Cyprus Company Formation

Cyprus Holding Companies: The use of holding companies is especially beneficial if you wish to have better control over the books in your company. The company can be used for optimizing the balance sheets and can create valuable tax deductions for companies with a limited circle of owners.

A holding company is a company that owns the shares in another company. You can for instance own all shares in the holding company while the holding company then owns (holds) the shares in your operating company. This carries several advantages. A European holding company, i.e. a Danish holding company, will then be able to create the following advantages:

• • The company profits can be invested outside of the usual work area by transferring the profits to the holding company that subsequently makes the investments.
• • If you wish to invest the profits from your operating company, you will normally have to pay taxes when you draw the money out of the company. By founding a holding company to transfer the money into, taxes won’t be due until the money is drawn out of the holding company. This leaves a larger sum to be invested and therefore makes larger returns possible.
• • If you pay the highest tax due to tax brackets, you are likely to save many percentages because in stead of paying income taxes you will pay the lower percentage for corporate taxes.
• • Assets from your company can be transferred into the holding company. In doing so your company decreases in value, which makes a potential generational succession much smoother and approachable.
• • If you wish to sell your operating company you will either have to pay capital gains tax or income tax depending on for how long you have owned the company. But if you’re not the official owner, and ownership instead is placed with a holding company, the operating company can be sold tax-free if the holding company has held the shares for a minimum of 3 years.

Holding companies have one significant disadvantage: it involves quite a few additional administrative tasks. If you wish to use Certus Corporate Services for your offshore solutions, we will take care of all administrative tasks that arise, and we will see to registration and all necessary communication with the local authorities. This way you will only have to deal with the daily management, but at the same time you get all the advantages connected with the holding structure.

Foreign Holding Companies
If you have not already founded a holding company but are planning on using the structure in the near future, it will be a good idea to consider Cyprus as the destination for you holding company. Cyprus is a member of the EU and therefore subject to all legislation originating from the institutions. But Cyprus also has its own efficient legislating in place next to the EU directives, and this gives better development opportunities for corporations. Cyprus is therefore our strong recommendation for holding structures.

Introduction to Cypriot Companies
Cyprus has one of the best tax-regulations in the EU when it comes to holding companies and operating companies. Corporate taxes in Cyprus are only 10% and have a double tax agreement with more than 35 countries.  The Republic of Cyprus has since 1st of May 2004, been a fully valid member of the EU.

Advantages of Cypriot Holding Companies
Profits from a Cypriot company are taxed with 10 %. In addition to this several circumstances help to make Cyprus the most advantageous destination for holding companies:

• • Dividend received from foreign non Cypriot companies is tax free.
• • Profits from sold assets (mostly shares in other companies) are tax-free.
• • Capital income is tax-free unless it originates from real estate in Cyprus.
• • Profits from activities in other offices, factories, construction sites etc. outside of Cyprus are tax-free.
• • Dividends given out to shareholder in a Cypriot holding company are tax exempt on Cyprus.
• • Royalties are tax-free
• • Capital gains are tax-free
• • Cypriot companies are exempt from taxation of proceeds from sale of real estate on non-Cypriot grounds

Above mentioned exceptions are very interesting and are some of the reasons why Cypriot holding companies are so attractive to international tax-planners, especially when this is done in combination with double-tax agreement countries. The advantages only apply when the company has a permanent operating address in Cyprus. This means that board decisions etc. must be made on Cyprus. A nominee director is therefore advisable.

Double Tax Agreements
When Cyprus is compared to other low tax countries, Cyprus has a clear advantage due to the many double tax agreements they have entered into. Cyprus has become very interesting in regards to tax-planning and the setting up of tax-efficient holding structures for European companies. This holding structure can include several operating companies, or they can be run separately. Call us today for a non-binding meeting so we can go through your options.

Complete Company Formation Package Includes:

• Name check
• Founding of company
• Registration with necessary authorities
• Certificate of Incorporation
• Memorandum of association 
• Registered address
• Power of Attorney
• Nominee Director
• Company-kit
• Yearly company fees
• Board resolution authorising the opening of bank account
• Register of directors
• Register of members 
• Local bank account incl. e-banking and the possibility of Debit and Credit card.
• Non-resident bank account incl. e-banking and the possibility of Debit and Credit card.

Package Price: 4,100€

To order the Cyprus Offshore Company Formation package please contact us or use our on-line order form. You can also contact us if you have more questions regarding an Cyprus Offshore Company.