FORMING A CYPRUS COMPANY

Incorporation time: 8 days

Shelf companies: Yes

Accounting: Yes

Secretary: Yes

Nominee Shareholder: Ye

Nominee director: Yes

History of Cyprus

Cyprus (formally the Republic of Cyprus) is an island state with 1.3m inhabitants located at the eastern extremity of the Mediterranean Sea. Its politics are very complex, since it is divided into three blocks: the Republic of Cyprus, the Turkish Republic of Northern Cyprus and the British sector. Although located outside Europe geographically, the country is part of the European Union.

Cyprus as an Onshore Tax Centre

Cyprus is an onshore European destination of choice due to its very favourable tax regime and its membership of the European Union. It is possible for companies based in Cyprus to trade with Europe (due to the import/export system) and also to obtain an EU VAT number. The country has adopted international Trust Laws, offering tax advantages to major enterprises located in Cyprus.

Cypriot law is based on British Common Law and onshore companies are regarded as IBC (International Business Companies) with limited liability. Cyprus companies must be formed by a licensed lawyer and have a minimum capital requirement of at least EUR 1,000. It is possible to protect the privacy of the owners and control structure of the Cyrpus companies by appointing a nominee director and nominee shareholders. Cyprus companies must have a registered address in Cyprus and this is provided by the local agents.

To avoid the taxation of profits, the management and control of the company must not be carried out in Cyprus. Companies will be considered tax resident in Cyprus if:

• Important decisions are made in Cyprus; and/or,
• The majority of the shareholders of the IBC are resident in Cyprus for more than 183 days per year.

The country has 40 national and international banks which are also operated on the British model, ensuring a good level of confidentiality.

Cyprus Summary

Cyprus is strongly discouraged for import-export operations in Europe because, given that the country’s location and the fact that it is an island, products cannot easily pass through it in transit. For any other activity, Cyprus is a destination of choice.

Types of Cyprus Companies

Cyprus companies take around eight days to incorporate.

Detailed Review of Cyprus’s Economy

Having joined the European Union in 2004 Cyprus has benefited from numerous aid packages for development, especially during the financial crisis of 2008 and the recent economic collapse when the European Investment Bank supported the country’s economy. For 2014 the Cypriot economy is expect to contract by a further 4.8%.

Like most western countries, the main dynamic sector in Cyprus is the tertiary sector, which employs 70% of the population. Formerly very agricultural, the country has changed in order to thrive and maritime transport is today one of the flagship areas of its economy (6th largest civil fleet in the world).

Tourism is, of course, another important facet of Cyprus’s resourcefulness. Industry still has a significant place in the national economy (textiles, oil, paper, metallurgy, etc.) but it is fading rapidly, due to labour becoming too expensive.

From an international trade perspective, Cyprus’s largest customer is, of course, Europe (especially Greece, France and the United Kingdom) with which the country has 50% of its transactions. The region generates a lot of traffic, due to large imports, but has high-quality infrastructure that is able to cope with this.

Cyprus’s Economic Strengths

• Cyprus is a member of the European Union.
• Taxes on business are low compared to neighbouring countries.
• The country can trade easily with Europe, Asia and the Middle East.
• High-quality infrastructure and telecommunications.
• Economy supported by European and international aid.

Cyprus’s Economic Weaknesses

• Recent economic difficulties.
• The internal market is not extensive (not many inhabitants).
• A very special political climate (three regions controlled by different entities).

Trade and Market Information

Cyprus has signed the Basel Convention on hazardous waste and the International Coffee Agreement of 2001. Since Cyprus is part of the European Union, the customs rules of the EU are applied on Cypriot territory.

Specific licenses are required to import goods into Cyprus and the control of imports is stricter for some products, especially agricultural ones. If the merchandise arrives from a Member State of the European Union Cypriot customs tariffs are void. Products from non-EU members are taxed differently depending on their nature but at relatively low rates.

The rules of the Common Customs Tariff of the European Union apply. At the administrative level, an import declaration must be completed, as well as a goods exchange declaration or an Intrastat, for trade within the European Community. An Entry Summary Declaration may also be requested.

In Cyprus, large retail business is still weak in a country with 3,000 points of sale (60% of which are retail outlets). The main players are Woolworths, Metro and Marks & Spencer’s. The primary transport of goods is by sea, with the ports of Limassol and Larnaca being the largest in the country. Today, Cypriot industry represents less than 20% of national GDP, with oil and gas being the largest sectors.

Employment Legislation in Cyprus

The average legal working week in Cyprus is 40 hours with a minimum normal monthly salary of around 700 Euros and a retirement age of between 63 and 65. The right to work in the country is based on the British standards and protects employees from unfair dismissal. This law is, on the whole, more permissive than European law. The rate of union membership is 68%.