One of the strategies to extract profits from owner-managed company is through employment income (salary, bonuses etc.). To begin with, this strategy is applicable to those who participate in the day-to-day running of the business in the position of employee or executive directors. Since the company and you are separate entities, you will need to sign an employment contract, de facto becoming employee of your company. In setting your employment contract keep in mind that the minimum salary in Cyprus required by law is: €835 per month at entry and increased to €887 per month after six months of employment.
One of the benefits of running your own business is that you have the freedom to decide how much of the profits should remain in the company and how much should be returned to you as an owner (shareholder). However, with that also comes one of the most classical tax-planning questions we are often asked: how do I get money out of my company in the most tax-efficient way?
Question: I was working in Russia until June 2010 after which I came and started full-time employment in Cyprus. I have paid 13% Russian income tax on my remuneration in Russia. Will I have to declare and pay any income tax in Cyprus on my Russian income and on what basis my Cyprus remuneration will be taxed?
Question: We would like to know how a non-resident company can apply for credit (between $2 and $70 million) and which Cyprus banks give corporate credit to non-residents?
Question: I am currently employed by a Cyprus-based Russian company and frequently go to work for our Russian office on matters related to information technology. My total income is composed of three elements: salary I receive from Cyprus, personal allowances paid by my employer for the business trips to Russia and additional remuneration from the Russian parent company for the work I perform there.
How will my income be taxed in Cyprus and Russia?