Those who want to open companies in Cyprus have several structures they can choose from. Among these are the sole proprietorship, the partnership, and the limited liability companies. Out of these, the Cyprus ltd, which can be private or public, is the most employed because of several tax advantages and possibilities to use them for various purposes.
Cypriot limited liability companies can be used as offshore companies by those interested in operating at an international level.
Below, our company formation agents in Cyprusexplain the procedure of establishing an offshore company in this country.
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Offshore companies in Cyprus
An offshore company is a business established outside the country the owner lives and pays taxes in. The offshore company can be established in one or more countries and the main grounds for setting up an offshore company in Cyprus are the protection of assets and tax reduction.
The types of Cypriot offshore companies are the limited liability company, the branch office, the general or limited partnership, the offshore banking unit, the offshore captive insurance company, the offshore financial services company and the shipping company.
Cyprus is preferred mainly for 2 reasons:
1) Setting up holding structures: for instance for those companies looking to expand into a larger number of countries Cyprus is a very suitable destination to set up your parent company;
2) Setting up Cyprus trading companies for the low corporate tax (12,5%) and 0% dividend tax as well as low company management fees.
We invite you to read about setting up an offshore company in Cyprus in the infographic below:
Conditions for starting an offshore company in Cyprus
In order to open an offshore company in Cyprus, the foreign company must comply with some conditions. There are no specific requirements for shareholders and directors of any nationality or residence. If anonymity is desired it can be obtained by using nominee shareholders, but the Central Bank must be informed who the beneficial owners are. Our experts in company formation in Cyprus can open offshore companies for foreign and local businessmen.
The term offshore company is seldom used nowadays, as it has been replaced by International Business Company, or simply IBC. It is useful to know that both local and foreign investors can open offshore companies in Cyprus, no matter if they are natural persons or if they are organized as corporations.
The following conditions must be met in order to register an IBC company in Cyprus:
- the business owners must decide on a trade name which must be reserved with the Trade Register;
- the company will be incorporated in accordance with its statutory documents which must be notarized;
- the minimum number of shareholders in a Cyprus offshore company is one, while the maximum number is 50;
- the minimum share capital required for opening this type of company is 1 euro, however, the company can have the capital desired by the shareholders;
- even if its operations will be carried outside the Cypriot borders, the offshore company must have a legal address in this country.
Our specialists in company formation in Cyprus can help foreigners who want to set up IBCs through the preparations for establishing such a company, including drafting the Memorandum and Articles of Association.
Documents required for offshore company formation in Cyprus
The offshore company will take the same form as any other legal entity registered in Cyprus, therefore the documents required for its creation will be the same as for onshore businesses.
The following papers need to be prepared when setting up an offshore company in Cyprus:
- the Articles of Association;
- the trading name reservation form;
- the application forms issued by the Trade Registrar;
- information about the shareholders and directors.
The Articles of Association and the Memorandum will contain the same information as those of onshore companies, therefore, there are no specific requirements when having them drafted. Our local agents can help you with the preparation of the incorporation papers of an offshore company in Cyprus.
The trading name of an offshore company in Cyprus
Just like in the case of other companies, the offshore entity must have a unique trading name which must bear the abbreviation LTD. In certain cases, the abbreviation can be IBC from International Business Company which used in most offshore jurisdictions.
In order to make sure the selected name is unique, it is advisable to propose at least 3 names, with the preferred one first on the application form.
It should be noted that the trading name of a company can be changed rather easy in Cyprus and if you need guidance, our agents are at your service.
Bank account opening for an offshore company in Cyprus
Even if registered for activities outside Cyprus, the offshore company still needs a bank account in which the share capital will be deposited. From this point of view, an international bank with a branch in Cyprus can be chosen thanks to fact that it offers access to the use of multiple currencies.
Our Cyprus company formation agents can help you set up a corporate account for your offshore company.
Management requirements for an offshore company in Cyprus
Just like any other Cyprus company, an offshore company must have a management board, which can be made of a single director. There are no conditions related to the nationality of the director, however, full information about their nationality and residency must be disclosed when filing for registration with the Companies Registrar. The company must also have a secretary who is a Cypriot resident.
In the case of offshore company directors and secretary, nominee services can be successfully used in Cyprus. Our local advisors offer such services to foreign investors interested in obtaining them.
How to register an offshore company in Cyprus
The company registration procedure of an offshore company in Cyprus is the same as for any other business form and must follow the next steps:
- preparation of the incorporation documents which must be drafted by a Cypriot lawyer;
- reserving a company name with the Companies Register (3 different names should be submitted for approval in order to ensure its uniqueness);
- the corporate bank account must be opened, and the share capital deposited;
- the incorporation documents must be submitted with the Cyprus Trade Register
- once the company obtains the Certificate of Registration, it must register for tax and VAT.
Even if the company will operate outside Cyprus, the necessary licenses and permits for its operations must be obtained with the local authorities in this country.
The Cyprus offshore company used for tax minimization purposes
The offshore company is also known as a non-resident company in Cyprus. The company will be registered in Cyprus; however, all its activities will be carried outside the country which makes it great from a taxation point of view.
The Cyprus offshore company will not pay the corporate tax in this country and will only pay expenses and liabilities if any.
The offshore as a holding company in Cyprus
Another use of the offshore company in Cyprus is that of a holding company. The offshore is perfect for foreign investors who want to open companies in Cyprus with the purpose of acquiring movable and/or immovable assets in other countries. Holding companies in Cyprus are subject to a special tax regime and benefit from various tax exemptions. Our company formation team in Cyprus can give you more details about this special tax regime and can help you open an offshore as a holding company.
