How to Choose between the Types of Cyprus Company Formation
Forming a limited liability company in Cyprus is very attractive owing to the advantageous tax systems prevalent in the country. Being a member of the European Union, the country offers one of the lowest tax percentages in Europe of 12.5%. The taxation policy is fully compliant with the OECD (Organization for Economic Co-operation and Development), so investors are guaranteed that there are no malpractices. Although the country is relatively smaller, it’s ideal to gain offshore benefits like so many of its counterparts in the region.
Cyprus Company Formation can answer your requirements for international tax planning. There are many exemptions offered for foreign sources of income, withholding tax on outbound dividends, interests, and royalties. Profits gained from share transaction are also exempt in Cyprus. There are no exchange controls, weak capitalization rules, and no capital gains. The initial step should be to the have the approval of the Registrar of Companies and ensure that the proposed company is accepted. There are many agencies that will help you with the necessary documentation of memorandum of association, articles of incorporation, and other formalities. The first step is to decide on the type of company to form when investing in Cyprus.
The most popular types of companies to form are ‘Branch’, ‘Limited Liability’, and ‘Partnership’. By comparing the three options, you would understand which suits your business requirements. Forming a ‘Branch’ will mean that the foreign party is liable complexly for what is incurred within the Cypriot branch; it is required to be registered with the Registrar of Companies, and have all annual accounts to be filed in Greek. On the other hand, a ‘Limited Liability Company’ does not require a minimum share capital; it should also have a between one and fifty shareholders and an appointed director. All accounts must be audited and filed in Greek. If none of these features appeals to investors, they can also look at forming a ‘Limited Liability Partnership’ where the required partnership numbers should be between two and twenty members. At least one of the partners must be appointed in the capacity to absorb unlimited liability of the company. Although it is required to be registered formally via the Registrar of Companies, there is no mandated need for auditing accounts.
One may argue that the country is not particularly generous towards foreign investors with investment incentives; however, many investors do see the plus side of the low-taxation within the country. Apart from this, companies can benefit from the loans and grants available for investors in high-tech and economic sectors.