Company incorporation in Cyprus – Advantages of offshore company in Cyprus

Under the new legislation, worldwide income taxation of foreign-controlled Cyprus offshore companies will no longer depend on where they are registered, but on where they are managed and controlled.

As a full member of the European Union, Cyprus offers a secure and well-regulated financial environment for international clients. Cyprus, by virtue of its exceptionally advantageous tax system, is emerging as the most favored jurisdiction in Europe for conducting international business. This, along with the added benefits of being a member of the EU, rightly justifies the World Bank’s characterization of Cyprus as the “miracle” of the region.

Cyprus imposes the second lowest tax rate for individuals and the lowest taxes on corporate profits among euro area countries, according to data published by Eurostat. The top tax rate for individuals in Cyprus is 30%, while the average in the Eurozone is 42.4% and 37.5% in the EU. Regarding corporate profits tax, the rate in Cyprus is 10%, while the average in the Eurozone is 25.7% and in the EU 23.2%. In addition, Cyprus is one of the most advantageous places of residence for Russian and Ukrainian companies.

It also offers a high level of banking, auditing, accounting and legal services, making Cyprus a successful international business and financial centre. Companies registered in Cyprus but managed and controlled from abroad will only be taxed in Cyprus on their income generated in Cyprus.

The offshore company in Cyprus will enjoy tax exemption on dividends and interest and foreign income from any permanent establishment abroad, as well as all foreign tax credits and compensation for losses incurred abroad. They will not be entitled to benefits under double tax treaties, but will not be subject to the information sharing rules under such treaties. Therefore, today an offshore company in Cyprus can be referred to as an international business company.