REGISTRATION OF OFFSHORE COMPANIES IN CYPRUS


Notion

An offshore company is an organization limited by shares, registered according to the legislation of Cyprus Republic. So an offshore company is a legal personality and has all the rights and duties of a Cyprus legal personality, except the right to make commercial bargains with Cyprus legal personalities and persons.

The founders of an offshore company must be in direct or indirect way foreign legal personalities or persons, whose source of income is out of Cyprus.


The process of registration

A. Permission of the Central Bank of Cyprus

For giving the permission Central Bank of Cyprus demands:

a) Letters of recommendation from Banks about each of the founders. The letters must carry recommendation about financial state, decency and credibility of the founders.
b) Articles of association of the company.
c) Short information about the founders and the company state.

B. Registration at the Registration Office.

For registration it is necessary

a) To get a permission for the proposed name of the company.
b) Articles of association and memorandum of the company in Greek.
c) Declaration of observance of the Cyprus Companies Law by the Memorandum and the Articles of Association signed by a practicing lawyer.
d) Names of the first Directors and Secretary of the company.
e) The registered address in Cyprus.

The process of legalization takes several days after handing in all the necessary documents and information. (Annex B application for the registration of the company).


Articles of Association and the Memorandum

A. Memorandum of the company consists of:


B. The Articles of Association consists of the items regulating:


The shareholders and the stock of shares

A. Only foreign people can be the shareholders, as it was mentioned before. For registration of the company, there has to be a minimum 2 and a maximum of 50 shareholders. If the owners of a company want to be anonymous, the shares can be registered with nominee shareholders and the Central Bank of Cyprus, according to the rules of practice has no right to divulge any information about the beneficial owners. Our office can offer you people of that kind from our staff.

B. The share stock of the company defines the shareholderers responsibility in relation to the creditors of the company. The stock with which the offshore companies become registered is following:

a) With the amount of 1,000 shares, CY.P. 1 per share if the company is directed from out of Cyprus.
b) With the amount of 10,000 shares, CY.P. 1 per share if the administration office is situated in Cyprus. In this case the company has the right to obtain duty-free goods for itself and for its employees, as well as the right to be granted residential permits for its employees and directors.


Council of Directors-Secretary

Any company is run by the Council of Directors, to promote the main aims of the company's activities. The Council of Directors consists of minimum 2 and maximum 5 persons, if there are no other conditions in the articles of the company. If the company has only one Director, he can perform the secretary's duties as well. The ruling of every day activities is the duty of a manager(s) assigned by the Council. The Council, as a rule, is elected at an annual meeting of company shareholders. A man who is not a shareholder may become a director as well.

A Secretary of a company is in charge of the archives of the company and of correspondence on behalf of the company and other contacts with the state authorities. These duties are usually performed by the lawyers of the company.


Taxation

Offshore zones, as a rule, offer privileged taxation to the offshore companies. In Cyprus the net profit of the company is taxed by 4.25%. The dividends of shareholders are not taxed. The income of foreign employees of the company are taxed in the following cases:

a) If they live and work in Cyprus and pay the income tax from their salary/wages in amount of 50% of the general tax, for Cypriots, from 0 to 20% (Table 1).
b) If they live and work not in Cyprus, they don't need to pay any taxes if their salary is paid from one of the Cyprus Commercial Banks. If the salary is paid from a foreign Bank in Cyprus, the employees are taxed in amount of 10% of the tax applicable for Cypriots (Table 1).

Taxed annual income
General tax
Tax for foreign employees
in Cyprus/out of
CY.P. 0-5000
0%
0%
CY.P. 5001-8000
20%
10%-2%
CY.P. 8001-11000
C30%
15%-3%
CY.P. 11000
40%
20%-4%

Table 1

Cyprus has agreements with following countries about not paying double tax:

Austria			Italy
Bulgaria		Kuwait
Canada			Norway
Czechoslovakia		Sweden
Denmark         	Russia
France          	Great Britain
Germany         	USA
Greece          	Yugoslavia
Ukraine

We hope that this information will be useful for you. If you need more detailed information in future, please do not hesitate to contact us.