Since its accession to the EU in 2004, Cyprus’ regulatory framework has been a powerful tool for tax planners and investors worldwide. Foreign companies have been able to re-domicile in Cyprus and Cyprus-registered companies re-domicile abroad since 2006, with the enactment of an amendment to the Companies’ Law Cap. 113 (the ‘Law’). The country presents many good prospects for companies seeking to re-domicile, offering investors and traders the opportunity to benefit from its business-friendly environment and advantageous corporate tax regime. Benefits such as tax exemptions of both dividend and capital gains income as well as the absence of withholding tax for income distributions have already attracted hundreds of thousands of businesses to re-domicile in Cyprus, without the need to fully restructure, transfer assets and liquidate former entities. It also provides significant cost-savings and presents ideal opportunities to take advantage of Cyprus’ extensive network of double tax treaties and to bring offshore structures onshore without the loss of underlying assets. An existing company re-domiciling to Cyprus preserves its existing legal status, goodwill and operational history.
A foreign company, registered in a country allowing re-domiciliation and provided its constitutional documents allow it to do so, may apply to the Registrar of Companies in Cyprus to be registered in Cyprus as a continuing company pursuant to the provisions of the Law, which extensively prescribes the requirements that need to be fulfilled in order for the Cyprus Registrar of Companies to consent to the re-domiciliation of a foreign company into Cyprus. Companies engaged in licensed activities as well as public companies will have to meet additional requirements.
Once all the requirements of the Law have been properly complied with, the Registrar of Companies will issue a temporary certificate of continuation. Within a period of six months, to be further extended by three months from the issuance of the temporary certificate of continuation, the foreign company must present evidence to the Registrar of Companies that it is no longer registered in the country of initial incorporation to receive the certificate of continuation.
From the date of issuance of the temporary certificate of continuation, the foreign company:
- is considered as a legal person duly incorporated according to the Laws of Cyprus and that is temporarily registered in the Republic for the purpose of the Companies' Law Cap 113
- has the same liabilities and is eligible to exercise all powers that registered companies have according to the Laws of Cyprus
The registration of the foreign company is not lawful and is void if it is done:
- for the purpose of establishing a new legal entity
- to damage or affect the continuance of the foreign company as a legal body
- to affect the property of the foreign company and the way this company will maintain its assets, rights and obligations
- to render ineffective any legal or other procedures filed or to be filed against the foreign company
- to acquit or prohibit from any conviction, judgment, opinion, debt, order or liability against the Foreign Company or its officials or shareholders
Key Benefits of Re-domiciling in Cyprus
- Relocation to an EU jurisdiction
- Gateway to EU and regional markets (Middle East & Africa), and preferential access to high-growth markets with which Cyprus has established business ties (Eastern Europe, India, China, Russia, CIS countries)
- Favourable tax and regulatory regime, and extensive Double Tax Treaty network
- Business-friendly and competent authorities
- Notional Interest Deduction (NID) on new capital (restricted to a maximum of 80% of the taxable income generated by the new capital introduced into the company)
- Established business centre with strong track record of successfully servicing international clients
- Highly skilled and multilingual service providers with international experience
- Significant cost savings
- English common law legal system, one of the most reliable and respectable legal systems worldwide
- Preservation of company’s existing legal status, goodwill and operational history