On January 1, 2013, Order of the Ministry of Finance dated August 21, 2012 N 115n “On amendments to the List of states and territories providing preferential tax treatment...” came into force, according to which the Republic of Cyprus is excluded from the list of offshore zones.

In practice, this means that Cyprus is no longer on the list of countries that are not subject to the Russian holding privileges regime: the ability to pay dividends to a Russian holding in a tax-free manner. Thus, Cypriot dividends received by Russian companies can now be taxed at a zero rate. To do this, the following condition must be met: on the day the decision to pay dividends is made, the Russian organization must have continuously held for at least 365 calendar days at least a 50% contribution (share) in the authorized capital of the Cyprus company or depository receipts entitling them to receive dividends , in an amount corresponding to at least 50% of the total amount of dividends paid (subclause 1, clause 3, article 284 of the Tax Code of the Russian Federation).

If we talk about the use of Cypriot opportunities today, the island is often a “layer” between a large Russian holding company and its assets. The popularity of the scheme is explained by the double taxation agreements in force in Cyprus, which allows capital to be “pumped” from Russia to Europe and vice versa.

However, serious problems have been brewing in the official financial relations between our country and Cyprus for a number of years. They were due to the fact that in the Agreement between the Government of the Russian Federation and the Government of the Republic of Cyprus for the avoidance of double taxation in relation to taxes on income and capital, signed in Nicosia on December 5, 1998, information exchange issues were outlined in such a way that it allowed the Cypriot side to refuse providing answers to relevant requests from the Russian side.

Faced with this state of affairs, the Russian side could no longer pursue a common tax policy towards Cyprus, since the lack of uniform rules and transparency inevitably leads to the fact that this is taken advantage of by those who benefit from the inability to track their financial and economic activities. As a result, Cyprus was included in the List of states and territories that provide preferential tax treatment and (or) do not provide for the disclosure and provision of information when conducting financial transactions (offshore zones), approved by Order of the Ministry of Finance of November 13, 2007 N 108n (in February 2009 year, the Seychelles were added to the list, and on August 21, 2012, the Republic of Cyprus was excluded from the list (though only from January 1, 2013).

The basis for issuing the order was the provisions of sub-clause. 1 clause 3 art. 284 of the Tax Code of the Russian Federation, in accordance with which a zero tax rate is established for the tax base determined by income received in the form of dividends. Moreover, if the organization paying dividends is foreign, a zero tax rate is applied to organizations whose state of permanent location is not included in the list approved by the Ministry of Finance.

In fact, this led to the fact that Russian entrepreneurs, who, guided by various considerations, withdrew funds to the accounts of their Cypriot companies, then, when the business they were conducting in Russia required money, regretfully realized that they could return the money back without losses are difficult. This state of affairs worried the Cypriot authorities. The Cypriot leadership, not wanting to be accused of encouraging tax fraud and wanting to improve its own image, expressed its willingness to accept a compromise solution and change its position regarding information disclosure. During 2008, the finance ministries of the two countries held two rounds of negotiations on this issue. As a result, the Cypriot side guaranteed that it would provide complete and prompt information upon Russian requests in order to achieve exclusion from the list of offshore companies. In parallel, work was carried out to remove the claims of the Organization for Economic Cooperation and Development against Cyprus.

The result of this work was the signing in October 2010 of an additional Protocol on amendments to the Double Taxation Agreement. It included provisions on the exchange of tax information and mutual assistance in tax collection. Now, regulators in Russia and Cyprus can, in principle, exchange confidential information, including about the owners of companies registered in Cyprus.

The next step was Order of the Ministry of Finance dated August 21, 2012 N 115n. This decision is long overdue and therefore timely. After all, this country is no longer perceived as a classic offshore. In addition, Russians on the island are traditionally treated with a friendly attitude due to religious and cultural proximity. In addition, Cyprus today, as a member of the EU, has a predictable economic and political situation and in the near future will be obliged to implement European standards in the field of the banking sector and the activities of legal entities. All this will undoubtedly add respectability and weight to the island state, where in large cities almost half of the street signs are in Russian, as an international financial center and will not reduce its popularity among our entrepreneurs.

