double taxation agreements (DTA) Yes, with most countries

Corporate tax 10%

tax free receipt of foreign dividends Yes

EU Parent-Subsidiary Directive applicable Yes

Holding company privileges Yes

Banking secrecy High

Nominee relationships allowed Yes

Cyprus has double taxation agreements = DTA with most countries. Freedom of establishment in the European Union is applicable. From a European point of view, NO commercially equipped business operation is required for approval of a permanent establishment regarding the tax legislation in Cyprus, and neither is the proof of active business in Cyprus. The profit tax in Cyprus amounts to only 10%, irrespective of the amount of profits. Distributions of profits are not taxed.

Fees for our service “Company Formation Cyprus”

The following services are offered by us:

Forming of the company, entry in the commercial register of the country, apostil, notarized and certified translations of certificates into English, unless official language

Nominee Director: An attorney in the formation country will act as nominee director of the company (to the outside) and transfers all rights and obligations internally to the actual beneficiary (notarized deed of trust). The director does not have any account authority.
Trustee Director: We offer a Trustee-Director who is engaged in your business on Cyprus, thus he can sign contracts for the company. Most of our competitors on the contrary only offer a Director who is acting in a statutory way. This implicates that any contract, any commercial transaction has to be signed by the client or his delegate.

Permanent Director: ETC can provide you with a permanent director who has an employment contract with your Cyprus company, payment of social security benefits and income tax.

Nominee shareholder: a tax office in the formation country will act as nominee shareholder (to the outside) of the company and transfers all rights and obligations internally to the actual beneficiary (notarial deed of trust).

Domicile of the company in the formation country: deliverable postal address, availability by telephone, telephone and fax, mail forwarding service

Account opening: bank account for the company at a renowned major bank in the formation country, internet banking, VisaCard and cheques. Only the founder of the company is authorized to have access to the account.

General power of attorney to the founder: Only the founder receives a notarially certified general power of attorney for the company.

Recommendation of a renowned tax office in the formation country, for book-keeping and accounting

Internet-homepage of the company hosted on a server in the formation country: 5 pages for presentation of services/products, feedback form, imprint, e-mail address. May be extended at any time.

Our Services within the scope of the Formation Package “Cypriote Limited"

1.Tax identification number

2. value added tax ID number,

3. accounting,

4. annual financial statement,

5. preparation of the annual return

6. advance turnover tax returns.

7. Account opening in Cyprus

8. Delivery and Shipping Service for letters / invoices!

9. Formation / Consulting by Tax Accountants and Attorneys at Law

10. No “Formation Director” or “Formation Shareholder” Moreover a Cypriot is the Director; the Director is registered and is reachable during the entire agreement term. Provision of Nominees via a Cypriote Law Firm, no “Figurehead Directors”

11. No "Help with the opening of a bank account” on Cyprus (which as a rule means that an account is not opened) rather guaranteed account opening, incl. VisaCard and online banking. You do not have to travel to Cyprus

12. Serviceable postal address, also for registered mail, no post office box

Upon request free within the scope of the total package: Swiss company and / or personal account at a major Swiss private bank. Our clients are not required to open a branch office in Switzerland, to open a company account in Switzerland, (otherwise a prerequisite). A Swiss account could, for example, be used to “securely park and multiply” Cypriote dividends.

Stock Capital: The recommended authorized capital amount is CYP£ 1,000, unless you wish to commit a larger amount. The business of the company is not restricted to the amount of the authorized capital. The minimum amount of authorized stock capital for the registration of a Ltd. is CYP£ 1,000. In the event, however, the company opens an office in Cyprus (commercially structured organization), the minimum amount is CYP£ 10,000. We would like to point out the fact that this amount does NOT have to be blocked on Cyprus.

Configuration at the Formation of a Cypriote Limited

1. Director on Cyprus

A production site, a site for the exploitation of mineral resources or construction works whose duration is greater than 9-12 months always constitutes the establishment of a place of business in Cyprus, irregardless of “the place of managerial supervision”. Otherwise a taxable permanent establishment is defined analogous to Article 5 DBA (Double Taxation Agreement) according to the „place of managerial supervision“. Either you - or an agent - relocate your ordinary residence to Cyprus and act as the Director of the Cypriote Limited OR you hire a Cypriote as a Director OR our Law Firm in Cyprus provides for a Nominee Director. By the way, we also provide the possibility to our clients, that a Cypriot acts as an „employed Director“ of the Cypriote Limited, with an employment agreement between the Cypriote Limited and the Director, as well as the payment of payroll tax and social security contributions.

