Cyprus offshore companies: Establishment and maintenance costs

Written by Veronica Goncharenko on . Posted in Articles

Cyprus’ history in providing base for international companies dates back from the 1970’s; however, it was not until the 1990’s that the establishment of offshore businesses significantly starts increasing. Up until 2003 there was a separate treatment for offshore companies (also known as, International Business Companies) as compared to the "local" ones. Today, difference between them does not exist in the eyes of the law or the taxman. In that context, an offshore company denotes a company that is held by foreign shareholders and established outside the country of its main operations or formed to meet a particular purpose (i.e. as SPV/SPE, special purpose vehicle/entity).

Strictly speaking, the cost of establishing and maintaining a company is a factor of its size and activities. Despite that, we shall attempt to at least lay down the base costs of setting up and running a personal or an SME offshore company.

Domain names and hosting solutions for your company

Written by Veronica Goncharenko on . Posted in Articles

The presence of your business in cyberspace is important not only because of the immense opportunity to stimulate and develop your business across the world, but also because of the unique way your corporate branding and marketing solution can complement each other.

In this article you will find out about the two main steps in starting your corporate web site: registering a domain names and finding a web hosting solution.

Registering a .cy domain name
Registering a domain name with country code .cy is relatively straightforward process but only available to natural and legal persons who have permanent residence in Cyprus. Furthermore, there is a restriction on the number of domains that can be registered: up to ten per company and one per individual. Despite these limitations, there is still plenty of choice out there to acquire a domain which is not .cy and often at a fraction of what you will pay in Cyprus. Just Google “buy domain name”.

Strategies for extracting profits from owner-managed companies: Director's remuneration

Written by Veronica Goncharenko on . Posted in Articles

In this article we will explain the tax implications of director’s remuneration as a mean of extracting profits from owner-managed company.

Types of directors
In principal, there are two types of directors, executive and non-executive. Both types represent office holders owing the same legal duties and responsibilities but differing in their business participation and the way their remuneration is taxed.

Executive directors have an active, leadership role in the day-to-day business and usually perform operation or strategic business function (managing director, finance director, marketing director etc.). Non-executive directors have a monitoring and supervisory role and are not involved in the day-to-day management.

Special defence contribution for individuals: Tax on bank interest

Written by Veronica Goncharenko on . Posted in Articles

In this article we will explain special defence contribution on bank interest and the situations when it may or may not apply.

What is special defence contribution?
Despite its awkward name, special defence contribution (SDC) is simply a type of direct tax imposed on only three types of income: interest, dividend and rent. To clear any doubts, it should be noted that special defence contribution and income tax are governed by completely different taxation laws. Special defence contribution is based on the Special Defence Contribution Law 117(I)/2002 with rates that are flat (either 10% or 3%) no matter what your total income is. On the other hand, income tax is covered by the Income Tax Law 118(I)/2002 with tax rates that are progressive.

Strategies for extracting profits from owner-managed companies: Benefits-in-kind

Written by Veronica Goncharenko on . Posted in Articles

What are benefits in kind? In general, these are direct or indirect benefits, which you as an employee or executive director of your company receive in addition to your salary. Some benefits in kind are taxable while others are not. The most common benefits you can claim from your company are: health insurance, company car, mobile, job-related benefits, accommodation, childcare, school tuition, travel and entertainment allowance, cheap or interest-free loan.

Fortunately or not, the Cyprus Income Tax Law 118(I)/2002 has only two instances mentioning the taxation of benefits in kind, both equally vague and unhelpful, so determining what is taxed is not straight forward and much of it boils down to your particular circumstances and a good professional tax advice.