Cyprus is one of the best economic zones for offshore or simply international business. More and more entrepreneurs are considering relocating their companies to the country, evaluating, in particular, the legal landscape and opportunities for savings within it.

 

This region falls within the competence of AA Lawrange, so it’s no surprise that we often receive inquiries about consulting new or existing businesses on the legal aspects of operating in Cyprus.

 

We recently completed one such project, so we now have the opportunity to share the process of its implementation and, in fact, the results.

 

Check out the material to learn more interesting details!

 

No Names, but with Nuances

One of our clients was interested in the issue of taxation in Cyprus for entrepreneurs — not only for those holding resident status, but also for “non-domiciled” individuals, foreign investors, and so on. In other words, he was at the stage of choosing a business format and was still considering the jurisdiction as one of the possible options.

 

The purpose of the inquiry was to assess the potential of the region, its tax regime, and the possibilities of operating in different formats. Simply put, to obtain the most detailed and comprehensive consultation regarding the jurisdiction and to create a clear algorithm for establishing a business in the country.

 

There is a request — we get to work. All so that the client can make an informed decision and choose the best possible business model in Cyprus.

 

Comprehensive Consultation and Preparation for Operations

Since the project was purely advisory in nature, we focused on studying the client’s needs and creating a list of tasks for our own team. All this was done to analyze the nuances and offer the client the optimal solution to their issue. In particular:

 

  • To compare the tax regimes applied to entrepreneurs with different legal statuses.
  • To determine the model that suits our client’s business and justify it with real calculations.
  • To develop an action plan for establishing or relocating a business to Cyprus.

 

It’s easy to say, but harder to do — due to rather complex and extensive legislation, which must be reviewed and presented in the form of a clear explanation for the client. However, nothing is impossible for a team that has its own representatives in Cyprus.

 

Not Tax Evasion, but Smart Optimization for Foreign Investors

Despite the rather lenient legal framework of the country, there is still a reserved attitude toward those who try to avoid taxation of business activities. Fortunately, our client understood this well before starting to form the company. That’s why we focused on providing the client with systematized information, including an analysis of several parallel options and business models. Specifically:

 

  • We studied Cyprus legislation and the Income Tax Law, as well as provisions regarding the Special Defence Contribution (SDC).
  • We verified the conditions for acquiring Cyprus tax residency, including the stay criteria (183 or 60 days).
  • We clarified the taxation specifics for dividends received by individual residents from Cypriot or British companies.
  • We re-identified the “non-domicile” status for foreigners, which affects exemption from certain taxes.
  • Additionally, we analyzed financial aspects such as the possibility of obtaining preferential taxation for individuals.

 

We also analyzed the client’s inquiries, including the specifics of their activities and financial transactions, and provided consultations with clarification of details regarding the income structure.

 

As a result, we were able to prepare a comprehensive report for the client, which described in detail all available taxation options and their personal opportunities in the region.

 

From Consultation to Legal Support: A Change in Client Status as a Result of Cooperation

As a result of this project, we can state that we:

 

  • Provided a comprehensive consultation on the specifics of taxation in Cyprus.
  • Explained to the client that individuals who are residents of Cyprus are exempt from dividend taxes due to benefits provided by the legislation.
  • Emphasized the advantages of the “non-domicile” status, which allows avoidance of the Special Defence Contribution (SDC).

 

We also achieved the outcome where the client completed the consultation project and submitted a request for legal support in the process of company registration in Cyprus.

 

Ready to discuss your own project or terms of cooperation? Contact an AA Lawrange manager for a preliminary consultation!