Abolition of the 0.6% variable charge on the share capital of a Cypriot company when establishing a Cypriot company and when increasing a Cypriot company’s share capital.

Within the framework of the legislative reform and reorganization of the Cyprus Registrar of Companies, one of the most important amendments that come into force now is the abolition of the 0.6% variable charge on the share capital of a Cypriot company when establishing a Cypriot company and when increasing a Cypriot company’s share capital.

What does it mean for Cypriot Companies?

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On 14 June 2018, the Central Bank of Cyprus has issued guidelines to Cyprus banks to open new bank accounts or to continue maintaining existing bank accounts in companies considered “Cyprus shell companies” or “Cyprus letter-box companies”.

On 2 November 2018 the Central Bank of Cyprus has issued further guidelines which enter into force immediately setting out a revised definition for “Cyprus shell companies” or “Cyprus letter-box companies”.

Now the new definition for “Cyprus shell companies” or “Cyprus letter-box companies”, as defined by the Central Bank of Cyprus is as follows:

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Overview

Cyprus Banking can offer all the facilities required by businessmen or individuals.

Who can open a Cyprus bank account?

Any physical person over the age of 18 years and any legal person (Cyprus Company or corporation) can open a bank account.

Is your physical presence necessary?

Physical presence is not necessary when the client is introduced by an approved introducer (in this case PKF Cyprus can act as an introducer for the opening of bank account). This is important as it save precious time, unnecessary expenses, inconvenience and travelling in Cyprus.

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The publication sets out how Cyprus intends to practically implement the provisions of the Withdrawal Agreement concerning residence rights of United Kingdom (UK) nationals and their family members, including family members who are third country nationals, in view of the UK leaving the European Union (EU).

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Cyprus and the UK signed a double taxation elimination protocol which will allow individuals to choose within a set period of time, which basis of taxation they want to apply to their government service pensions.

This choice can be made from January 1, 2019, until December 31, 2024.

UK Government service pensions are currently taxable only in the country in which the recipient is resident, but under a 2018 Convention, they will be taxable only in the country which pays the pension.READ MORE

UK ships started re-flagging to Cyprus to preserve European Union tax arrangements before UK departs from the bloc. Re-flagging to Cyprus is done to preserve the tonnage tax arrangements under which ships remain flagged within EU. Cyprus’s tax system allows shipping companies to pay corporation tax on the basis of their ship’s tonnage rather than profit.

Since the establishment of the Cyprus shipping Ministry last year, companies registered in Cyprus under the tonnage tax system increased 13.69%. Cyprus is the third largest fleet of the EU and the 11th biggest merchant fleet worldwide.

Cyprus has become an attractive destination for Greek business seeking a friendlier business climate, with many companies opting to register a subsidiary or even fully relocate to Cyprus

Companies like Hellenic Petroleum and betting firm OPAP have set up subsidiaries in Cyprus where as Jumbo took the decision and moved its base to Cyprus, leaving a subsidiary in Greece. Other firms which moved their business to Cyprus are the Fourlis Group of Companies franchisee of IKEA, Intersport stores Leroy Merlyn, ITC Publicworld  set up by the Germanos group, Ifantis, Autohellas, the Derlicious chain of restaurants, Coffee Island and many others.

Some of the reasons led Greek businesses moving to Cyprus are:
+ Cyprus financial background,
+ A member of the EU with access to EU fundamental rights and access to important European directives that promote, support entrepreneurship within the EU and between EU countries.
+ Cyprus is European country where there is freedom of movement of citizens, trade and capital
+Stable economic environment
+ Stable tax system
+ Providing an appropriate legal framework for setting up and maintaining a Company – Cyprus Company
+ No capital controls
+ Providing multiple options in regards to organisations, restructuring businesses, strategic planning and raising of new capital
+ Providing an appropriate legal framework for asset protection and hereditary issues, such as the creation and management of trusts
+ Provision of exit strategies
+ Euros is the main currency of transaction
+ Same language
+ An adequate place to set up headquarters for their business

In addition Greece corporate tax is 29% and dividend distribution tax 15%, while in Cyprus corporate tax is 12,5% and dividend distribution tax 0% for non-Cypriot shareholders residing in Cyprus

The case of Cyprus

The viability of international tax planning and business structures has been affected by a coordinated effort by the G8 to address tax evasion and ultimate beneficial ownership of offshore companies.

As from 2014, the Organisation for Economic Cooperation and Development (OECD) focused on beneficial ownership principles and on Base Erosion and Profit Shifting (BEPS) in order to close gaps in international taxation for companies that allegedly avoid taxation or reduce tax burden.

In Cyprus, for Cyprus company residency purposes, a Cyprus Company needs to demonstrate that management and control is effectively exercised in Cyprus
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The Cyprus film industry scheme provides Cypriot and foreign producers with incentives, cash rebates and/or tax credits of up to 35 per cent on qualifying production expenditures and also predicts tax allowances of 20 per cent for investment in infrastructure and equipment.