Alternative: The non-Cypriote client / founder himself acts as the Director of the company and provides proof that he routinely travels to Cyprus to perform the required ordinary managerial duties (however, this is not feasible in the case of the necessary day-to-day decisions).

2. Shareholder of the Cypriote Limited

The shareholder is due the profits after taxes (dividends). In addition, the shareholder is the owner of the company. Shareholders of a Cypriote Limited can be natural persons, or domestic or foreign companies.

In the event a Cypriote is a shareholder a 15% defense tax is due, when the dividends are distributed or if no dividends are distributed for a period of two years. For this reason we offer a “Nominee Shareholder“ within the scope of our services, more specifically our English Tax Accounting Firm acts as the Nominee Shareholder.

Cyprus provides the advantage, that dividend distributions to a non-Cypriote is not taxed. There are exceptions to this arrangement, which we would like to explain in more detail in a personal setting.

To the extent the client / founder or his company would like to act as the shareholder himself, the following factors are to be observed:

-Does your country have laws analogous to the “taxation of fictitious distributions“, comparable to those in Germany and the USA? Such laws result in the Cypriote dividends being taxed at the shareholder, even if they are not distributed. This is subject to the prerequisites, that the client / founder owns more than 50% of the shares (majority shareholder) and the Cypriote Limited located on Cyprus only generates passive income. In the event such laws exist within the European Union, this is illegal, based on the findings of the European Court of Justice.

If this is the case, the client / founder should „officially“ only hold a maximum of 50% of the shares, the other shares should be held on a trust basis.

- Does the EU-Parent-Subsidiary- Directive apply? In the event the shareholder is a company located in the EU and should the company hold at least 15% of the shares of the Cypriote Limited and both companies (Cypriote Limited and Shareholder) are active companies and the interest is evidently set up for at least one year, then the dividends are distributed tax free to the foreign shareholder due to the EU Parent Subsidiary Directive.

Example:

A Danish corporation is the 100% shareholder of a Cypriote Limited. The Cypriote Limited is first taxed at a 10% rate. The dividends (earnings after taxes) distributed to the Danish corporation are tax free. Such dividends are first taxed in the event they are distributed to the shareholder of the Danish corporation, provided such shareholder is an individual.

Please consider, that it is not mandate of a Cypriote Limited to distribute dividends. Moreover, the Cypriote Limited can make investments across the globe, for example: purchase a house in Spain.

Cyprus Limited as Holding: no taxation!

Cyprus Holding (legal form of a Limited company) is not subject to taxation. In addition to the characteristics of a permanent establishment according to tax laws, it requires pure holding tasks and that the shareholders/co-partners perform active operations in their respective countries and are taxed or that the right of taxation is utilised, respectively. Example: an entrepreneur has independent enterprises in the form of limited liability companies in several countries, i.e. for example, an English Limited, a German GmbH and a Spanish S.I. All companies carry out active business in their countries and are subject to tax or the right of taxation is used, respectively. Now a Cyprus Limited is established, which becomes shareholder in the foreign companies. The foreign companies’ profits flow tax-free into the Cyprus Limited. Provided that they are European companies (directive on parent companies and their subsidiaries in the European Union), no withholding tax is imposed in the countries of the co-companies. That means that any profits may be received completely tax-free! It is again important that the Cyprus Limited (Holding) company meets all requirements of a permanent establishment according to tax laws:

· Place of business management: A Cypriot must hold the business management, at least to the outside (nominee solution)

· No bogus company in its sense, but a regular registered office (deliverable postal address, availability by telephone and fax during normal business hours, company sign). Any office or employees (commercially equipped business operation) are not required, since the freedom of establishment in the European Union is applicable

· Bank account in Cyprus

If the member companies are non-EU companies, withholding tax is usually imposed in case of a flow of profits into the Cyprus Limited. This withholding tax varies greatly within the individual countries.

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