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Executive Summary
The Republic of Cyprus is a country-island, third largest island in the Mediterranean Sea after Sicily and Sardinia. Cyprus became independent from the UK in 1960 and member of the Commonwealth in 1961. It became a member state of the EU in 2004 and has adopted the Euro currency. There is an ongoing internal dispute between Turks and Greeks that in 1974 attempted a revolution in Cyprus, aiming annexing Cyprus to Greece, whereas Turkey occupied the third of the island in the North. However, the whole territory of Cyprus is de juro recognized as an independent and sovereign state.

Cyprus is believed to have natural gas and crude oil; government creates and enforces favourable rules for promoting financial industry and its services. Economy is largely based on international trade, education and tourism, with smaller sectors of agriculture and light manufacturing. The presence of ethnical conflicts represent the threat and weakness for the country’s solid development. Nicosia is the capital of Cyprus.

Geography
Cyprus is situated in the Mediterranean Sea on an island to the East of Greece, to the West of Lebanon, Syria and Israel, to the South of Turkey and North of Egypt.

The landscape is composed by the central plain and the mountain masses that cover southern and western parts of the country, almost a half of its territory. The warm and dry Mediterranean climate favours agricultural activities and attracts tourists from all over the world. Winters are mild, summers are hot. There are significant differences in temperature and weather on the island, determined by  altitude and distance from the coast.

Map, Flag and Coat of Arm


Types of Company

Private Company Limited by shares

The number of members should not exceed 50. Starting from 2003 a private company which is fully owned by foreign residents, that is referred to as an offshore company, can no longer benefit from a separate reduced taxation regime. Company formation documents and annual accounts should be submitted to the authorities in the Greek language. Full details of shareholders must be provided and a company must have at least two directors. The Companies Law has been reviewed and amended before entering the EU.

Exempt Private Company
A private company limited by shares has an exempt status if it complies with the following conditions: a) only another exempt company may hold any of its shares or debentures; b) there are no more than 50 debenture holders; b) no corporate entity is a director of the company.

Such a company is not obliged to file accounts along with its annual return. In addition, it is imposed no statutory restrictions on loans to directors.

Company Limited by Guarantee
This company is usually used for non-profit and charitable purposes. Apart from the share structure, it  is similar to a private company limited by shares.

Public company limited by shares
This company does not contain restrictions that are imposed to a private company and it may be listed on the Cyprus Stock Exchange.

Branch of Overseas Company
Companies that have established a branch in Cyprus are obliged to file their accounts on the annual basis that need to be accompanied with a certified translation in the Greek language. The Cypriot branch of a foreign company is treated as a local company.

General Partnership
These structures are equivalent to the English legislation. It takes approximately a month for registering a general partnership and it is necessary to submit the following information: names and full data of partners, purposes, place of business. A general partnership may have between 2 and 20 general partners, and only up to 10 in case a partnership conducts a banking business. There is no need to file accounts or to be audited.

Limited Partnership
This is a similar structure to a general partnership with an exception in the requirement of having at least one general and at least one limited partner, who in its turn, is liable only up to the amount invested in the partnership.

Sole Proprietorship
This structure is generally similar to the general partnership. A sole proprietor is liable for all the debts, and all the names used for business purposes apart from the name of the owner must be registered.

Local Trusts
Usually a settler and beneficiaries are residents of Cyprus, and the trust is a subject to exchange controls.

International Trusts
Both, a settler and beneficiaries, must be non-residents, but one trustee must be a Cypriot. This structure may have tax advantages.

Offshore Trusts
A settler must be resident, but beneficiaries must be non-residents, and all the trust activities must be conducted outside Cyprus. As with offshore companies, after having entered the EU, this type of trusts has interrupted its special tax regime.

Taxation

Personal
A tax year coincides with the calendar year, and a resident is a person who spends 183 or more days in a year in Cyprus. Residents are liable for taxation on their world-wide incomes, while non-residents are taxed only on income generated in Cyprus. As for the EU requirements, Cyprus authorities are obliged to share information on savings returns received by nationals of other EU member states, and the data should be passed to individuals’ home countries. Income tax rate varies depending on the amount of income in a year.

Capital gains tax is levied at the rate of 20%; gains occurring from disposing shares listed on any recognized Stock Exchange are exempted from tax. Estate duty has been abolished in the year 2000. There is an annual real estate tax levied on the property, the rate of which differs depending on the market value of the property. There are custom duties, but after having entered the EU, most goods that arrive from the EU, are exempt from tax duties. Excise duties are applied on petrol, alcohol, soft drinks, tobacco and motor vehicles.

Corporate
Companies that are registered in Cyprus or foreign companies that have a branch or an office in Cyprus, or conduct business from the jurisdictions are liable to pay corporation tax. Cyprus has one of the lowest corporate taxation rates set at 10%.

Dividends and royalties that arise from assets kept outside Cyprus, as well as interest payments to non-residents are exempt from withholding tax. Other types of payments to non-residents are subject to 10% of withholding tax, but only 5% is applied for film royalties. The standard rate of VAT is 15%.

Cyprus Company And Country Advantages
 
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