Under the laws of Cyprus, foreign companies can be redomiciled in Cyprus following the international practice that permits companies to move their seat of incorporation. Through re-domiciliation, companies can avoid liquidation or dissolution of an existing company while transferring the portfolio of assets of an entity incorporated in the new jurisdiction.
A company can move to a new jurisdiction similar to when it changes its registered office or agent within the same jurisdiction. The process of moving a company’s domicile (or place of incorporation) from a jurisdiction to another by changing the country under where it is registered is known as corporate re-domiciliation. The company maintains its legal identity, client base, status, reputation, and even its bank accounts under this process.
Why Should Your Company Redomicile to Cyprus?
There are several reasons why a company should redomicile to Cyprus including, one of the lowest corporate tax rates in EEA, 12.5% (on Cyprus profits), and the holding of at least 1% of a foreign subsidiary’s share capital by a Cyprus holding company to receive tax benefits. Additionally, the legal system is based on the English common law system and there is no withholding of taxes on dividend distribution to non-resident foreign shareholders, be it company or individual.
Furthermore, there are less stringent regulations and scrutiny. Receiving dividends from another Cyprus tax resident company, abroad, or a permanent overseas establishment of a Cyprus holding company qualifies for tax exemption. Moreover, generated profits from transactions in shares, bonds, and other qualifying securities are exempt, and capital gains realised from sales of non-Cyprus assets, including real estate and foreign share capital, are exempt.
In the case of an existing company migrating or redomiciling to Cyprus, there is a preservation of the company’s existing legal status, goodwill, and operational history. Generally, re-domiciliation allows companies operating in countries with costly, difficult regulatory, high-tax, and high-risk environments to migrate to Cyprus without triggering assets disposal or diminution of the company’s goodwill or operating history.
What Are the Essential Conditions for Redomiciling a Foreign Company to Cyprus?
Only foreign companies registered in countries whose Memorandum and Articles of Association make a provision for possible re-domiciliation and allow re-domiciliation can apply to the Registrar of Companies in Cyprus. Consequently, according to the requirements of Companies Law Cap 113, the companies are registered in Cyprus as continuing companies.
Temporary Registration
After the issuance of the temporary certificate of continuation, from that date, the laws of Cyprus consider the foreign company to be a legal entity duly domiciled and incorporated. Also, according to the laws of Cyprus, the company retains its liabilities, and it is eligible to exercise all powers that registered companies possess.
Furthermore, the foreign company must present evidence of being struck off the companies registry in the country of initial incorporation before receiving the certificate of permanent re-domiciliation. The foreign company should present this evidence to the Registrar of Companies within six months of issuing the temporary registration certificate.