Substance in Cyprus
Let's help you build your presence in Cyprus
The international tax landscape is constantly changing; businesses must improve economic substance to create a redefined global tax strategy.
The OECD/G20 is currently undertaking The Base Erosion and Profit Shifting (“BEPS”) project, which will bring in fresh and tighter regulations on the entire international tax system. Multinational enterprises can only respond to this appropriately by establishing the appropriate levels of a substance in jurisdictions where their presence is currently poor. Asides from this, businesses will consider the rationalisation of the number of their global entities and focus on specific activities in areas where it is easier to establish a fully operational and optimised business presence.
Looking to establish your presence in Cyprus?
Cyprus is ideal for building business presence, considering its strategic location, optimised legal system, full EU membership, competitive corporate tax rate (12.5%), personal tax incentives, qualified local workforce, and an overall business-friendly landscape.
The Cyprus tax legislation considers a company to be a tax resident in Cyprus if the company is managed and controlled from Cyprus. The company must put in place the required corporate governance procedures and indicators of substance, to support its tax residency position. These include the below:
- Strategic decisions are taken during directors' meetings in Cyprus;
- The board of directors includes Cypriot residents who are well-qualified;
- Running an office in Cyprus with employees, where day-to-day business operations are executed;
- Full documentation of the decision-making and administrative process in Cyprus.
Combined with other Cyprus-based arrangements, the factors above can help mitigate other tax risks, including possible issues with beneficial ownership and transfer pricing, and controlled foreign company (“CFC”) rules.
Here is how we can help you
At DIONYSIOU LEGAL, we offer different services to help your business enhance its presence in Cyprus, including:
- The assessment of the present substance level of companies in Cyprus, alongside helpful recommendations that follow best practices;
- Offering professional help in setting up an office, hiring local employees, sorting migration formalities, and drafting contracts of employment;
- Offering customised legal and tax support on redomiciling companies to Cyprus;
- Scouting for suitable office space for business and residential accommodation for staff;
- Bespoke support on continuous administrative functions, such as HR, payroll, and accounting solutions.