The consequences of this step are as follows. Firstly, now dividends paid to a Russian shareholder will not be subject to income tax and defense tax in Cyprus, and dividends paid by a Cypriot subsidiary will not be subject to income tax in Russia. Secondly, transactions between related parties will not be recognized as controlled for tax purposes if the party to such transactions is a Cyprus resident company (clause 3 of Article 105.14 of the Tax Code of the Russian Federation). Thirdly, the obligation for banks to send information on banking transactions with Cyprus as an offshore territory to Rosfinmonitoring is removed. Fourthly, an opportunity opens up for companies from third countries wishing to invest in Russia to make wider use of the Cypriot jurisdiction, etc., for these purposes.

In December 2012, in his annual Address to Parliament, the President of the Russian Federation noted that "... The offshore nature of the Russian economy has become the talk of the town. ... We need a whole system of measures to de-offshorize our economy. We need to achieve transparency of offshore companies, disclosure of tax information, how Many countries do this during the negotiation process with offshore zones and the signing of relevant agreements. All this can and should be done. But if, when choosing a jurisdiction, the issue is resolved in favor of someone else’s legislation, then, of course, it is necessary to admit that one should correct one’s own shortcomings in the judicial system. system, in rule-making, in the practice of applying laws." The changes that have occurred in the order of information exchange and the status of Cyprus are in line with the assigned tasks. Time will tell how bilateral relations will develop and what accents will prevail in them.

Cyprus is one of the most popular countries for doing business. This island gained such popularity due to its “entry” into the offshore zone of Cyprus. Let us remind you that an offshore zone allows you to pay taxes at very acceptable and reduced tax rates. Therefore, it is not at all surprising that many foreigners open their own firms and companies on this island.

Registering a company in Cyprus does not take much time and effort. And this is an additional advantage compared to others, where registration sometimes takes several months.

Coral Bay, Cyprus

Let us remind you that an offshore zone and an offshore are radically different concepts. An offshore company in Cyprus is a company in Cyprus that operates on this island. And the offshore zone in this case is Cyprus, which provides reduced taxation to participating companies.

In an offshore zone, you can buy a ready-made business or open one from scratch. But it is worth remembering that it will cost much more than opening it yourself.

To register a company you will have to follow these instructions:

1. Decide on the choice of company name. According to the laws, two identical names of a company or organization cannot exist in the state. Therefore, if a similar name is already registered in the state register, then you will need to come up with a new one. On average, it takes 2 to 3 days to verify a title.
2. After checking the name, it is necessary to legalize corporate documents. Typically, the process of legalizing documents does not take more than one week.
3. Next, you need to open a bank account in the name of a Cypriot company. It often takes about 7 days to open an account. But account details can be received the very next day after submitting an application for opening. But it is worth remembering that it is strictly prohibited to carry out any financial transactions before the official opening of the account.
4. After receiving all the documents, opening an account and assigning a legal address, the company in Cyprus can be considered registered.

Limassol, Cyprus

The main documents confirming the registration of a company in Cyprus are:

• Charter
• Set of stamps
• Set of certificates:

1. Certificate of shareholders of a Cyprus company.
2. Certificate of registration of the company.
3. Certificate of assignment of a legal address (location of the company).

According to the laws of Cyprus, to register a company in an offshore zone you will have to pay $2,250. But it is worth remembering that annually you will need to pay an additional approximately $350 to the Cypriot state budget. This is an annual government fee. It is paid every year, regardless of the field of activity of the enterprise and the authorized capital.

According to the laws, the annual government fee must be paid by the end of December.

If you do not pay the fee on time, the company may even be deregistered. Therefore, it is undesirable to allow delays of at least one day.

