordingly.