Note the distinction between resident tax and non-tax resident companies. Cyprus is becoming increasingly popular as a business location. No other country in the EU offers similar tax breaks at the same time, EU wide legal certainty. The growing interest in Cyprus limited companies to optimize tax but also leads to a growing number of firms, which it takes much less with accurate advice and harm clients over the medium term rather than to create advantages. For this reason, Shanda consult published this press release about some important information about the societies in Cyprus and their tax treatment.
Companies (international business company) no longer exists the IBC recommended by many consulting companies in Cyprus for over 5 years! Often it is however simply an inaccurate choice of terms in the context of application or advice. Well but, as a consultant is that it is not precise with his choice of words, leaving your review. Although it is in Cyprus also other Societies are (partnerships, AG-like public limited companies”, etc.), the limited liability company is in almost all cases (limited liability company” “) in question, not only for foreigners, since it is the locally common in Cyprus company form. From the perspective of company law, there is no differentiation between domestic and foreign companies, or between companies in Cyprus with domestic or foreign, or resident in Cyprus or non resident shareholders. However, Cyprus tax law distinguishes between residents “and tax foreigners”, or between, so the Cypriot terminology, tax-resident “and non-tax resident” companies. Companies which have not only its registered headquarters in Cyprus, registered in Cyprus, but its Managing Director (= directors) are resident in Cyprus, whose centre of business Decisions so is in Cyprus, considered to be tax-resident companies. Tax-resident companies are subject to under the simply structured Cypriot tax law, a 10% corporate tax. There are no other taxes on the profits of the company, some a few, rarely applicable exceptions.
Non-tax resident companies, however, are subject to Cyprus of any tax liability. The Centre of business decisions must be outside Cyprus, that is to say, the Managing Directors (directors =) must be resident outside Cyprus. Also non-tax resident companies may talk to business persons residing in Cyprus or companies. Should they do this, the profit of 10% corporation tax resulting from these transactions is subject to. Still, an important feature is that tax-resident companies full will benefit of existing double taxation agreements, while non-tax resident companies of the existing Tax treaties may not benefit. So usually a non tax-resident company, is unnecessary for taxpayers resident in Germany because due to non applicability of the double taxation agreement between Germany and the Republic of Cyprus, as well as due to lack of the main characteristic of the establishment (place of business decisions must be Cyprus ‘ “) the entire profit of the Cypriot, not tax-resident company would need to be taxed according to German rates in Germany. Often applied the exceptions are cases in which the German taxpayer (natural or legal person) outsources its business with foreign customers in the Cypriot society. In this case, accounting directly between the Cypriot society and the client foreign (from the German perspective) is performed. Beneficial for internationally active companies EU directives (E.g. EU parent subsidiary directive) come on non-tax resident companies not in application.