Registration fee

The registration fee is quite high. And this is not surprising. Indeed, in addition to the registration fee, this price includes:

1. Payment of government duties.
2. Payment for legal address.
3. Payment for an agent who, if necessary, advises the company.
4. Payment of all constituent documents.
5. Payment for the services of a notary, who certifies all documents during registration.
6. Payment for translation of documentation into Greek.
7. Payment of the general power of attorney in one copy.
8. Registration of taxpayer number.
9. Making stamps.
10. Payment for opening a bank account.

Requirements for companies

To successfully register in Cyprus, a company must meet the following requirements:

1. It is advisable to indicate the company name in Greek. It is allowed to indicate in English. But it is worth considering that the name of a Cypriot company, according to current laws, must contain the prefix “LTD” (limited liability company).
2. Amount of capital. The minimum amount for opening a Cyprus company is one thousand euros. But often this amount is not enough, so it is better to present 5 thousand euros.
3. Management team. To successfully register, the company must select a person (or several) who will be in charge of management. A director can be either a legal entity or an individual. It doesn't really matter. But as practice shows, it is better to appoint a citizen of the Republic of Cyprus to the position of director of a foreign company to establish tax residency.
4. Availability of a corporate secretary. Only a citizen of the Republic of Cyprus can be appointed as a Corporate Secretary.

Taxation

As previously noted, Cyprus attracts foreign enterprises with the opportunity to pay taxes at reduced rates.

If a company or enterprise sells its own real estate, then additional capital gains tax is paid. It is equal to 20 percent of the total value of the property sold. Tax is paid even on the sale of company shares.

According to the law, every company registered in Cyprus is required to pay value added tax. The amount of tax directly depends on the product or services supplied. The average rate is 19 percent. But in some cases, the tax can be reduced to 5 - 7 percent.

You also need to make additional tax payments to the social fund. These taxes are only paid if the staff includes residents of Cyprus. The tax ranges from 11 to 13 percent of workers' salaries. This tax should not be confused with contributions to the pension fund. The employer pays into the social fund, and the worker himself contributes about 7 percent of his salary directly to the pension fund.

About taxation in Cyprus in this video:

All activities of the company are regulated by the Law on Companies. This law was drawn up on the basis of an English law, which in turn was passed in 1948.

Booking a company registration in Cyprus is an opportunity to gain access to European markets, as well as a way to successfully accumulate capital in a country that currently has one of the most developed countries in the world.

Registration of a company in Cyprus: Basic information about the structure of the company

When the country joined the EU, fiscal legislation changed significantly. At the same time, the peculiarities of the country’s political structure have been almost completely preserved. This duality of standards allowed the state leadership to build a special relationship with the business environment.

Offshore companies in Cyprus - characteristics of the tax system

At the moment, the income tax in Cyprus is a uniform rate for all participants in economic relations of 12.5%. Payment of dividends on shares of residents of the country is also subject to taxes of 15%. As for foreign investors receiving income from the placement of shares in Cyprus enterprises, this activity is completely exempt from tax risk.

The VAT rate in this region does not exceed 19%. This is the minimum value that can be found in EU countries. As for the nature of mandatory reporting for companies in Cyprus, in the first 18 months of the company’s existence, its owner is relieved of the obligation to provide any financial documents to regulatory authorities. After this period, reporting is provided once a year to calculate the amount of corporate tax payment.

Open a company in Cyprus: Advantages of the absence of double taxation in the Republic of Cyprus

At the moment, more than 35 agreements between the Republic of Cyprus and various states have been registered regarding the regulation of situations related to the avoidance of double taxation when withdrawing capital from any other country to the territory of this jurisdiction.

The impossibility of applying double taxation is taken into account when businessmen transfer money from Russia and back. The mechanism for implementing this rule is as follows: the entrepreneur transfers money and tax is withheld from this amount. The counterparty receives net profit and then applies to government authorities to obtain a tax deduction, which is equal to the amount of tax withheld previously.

