Chesterfield (London) 
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Typical Cyprus Structures

Holding Company

Cyprus holding company is generally a limited liability Company that has the purpose of holding shares in one or more other companies.

The main reason for choosing Cyprus for the establishment of a holding company is usually to minimize the amount of tax deductions, therefore increasing profit margins.

Tax benefits for a Cyprus Holding Company;

  • 10% Corporate tax rate (one of the lowest in Europe)
  •  There is no capital gains tax in Cyprus on the disposal of shares in subsidiary companies
  •  No withholding tax on dividends, interest or royalties to individuals or companies non-resident in Cyprus
  •  No Cyprus tax on dividends received by the Cyprus holding company from non-resident subsidiaries (subject to certain conditions)
  •  Cyprus has over 40 double tax treaties

When you consider that Cyprus is a full member of the European Union and has various other incentives to offer such as group relief on companies tax resident in Cyprus it really has a lot to offer.

Royalty Company

Cyprus has a reputation as being a very attractive jurisdiction for the set-up of Royalty Companies. The reason for this is that there are many benefits associated with establishing a Royalty company here. Cyprus has been developing the area of IP law and is a member and signatory to numerous treaties. ‘IP’ stands for Intellectual Property and is the Legal entitlement in connection with creative ideas and works such as literary works, artistic works, designs and inventions.

Some of the main benefits for a Cyprus Royalty Company are;

  • 10% Corporate tax rate (one of the lowest in Europe)
  • Tax is only payable on 20% of the revenue from intellectual property rights as the other 80% is deemed as expense
  • No tax on dividends received from abroad (certain conditions apply)
  • No withholding tax on dividends, interest or royalties to individuals or companies non-resident in Cyprus
  • Profits from dealing in securities is tax exempt
  • Capital Gains from the sale of moveable assets is tax exempt
  • Cyprus has over 40 double tax treaties
  • Cyprus rules concerning Royalties are in full conformity with the interest and Royalties Directive of the EU
  • Modern and respected VAT regime for registration when trading with the EU

Cyprus also provides a unilateral tax credit for any tax withheld abroad on the payment of Royalties, dividends or interest, therefore greatly reducing the tax payable in Cyprus and in some cases negating this altogether.

Agency Company

The concept for this is that a Cyprus company may be used as a nominee or agent for an undisclosed low tax or international offshore company. There would be a requirement to have an agreement in place with the offshore company as the principal and the Cyprus Agency company representing the principal who would adhere to the terms of this agreement. Either company may then in effect conduct business, but it may be structured whereby the Cyprus agency company name and details will appear on all correspondence.

The Agency Company may be registered in Cyprus. Not only is this then an onshore company (acting on behalf of an offshore company in a jurisdiction such as BVI), but Cyprus is a full and respected member of the EU. The Agency company may, for example deal with all invoicing and accounting as well as any promotion and advertising, whilst the offshore company conducts the majority of the business. All proceeds would be received into the Cyprus Agency Company’bank account. As the terms are stipulated in a private agreement, known as the agency agreement between the two companies there is no need to disclose the relationship to any other party and therefore confidentiality is assured. 

There are many factors which should be taken into account when considering this structure or any of the above structures and Chesterfield will be able to advise and set-up the optimum structure and provide professional, compliant administration.

For further information on any of the above structures or any other structure please follow the link below or call us on our offices Telephone Number: 44 20 7097 1385

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