European Company – “Societas Europeae” (SE)
Companies operating in more than one EU Member State are now given the option of forming a European Company – known formally by its latin name of “Societas Europeae” (SE). An SE can operate on a European-wide basis and be governed by Community law directly applicable in all Member States. The European Company statute is published by two pieces of legislation, namely a Regulation (directly applicable in all Member States) establishing the company rules and a Directive (which will have to be implemented in national law of all Member States) on worker involvement.
Cyprus has enacted the Regulation and an administrative procedure has now been put in place and is in line with the Council Regulation (EC) No. 2157/2001. The main objective is to allow companies incorporated in different member states to merge or form a holding company or joint subsidiary, while avoiding the legal and practical constrains from the existence of different legal systems as well as allowing the possibility to even set up a new SE from scratch.
For Tax purposes, an SE will be treated as any other multinational company according to the national fiscal legislation applicable at company lever or branch level. Cyprus low corporate tax of 12.5% make it an attractive location for an SE. On top of that, by fully implementing the Mergers Directive, Cyprus allows for Public Companies from all over Europe to merge into an SE in Cyprus at no tax burden.
Other tax advantages, include exemption possibilities for inbound and outbound dividend payments, no withholding taxes on interest for non-residents, a network of double taxation treaties, tax deductions in respect of borrowing costs, no thin capitalisation rules, narrow and flexible CFC legislation as well as group relief, to name just but a few. It’s a known fact that the island is generally recognised by tax experts as one of the more attractive locations for the establishment of a holding company in Europe. The availability for use of the SE statute since October 8, 2004 should have further increased Cyprus’ attraction as a holding destination. However, such attraction will largely depend on the taxation of the SE in general and the tax advantages that may exist for an SE established in Cyprus.
The SE must have a minimum capital of EUR 120 000. The laws of a Member State requiring a greater subscribed capital for companies carrying on certain types of activity, shall apply to SEs with registered offices in that Member State..
The registered office of the SE designated in the statutes must be the place where it has its central administration, that is to say its actual centre of operations. The registered office of an SE, may be transferred to another Member State which does not result in the winding up of the SE or in the creation of a new legal person.
In order to find out how to go about incorporating an SE quickly and effectively and with the minimal cost, contact our specialized team today for a free consultation. Our experts will guide you through the four ways of incorporating an SE and find a tailor made option suited to your needs.