Offshore Banking Units (O.B.U.S)
Offshore Banking Companies as subsidiaries of foreign banking corporations or offshore branches of such corporations may be registered in Cyprus. International enterprises or their subsidiaries, established in countries where there is good banking supervision, could obtain a license from the Central bank of Cyprus to operate in Cyprus as an OBU.
Today in Cyprus are operating 28 Offshore Banking Units, 2 Administered Banking Units and 2 Cyprus representative offices from oversea Banks.
A captive Insurance Company is a wholly owned or controlled subsidiary company formed by a non-insurance parent (or association of companies or individuals) for the purpose of participating in the risks of the parent enterprise or its group (subsidiary or associate). The risks assured can be those that can be insured in the normal way, or those for which insurance coverage is difficult to obtain or highly costly.
Captive Insurance Companies
They are regulated by the provisions of the Insurance Companies Law, and may be registered in Cyprus as offshore companies under certain provisions and requirements imposed by the Central Bask. In addition to the usual conditions imposed by the Central Bank to offshore companies the Captive Insurance Companies must also comply with the Insurance Companies Law and in particular with the following:
(i) The minimum paid up share capital must be CYP 10,000.00
(ii) Full compliance with the provisions of the Insurance Law as to the filing of the accounts and other relevant documents (the Council of Ministers may allow certain modification of this requirement)
(iii) Proof no financing from local sources
(iv) Adequate cover to the satisfaction of the Super-intendent of Insurance, regarding claims from third parties, that these claims shall rank in priority to the claims of any other company in the group.
(v) All local expenses incurred must be covered by funds to be imported from abroad. The captive insurance company shall advise the Central Bank annually of all funds imported into Cyprus from abroad.
Besides the usual benefits and advantages available to offshore companies, Captive Insurance Companies may gain the benefit of obtaining insurance at lesser net cost and have a flexibility which can be related to all aspects of the sponsor s risk management programme.
Shipping Management Companies
Cyprus has been for years now a very attractive destination for the registration and management of Shipping and Maritime operations Companies .Since 1963 Cyprus created the legal infrastructure for the establishment of Cyprus as a maritime center aiming at the registration of vessels under Cypriot flag. Now Cyprus ranks 6th in the world regarding the number of ships registered under the Cypriot flag with over 2.600 ships and exceeding 26 million Gross Tonnage (GT). For more information o Shipping Companies click Hyperlink on Shipping Companies
Construction and Engineering Companies
They are particularly advisable for operations anywhere in the world, and especially for operations in the Middle East countries, and have been already conducting enterprises for American, British, Dutch, and Greek Interests. Cyprus as the country which offering a high degree of stability amongst the neighboring countries could be used as a set up for minimum taxation on potentially maximum operations especially derived from the establishment of the benefit of double tax- treatie.
Proved to be very attractive as they have been extensively used for American, Dutch, Austrian and British employment of expatriate staff, and by paying a low Cyprus tax will avoid the higher taxation in their home country, providing recruitment of labor for contract or other work undertaken outside Cyprus.
They can be also very beneficial in the occasions of countries whose national tax law allow, in the event of payment of tax in another country, to remit their salaries to their home countries without payment of any further local income tax, like in the case of Australian, Austrian, and French residents. Quite advisable of the above advantages a fully justified commercial justification could be applied in the case of provision of foreign labour in the South Mediterranean and Middle-Eastern countries.
Particularly advisable as they can be actively involved in the dealing and managing investments, providing investment advice or establishing and operating collective incentive schemes and financing of joint ventures or other attainments in countries with which Cyprus has a double tax treaty, in which withholding tax is either nil or very low.
In addition to that the benefit of an offshore finance company could be used in decreasing the taxable profits made by the subsidiaries by way of interest charges made on loans obtained or to on-lend funds to entities which belong to the same group as well as to non related parties.
Holding and Investment Companies
They can be used in conjunction with Cyprus treaties and could provide extremely advantageous results by centralizing group s investments through a central non-Cypriot company used as a basis for holding and managing their own investments worldwide. They could be also advantageously used with effective tax planning in conjunction or not with the use of treaty countries.
