The establishment of a Cypriot Company has numerous advantages and uses, and with the correct and proper structure, it can offer to its shareholder(s) a comprehensive tax-efficient method to conduct business internationally. Cypriot Companies are governed under the Cyprus Company Law, Chapter 113 (“CAP 113”), law based on the UK Common Law principles, aligning with the EU laws and regulations as well.
Articles 354A to 354IH of CAP 113 are the ones that govern the Re-Domiciliation of companies in the following scenarios:
- Foreign Company – Re-domicile in the Republic of Cyprus;
- Cypriot Company – Re-domicile outside the Republic of Cyprus.
Our focus in this Article are the provisions as per the law and the benefits of Re-Domiciliation of Foreign Companies in the Republic of Cyprus.
Foreign Company – Re-Comicile in the republic of Cyprus
Any Foreign Company registered in a jurisdiction where re-domiciliation is not prohibited by law, as well as by the Memorandum & Articles of Association (“M&AA”) of the company, shall be eligible to apply to the Department of Registrar of Companies in Cyprus (“Registrar”) and transfer its registered office in Cyprus, pursuant to the provisions of CAP 113.
B. Preparation of the application
Prior to the submission of the application, various supporting documents shall be collected that should accompany the application.
Supporting Documents include but not limited to the following:
i. Shareholder(s) Resolution – Authorizing the Re-Domiciliation;
ii. Notice Letter – Official Notice to the foreign corresponding Register of Companies for the Re-Domiciliation intention;
iii. Updated M&AA – In compliance with the provisions of CAP 113;
iV. Certificate of Good Standing;
v. Affidavit of Director(s) – Details of the company including the name, incorporation date, country of incorporation, as well as the clean criminal record of the company;
vi. Solvency Affidavit – Confirming the financial good standing and solvency of the company.
C. Public or Licensed Companies
Where the Foreign Company is listed as public, apart from the above supporting documents (i-vi), the following shall be provided as well:
- Prospectus of the Public Company;
- Approval of Re-Domiciliation by the Foreign Stock Exchange Authority; and
- List of all Shareholders.
Where the activities conducted by the Foreign Company are provided under a license granted by the corresponding regulator in their jurisdiction of incorporation, a Re-Domiciliation consent shall be provided by the specific regulator as well, in order to be able to apply for the corresponding license in Cyprus.
It is important to note that in case of false declarations or representations by any of the officials within the management body of a company, constitutes to a criminal offence which in case of conviction, imprisonment of 1 (One) year and a penalty/fine up to the amount of €34,172- (Thirty-Four Thousand One Hundred and Seventy-Two Euro) may be imposed.
E. Temporary Registration
Upon completion of collection of all necessary supporting documents, the application is submitted at the Registrar and the Foreign Company is temporarily registered as a continuing entity in the Republic of Cyprus as from the date of such registration.
Unless the name of the Foreign Company is not required to be amended by the Registrar, a Temporary Certificate of Continuation of the Company in Cyprus (“Temporary Certificate”) will be issued and published to the Official Gazette of the Republic of Cyprus.
Within 6 (Six) months of the issuance of the Temporary Certificate, the Foreign Company shall provide the Registrar with the following:
i. Supporting Documents from the regulator of the jurisdiction of incorporation that the Foreign Company has ceased being registered (“Certificate of Discontinuance”).
ii. Temporary certificate of continuation in the Republic of Cyprus.
* Application requesting the deletion from the registrar of the jurisdiction of incorporation, must only be submitted once the Temporary Certificate is issued in by the Registrar in Cyprus.
IMPORTANT NOTE: All Supporting Documents accompanying the application for Re-Domiciliation shall be duly certified and apostilled, as well as officially translated in the English language and Greek where necessary.
F. FINAL APPROVAL:
Upon the issuance of the Certificate of Discontinuance and once presented at the Registrar, evidencing that the Foreign Company has ceased to be a company registered in the country of initial incorporation, the Registrar proceeds with the issuance of the Final Certificate of Continuation (“Certificate of Continuation”), which certifies that the Foreign Company has been duly registered in the Republic of Cyprus.
CYPRUS COMPANY – BENEFITS OF RE-DOMICILIATION IN CYPRUS
G. ATTRACTIVE TAX-ENVIRONMENT:
Cyprus has one of the lowest corporate tax rates in Europe, at the rate of 12.5%. Moreover, full tax exemptions apply on profits acquired from dividends received from abroad or from profits of permanent establishments in other countries (under certain circumstances). Interest and dividend taxes declared by companies to Non-Cypriot Resident shareholders are not withheld, therefore 0% tax applies. Additionally, Cyprus has a large number of double taxation treaties, with over 50 countries including Russia, China, US and the UK.
Sale or transfer of shares in a Cypriot company is fully exempted, with an exception where the company owns immovable property in Cyprus. In addition to this, there is up to 80% tax exemption on profits derived from licensing or exploitation and gains on disposal of Intellectual property. There is no Inheritance Tax nor Wealth Tax and there is no Controlled Foreign Corporation rules and legislation. Last but not least, there is unrestricted access to EU Directives as well.
H. SIMPLICITY OF CYPRUS COMPANY REGISTRATION:
Cyprus company may be incorporated within 10 working days, with 100% foreign ownership (of any nationality). The physical presence of the beneficial owner in Cyprus is not required. All procedures may be done remotely, via emails and couriers.
I. REPUTATION AND INTERNATIONAL MARKETS:
Cypriot companies represent status and reputation, as they are considered as common European companies. Additionally, companies in Cyprus, provide the opportunity to businessmen to legitimately conduct business in Cyprus, within Europe, as well as Internationally.
Apart from all the above ‘Practical’ and ‘Taxation’ reasoning to Re-Domicile your Foreign Company in Cyprus, there are also various direct and indirect external factors that enhance the choice of Cyprus, such as the High Quality of Life, its access to the EU and High Growth Markets, the High-Quality Workforce as well as the Low Cost of Conducting Business.
Our Firm can advise you further, not only on how and why to Re-Domicile your Foreign Company in Cyprus, but as well on the how to setup the structure of your Foreign Company, in order to reflect sufficiently your type of business activities and optimize the appropriate results.