Cyprus Offshore Companies offer many competitive advantages when compared with other offshore business centers that make them extremely attractive to serious potential investors that are looking for a stable tax planning regime and a way to minimize tax exposure.
The term Cyprus Offshore Company may be misleading these days. Following changes in the domestic laws in 2003 the term Cyprus Offshore Company was replaced with the term International Business Company or IBC. So when someone refers to a Cyprus International Business Company in essence he refers to the business vehicle that was known for decades as the Cyprus Offshore Company. In this article when we say Cyprus Offshore Company we mean the Cyprus International Business Company and vice versa.
The Cyprus International Business Company has the same characteristics as the Cyprus Offshore Company with the added advantage that Cyprus is now member of the European Union. The Cyprus Offshore Company enjoys the lowest tax in the European Union. The standard corporate tax for a Cyprus Offshore Company is 10% (0% for shipping companies, 4.25% for maritime management companies). This should not be compared with other offshore companies in offshore jurisdictions like Belize, BVI or Seychelles because they are there for a different purpose. The corporate of a Cyprus Offshore Company should be compared with corporate tax in other European Union countries like Greece (40%), Germany (40%) , United Kingdom etc. The only comparable jurisdiction in the European Union is that of Ireland but Cyprus has so many other advantages that outnumber the low corporate tax of Ireland.
The tax system is planned in such a way to encourage foreign investment. So we are talking about an investor friendly tax regime which offers the Cyprus IBC the advantage to operate in stable and secure environment with no surprises, sudden changes in government economic policy etc. The Cyprus Offshore Company pays no tax on profit from trading in securities. Thus if the company trades in the stock exchange of any country and makes profit, that profit is tax free.
The foreign beneficial owners of Cyprus Offshore Companies, Cyprus Branches and Partnerships are not liable to additional tax on dividends or profits over and above the amount paid or payable by the respective legal entities.The profit made out of by a Cyprus Offshore Company outside Cyprus is not taxable. For example if a Cyprus Offshore Company operates in Russia and makes profit from its business that profit will not be taxed in Cyprus. The Cyprus Offshore Company has the great advantage of being surrounded by an impressive network of Double Tax Treaties that were signed by the Republic of Cyprus. The list is available here. There is no other international business center that has this many Double Tax Treaties with other countries.
The Cyprus tax law is in line with the European Union tax directives. A Cyprus Offshore Company is in essence a European company with all the advantages this entails. The Cyprus Offshore Company may merge with any other company, be the object of a take-over or reorganization within groups without tax consequence. Unilateral tax-relief is granted to all Cyprus companies including Cyprus Offshore Companies for foreign tax suffered irrespective of the absence of a double tax treaty.Tax losses suffered by a Cyprus Offshore Company are carried forward indefinitely and can also be surrendered as group relief. Last but not least Cyprus has highly qualified personnel an excellent banking system and the perfect environment for a foreign business to flourish.