Special relations with Russia - the opportunity to buy an offshore company in Cyprus is profitable

The official website of the Government of Cyprus systematically publishes information about agreements concluded between Russia and the island state, which are designed to simplify the movement of financial flows.

Recently, the European Union has achieved fundamental reforms of the political system in Cyprus. This step strengthened the relationship between the Russian Federation and Cyprus: a special procedure for levying taxes on the income of legal entities, a flexible fiscal system - factors that guarantee the safety of the capital of foreign investors.

Buying a company in Cyprus with UraFinance is now even easier

Our specialists will help you get around the pitfalls that occur when registering a company on the territory of an island state. They stem from the following provisions:

• in Cyprus, which specializes in the provision of insurance, banking, accounting or legal services, is possible only with licensing of its activities.
• There must be an office and a local secretary of the company on the territory of the island state.
• The authorized capital of Cypriot offshore companies is limited to a minimum value of 1000 euros, which includes 1000 shares with a par value of 1 euro. However, only registered shares are available.
• Nominee directors and shareholders may be used. However, the norms of the current Cypriot legislation recommend choosing the persons in question or residents of the country.

This will reduce the likelihood of double taxation when transferring capital to zero.

Growing your own business requires investors to be resourceful and adapt quickly. In such conditions, many world businessmen prefer to open their own business in Cyprus. This island has been one of the largest offshores for many years and has managed to accumulate an impressive client base. The latter included Russian entrepreneurs.

With accession to the EU, the country ceased to be one of the world's tax havens, but did not lose its key advantages for international companies:

• Possibility of cooperation with any European counterparties. By opening a business in a European jurisdiction, you will be able to transport goods duty-free throughout the EU. Plus, given the introduction of sanctions in Russia, cooperation with a Cypriot company will be much more attractive and profitable for foreign customers and partners.
• The island has the most favorable VAT rates (19%) and corporate tax (12.5%) in the EU.
• All income received by Cypriot enterprises from the purchase/sale of securities, interest, dividend income and royalties are taxed at a zero rate.
• Profits from transactions with real estate located outside Cyprus are also not subject to taxation.
• Receipts from any foreign branches, subsidiaries, etc. are taxed at a zero rate.
• Cyprus has already concluded more than five dozen agreements on the avoidance of double taxation, including with African states, which opens up new investment markets for venture business. It is worth noting that traditional “financial” jurisdictions are gradually oversaturated with capital investments - incomes are not so high, and competition is significant. African markets are much less competitive.
• Outsourcing is well developed in Cyprus. This applies to auditing, accounting and other financial services, telecommunications and equipment maintenance. Thus, you do not have to keep additional employees on staff, but, if necessary, hire third-party specialists, which will significantly reduce costs.

As can be seen from the above, Cyprus remains an attractive business jurisdiction, even despite experiencing a three-year recession. Of course, the country still has a long way to go to recover to pre-crisis levels, but positive GDP growth, a reduction in non-performing loans and a constant influx of tourists clearly indicate the beginning of the country's economic recovery.

Reasons to choose Cyprus

Traditionally, Cyprus is included in the list of the world's largest business centers. The island can offer a full range of services for both small businesses and large holdings. As for the reasons to open a company here, the most important of them are described below:

