Touching on the basics of Cyprus private companies

ACypriot private company limited by shares is frequently used in corporate structures as an ultimate or intermediary holding company. The rationale behind its use is to minimise, or eliminate as the case may be, tax liabilities arising from dividend, interest or royalty income, as well as gains from the disposal of shares.

Cyprus benefits from one of the lowest tax regimes in the EU, as a uniform corporation tax rate of 12.5% on profits is applicable for all Cyprus companies. Due to its extensive double tax agreement (DTA) network, Cyprus is an ideal jurisdiction for investments to and from Asia and Central/Eastern Europe. The main purpose of a DTA is the avoidance of double taxation of income earned in any of these countries. Under a DTA, a credit is usually allowed against the tax levied by the country in which the taxpayer resides for taxes levied in the other treaty country.

Getting started

A shelf company is a company that has had no corporate activity. It was registered by a practising solicitor and was left with no activity at all on an office “shelf”, ready to be sold on to any interested person who desires the use of a Cyprus company without going through all the procedures of creating a new Cyprus company. The prime reason for buying a shelf company is to save on the time involved in creating a new Cyprus company from scratch. Where the incorporation of a Cyprus company starts anew, the completion of the procedure may take up to two weeks, in contrast to shelf companies that are readily available for near immediate use. A Cyprus company incorporated afresh and a shelf company are the same in all material respects.