The offshore company offers a high degree of privacy
Among the benefits of opening an offshore company in Cyprus are:
- a minimum number of one shareholder and one director who can be foreigners;
- the shareholder can also be the director of the offshore company;
- the beneficial owner can appoint a nominee shareholder for confidentiality reasons;
- there is no minimum share capital to be deposited when registering an offshore company;
- the offshore company can complete transactions in any currency.
Our company formation consultants in Cyprus can help with the registration of offshore companies.
The offshore company vs. the onshore company in Cyprus
The differences between onshore and offshore companies aren’t many, however, they are very important for entrepreneurs choosing to operate through one or the other.
The first and most important difference resides in the use of the two entities: the onshore company can be employed for completing activities in and outside Cyprus, while the offshore entity can be used for activities completed outside Cyprus only. Because of this reason, the taxation of the two business forms is also different, as offshore companies are not subject to the Cyprus corporate tax.
Another difference between the onshore and offshore company is that the latter is not required to apply for business licenses in Cyprus, but in the country(ies) it will offer its services or sell its goods in.
From a structure point of view, the limited liability company can be used for the creation of both onshore and offshore companies, with the mention that in the case of the offshore entity the shareholder can also act as a director in the business, therefore offering access to easier company registration procedures.
Choosing between setting up an onshore or offshore company in Cyprus will remain at the latitude of the investor and the operations they want to complete.
Our local advisors can offer more information on the differences between the two business forms and how they can be employed in order to benefit from the advantages Cyprus offers as an investment destination.
Taxes for offshore companies in Cyprus
The Cypriot corporate taxes that apply to inland companies are usually applied to offshore businesses as well. The profit tax for offshore companies and branches with a management board in Cyprus is 12,5% and it is one of the lowest tax rates in Europe. There are no withholding taxes for dividends, interests or royalties paid by offshore companies either. Cyprus also has an extended network of treaties in order to avoid double taxation which includes more than 45 countries.
Offshore companies are not allowed to carry trading activities on Cypriot territory with the residents. The only activities an offshore company is allowed to conduct in Cyprus refer to management and control of the business.
The benefits of the Cyprus offshore company
An offshore company offers many advantages to its shareholders, and among these we mention the following:
- it can be used for multiple purposes, one of the best one is tax minimization;
- when set up as an LLC, it will offer limited liability to the shareholders with respect to their personal assets;
- it requires a minimum share capital of 1 euro;
- it ensures a high degree of privacy, as it can use nominee shareholders;
full foreign ownership is permitted in an offshore company in Cyprus;
- it can use any currency in its activities.
The offshore company is one of the best tax minimization and asset protection solutions in Cyprus.
Why invest in Cyprus
According to the online magazine StartingBusiness.com, Cyprus should be considered by foreign investors because of several reasons, among which:
- one of the lowest corporate tax rates in Europe and the EU – 12,5%;
- it has an extensive network of double taxation agreements – more than 60 treaties;
- it ranked 27thin the Economist Intelligence Unit’s 2019 Quality of Life index;
- it is a world-famous shipping center with more 140 companies operating in this industry.
More information on the offshore companies in Cyprus are available in this video created by our Cypriot company formation agents:
FAQ on offshore companies in Cyprus
1. How much does it take to register an offshore company in Cyprus?
The incorporation procedure of an offshore company takes around 10 days to complete.
2. Can I register an offshore company remotely?
Yes, it is possible for the offshore company to be registered while the owner is abroad. Our Cyprus company formation consultants can complete the procedure through a power of attorney.
3. What are the requirements for opening an offshore company in Cyprus?
The requirements related to setting up a Cyprus offshore company are the same as for onshore companies. Our Cyprus company formation advisors can assist with the registration of an offshore company.
4. What type of entity do I need to register as an offshore company in Cyprus?
Offshore companies can take various forms in Cyprus. The most common one is the limited liability company. This type of structure is also subject to very little company formation requirements in Cyprus.
5. Is there any minimum share capital required to open an offshore company in Cyprus?
The Company Law does not require any minimum share capital. However, investors are recommended to deposit at least 1,000 euros upon the registration of the company.
6. Are there any special licenses or permits to open a Cyprus offshore company?
Unless the company operates in a specific sector which requires a certain business license, there are no requirements in this sense. However, it is best to check with our company registration consultants in Cyprus if any special conditions are imposed.
7. Does the offshore company need a local address in Cyprus?
Yes, even if it is a non-resident company, being a Cyprus business entity, the offshore company will need a local address. We can provide you with virtual office services for this purpose.
8. Does the offshore company need Cyprus resident director?
No, the offshore company does not need a resident director, however, it will need a local company secretary. Both nominee director and secretary services are available in Cyprus.
9. How are offshore companies taxed in Cyprus?
Offshore companies will not be imposed with the corporate tax in Cyprus. Our local consultants will explain the fees offshore companies must pay in Cyprus.
10. Must a Cyprus offshore company have its accounts audited?
Yes, as a resident-company, the Cyprus IBC must submit audited accounts with the local tax authorities.
11. What are some of the uses of an offshore company in Cyprus?
The offshore company can be used for various purposes, however, most of the times it will be used for trading activities. Cyprus offshore companies can also be used for holding purposes.
It should also be noted that shelf companies can be purchased with the purposes of using them for offshore activities.
If you are interested in setting up an offshore company in Cyprus, our local consultants can provide the necessary assistance during the registration procedure, including the drafting of the incorporation documents and remote registration with the Companies Register.
If you want to set up a business in Cyprus and need legal advice in order to choose the suitable type of company, you can contact our experts in Cyprus company formation. If you would like to start an offshore company in another jurisdiction, we can put you in contact with our partners from the Isle of Man, the British Virgin Islands or Belize.