1. You can create a new company on the island within 5-7 days.
2. To register your own business, you do not have to visit Cyprus in person. With the active implementation of online systems, the entire process of establishing a company can be completed remotely.
3. The wide distribution of online services, the development of the banking sector and the presence of consulting and other organizations specializing in working exclusively with Russian businesses will allow you to keep your finger on the pulse of the company and manage all current affairs from anywhere in the world. So, in order to develop a business, you do not have to live in Cyprus permanently.
4. Together with the company, you can open both a corporate and personal bank account. It is important to note that Cypriot banks are gradually emerging from the recession that has overwhelmed them. In addition to servicing existing accounts, island lenders are actively attracting new clients, including our compatriots. Having an account in a Cyprus bank will allow you to use your funds anywhere in the world, and the Internet banking service will make it possible to carry out almost any operation remotely.
5. You can start your own business on the island even as a foreign citizen.
6. There are no clear regulations in the country regarding the minimum amount of authorized capital. It is determined individually and depends on the size and specifics of the work of each specific enterprise. So, you can indicate only 1000 euros in the authorized capital, and at the registration stage you do not need to pay this amount.
7. All necessary certificates and registration certificates can be provided in English.
8. Obtaining a VAT number will take you only 48 hours. Its presence will allow you to cooperate with European counterparties on much more favorable terms and increase the level of trust in your company.
9. Island legislation allows for the involvement of nominee shareholders and directors, which ensures significant investor confidentiality.
10. Possibility of redomiciliation of a company from another jurisdiction. If you intend to transfer the company to the international level, then you can transfer a ready-made enterprise to Cyprus.
11. Cyprus is not on the OECD blacklist, so your business will operate in a reputable jurisdiction on completely legal grounds.
12. This country has one of the most favorable tax policies in Europe. Thus, owners of island companies can count on zero tax on income from transactions with securities, re-registration of real estate, income from subsidiaries and foreign branches, etc. The local government has done everything possible to ensure that international businessmen strive not only to do business, but also to live on island. In addition to business prospects and an impressive range of entertainment, Cyprus is ideal for long-term residence for Russian expats. There are Russian shops, schools and a large national diaspora here, so the process of adapting to a new culture and rhythm of life will not be so painful.
13. The island has fairly low costs, especially compared to other European countries, for the maintenance of enterprises.
14. You can always close the company with minimal bureaucratic procedures.
15. All closed companies can be restored to the commercial register within 20 years.

Own island business and second EU passport

Cyprus Economic Citizenship Program Changed! Now you don’t need to invest 5 million euros and take part in a collective scheme - the investment amount has been reduced to 2 million individually!

By investing in a Cypriot company, you can get not only an international business, but also a second passport from an EU member state. Obtaining such a document became possible due to the active development by local authorities of the economic citizenship program. It provides an opportunity for wealthy foreign investors to obtain full Cypriot citizenship in exchange for investments in real businesses and a number of other assets: bank deposits, government bonds or real estate.

You do not have to limit yourself to just one option - if necessary, you can combine investments in the areas described above until you reach a minimum of 5 million euros.

But this amount is far from final. Subject to participation in a collective investment program, the minimum amount of investment can be reduced to 2.5 million. Collective investments imply the creation of a group of investors (minimum 5 people), which will replenish the Cypriot economy by at least 12.5 million.

In this case, you do not have to look for the remaining partners yourself. You can contact companies that specialize in investing in second citizenship. There they will help you not only find reliable partners, but also develop an optimal investment portfolio and deal with all the paperwork.

Having a European passport will make working with foreign partners much easier. It is no secret that today not all companies and firms seek to cooperate with Russian businessmen. With Europeans the situation is completely different. Plus, you will be able to use local courts, hospitals, apply for pensions and other social security, and your children will be able to study at leading EU universities.

The right to obtain such a passport will apply not only to you, but also to your family members, including your wife, children and parents. And this does not mean that you will be obliged to live in Cyprus permanently. A second passport will allow you to travel to 133 countries of the world visa-free and even live in any European country. Thus, opening a company in Cyprus can be the first step towards obtaining an EU passport.

For more detailed information regarding opening a company in Cyprus, please contact us by email [email protected]

Companies in Cyprus

Shelf company cost In Cyprus - 1790 Euro

The price already includes the services of nominees resident in Cyprus, a registration address in Cyprus and an apostille of constituent documents.

Registration fee new company in Cyprus - 1890 Euro

Registration of a Cyprus company takes from 2 to 3 weeks taking into account the time for apostillization and sending documents from Cyprus.