Eligible expenses covered by the Cyprus film industry scheme:

1. Provision of production company services
2. Labour costs (including of foreigner employees)
3. Wages for cast, extras and crew

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Three satellite casinos are now opening one each in Nicosia, Larnaca and Paphos, while that in the free Famagusta area should be up and running before the summer of 2019

Casinos are run by Melco’s Cyprus Casinos (C2), which opened a temporary casino in Limassol in last June pending the construction of an integrated casino resort

Nicosia satellite casino the biggest of the satellite casinos will open in Engomi. It will have 50 gaming machines and five gaming tables. The other satellite casinos will have only gaming machines. In Larnaca, it will operate at the airport and in Paphos near the town’s municipal parking.

“Cyprus Casinos C2”, the first licensed casino in the Republic of Cyprus, has launched its official website. Available in English and Greek, it can be accessed at www.cypruscasinos.com .

Cyprus is expanding its role as a location in which to establish Cyprus investment funds, both EU regulated Undertakings of Collective Investment in Transferable Securities (UCITS) and alternative investment funds. Cyprus Funds have full access to EU legislation establishing pass porting rights for funds to be freely distributed in other EU jurisdictions. Cyprus has begun to show its potential as an attractive alternative within the EU investment funds market. A number of EU directives, strengthening the degree of harmonisation across all EU member states such as the UCITS IV Directive and the Alternative Investment Fund Managers Directive (AIFMD), are expected to effectively increase the attractiveness of EU jurisdictions. The island has already seen increased interest and has attracted international industry leaders. READ MORE

PKF Cyprus Nicosia office is excited to announce the launching of PKF Cyprus legal services division.

PKF Cyprus Nicosia office now launches a unique one-stop centre, aiming to provide full, total and comprehensive corporate and legal services solutions in Cyprus to its clients both in Cyprus and abroad. The PKF Cyprus legal services division is located in new completely separate building facilities in Nicosia in the same building as the PKF Cyprus Nicosia office.

The PKF Cyprus Nicosia office will now be privileged to provide to the most respectable corporations both in Cyprus and abroad with an all-embracing, across the board range of corporate services, mostly in the areas of: READ MORE

The PKF Worldwide Tax Guide 2018 – 2019 is an annual publication that provides an overview of the taxation and business regulation regimes of the world’s most significant trading countries. This year’s edition comprises 134 jurisdictions. It provides information
on significant trade countries tax systems and tax rates, personal income tax, corporate tax, capital gains tax, VAT rates, double tax treaties etc. In addition PKF worldwide tax guide 2018 -2019 can be a useful reference in general tax planning and tax optimization.

Please click below to download full version
PKF WORLDWIDE TAX GUIDE 2018 – 2019

The Cyprus tax diary provides information on the deadlines of the various tax obligations of Cyprus companies. The Cyprus tax diary provides information to Cyprus Companies on provisional tax assessments and payments on final corporation tax assessments and payments…READ MORE

Over the past years, Cyprus was developed into one of the most favorable places for international business. The Cyprus low tax regime combined with Cyprus excellent geographical position, infrastructure and Cyprus ability to offer sophisticated planning structures, the ability to set up and manage Investment Funds (Cyprus Alternative investment funds – AIFs), the enactment of the Cyprus International Trusts Law which provided for the formation and administration of international trusts ,the excellent geographical position, infrastructure and good quality of life, the recent developments like the construction of luxurious Marinas, the decision to build a mammoth casino resort by year 2020 and its excellent infrastructure in banking and telecommunication where some of the key factors for its success.

Cyprus is now encouraging High-net worth individuals moving to Cyprus by giving personal taxation incentives and benefits

Individual’s most important Cyprus taxation advantages and benefits when moving to Cyprus:

+ An individual can become Cyprus tax resident and obtain a Cyprus Tax Identification number (TIN) within a short period of time;

+ A Cyprus tax resident individual by obtaining the Cyprus non domicile resident status is totally exempt from Cyprus taxes on dividend, interest and rental (property situated in Cyprus) income; READ MORE

Cyprus is now encouraging High-net worth individuals to move to Cyprus by giving personal taxation incentives

The introduction of “Domicile” regime aims to exempt High-net worth non-domiciled individuals moving to Cyprus from personal taxes (Special Contribution for Defense). High-net worth non-domiciled individuals (non-doms) will need to declare Cyprus as their taxable jurisdiction and receive an exemption from Cyprus personal taxes (Special Contribution for Defense) on rents (3% on 75% on rent income), interest (30%) and dividends (17%) which are applicable to Cyprus domiciled individuals.The exemption will apply for 17 years as from the date of declaring Cyprus as their taxable jurisdiction. READ MORE

Over the years PKF Nicosia, Cyprus partners and staff have participated and contributed in the structuring of Multinational Companies (MNCs) and High Net Worth Individuals (HNWIs) including inter alia the proper allocation of Multinationals group risks, on the choice between capitalizing a business enterprise with debt or equity, on finance companies and payments in respect of loans between foreign companies, on intellectual property rights etc.
Click here to see PKF Cyprus Nicosia full services