Companies of this kind are mostly used for holding participation in jointures or other acquisitions in countries of Eastern and Western Europe and the Middle East as well as to countries in Africa India and China reducing to the minimum level the dividend withholding taxes as well as avoiding any tax credits imposed on the group the company belongs. In addition to that the dividends derived from the non-Cypriot (offshore) company could be well used for reinvestment in other subsidiaries avoiding in this way any tax liabilities arising for the parent company according to the domestic taxation system, especially for services such as invoice factoring, staff recruitment, construction contracts, joint ventures, patent exploitation, e.t.c.
These account by far the greatest amount of Cyprus offshore companies. This kind of companies could be utilized for transit trade via the Cyprus seaports, as well as for activities in connection with trading in the geographical area of Cyprus or anywhere else in the world. They may also store maintain, break bulk or repackage their own transit goods in rented private or public warehouses. Trading companies are also allowed to derive income from portofolio investments in shares traded on the Cyprus Stock Exchange.
Moreover another advantage of trading companies is offered by extracting untaxed profits form countries which Cyprus has a double tax-treaty. In some cases they are used (especially by European-based companies) for undertaking the whole overseas trading and marketing activities entrusted to a Cyprus subsidiary. (company-branch) In general a very wide scope of for companies of this kind can be secured and serve interests for countries in any part of the world.
In case that a foreign company wishes to sell or manufacture its products in the Cypriot market must do so through a wholly or partially owned local company.
Particularly attractive for multinational as well as national companies aiming at centralized management control as well as for companies incorporated in distant tax heaven countries. The entrepreneurial environment, the developed infrastructure of Cyprus and the considerable tax advantages serve interests for Eastern and Western European as well as Middle and far Eastern regions. Moreover the growing management of overseas affairs of business or the rendering of services abroad from Cyprus, by expatriate executive gave Cyprus the reputation of an international business center with more than 2,000 International Business Companies maintain fully fledged offices.
This type of companies could be utilized for re-invoicing of goods, fabric and services from any region in the world for any intention and to any destination enjoying the low taxation status. They can be also very easily managed since all that is required for their maintenance is a registered office and capable personnel or accountants to organize invoices and transactions.
The Cyprus national tax systems in accordance with the laws relating to the operation of double tax treaties, create opportunities for efficient tax planning rendering Royalty companies (concerning the income received from the transfer of exploitation of intellectual and industrial property rights) extremely attractive. There is a variety of schemes and arrangements applicable so as to widen the number of countries from which royalties may be received untaxed or reduced tax. I addition to those operating from fully fledged offices in Cyprus, there are many Royalty Companies which maintain only a register ed address in Cyprus, and Cypriot or foreign directors.
Real Estate Companies
These companies may be very advantageously used both for investment and for dealing in land, especially from the effective application of the network double tax treaties. In the case of European countries exceptionally interesting arrangements may be made as there are already quite a number of companies related to real estate, representing a wide variety of interests, however Asian real estate companies have been incorporated in a quite large scale, recently.
Trust Companies may be used especially in conjunction with other tax advantages for managing trust funds or pension funds outside Cyprus, or Cyprus trusts on a professional level. There is no minimum capital requirement, and for the operation of such company prior authorization from the Central Bank of Cyprus must be obtained.
Internet and E-Commerce Companies
The beneficial tax regime applicable for IBCs can be also applied in the case of internet and e-commerce companies. The developed infrastructure of Cyprus and telecommunications are also important reasons for the attraction of a fat growing number of companies being incorporated with intention to host their e-commerce sites or ventures. The advantage of Cyprus double tax treaties can be also applied on the income derived from the activities of these companies which may finally achieve total avoidance of tax in both countries.
They usually operate both in the form of corporate entities as well as participating by forming a subsidiary in manufacturing activities, particularly in the Cyprus region, where a variety of tax and other important incentives are offered to companies of this kind, as well the benefit applied under the relevant double tax treaties.
Printing and Publishing Companies
Printing of books and journals in Cyprus by IBCs for sale and distribution above is considered to be an onshore business and apart from the usual tax advantages of an onshore company the low cost of local printing as well as the excellent infrastructure and good telecommunications make Cyprus an ideal place for the incorporation of a company of this kind. However Printing and Publishing companies incorporated and operating abroad may always use the benefits of the very low Cyprus taxation and double tax treaties by forming a subsidiary in Cyprus.