How to Open an Offshore Company in Cyprus

An offshore company represents a business which is set up outside the country where an individual resides and pays taxes. 
The main reasons why business owners choose to open offshore companies in Cyprus are the tax reductions which they can enjoy and the asset protection offered in this country. 
In this article, our lawyers in Cyprus describe briefly how to open an offshore company in Cyprus. Throughout the years our team of lawyers has helped many local and foreign investors register offshore companies here, so you can trust us if you need help is setting up such a company in Cyprus.

The main features of a Cyprus offshore company

The offshore company is preferred by investors who want to have their companies registered outside their countries of residence. This is why, an offshore company registered in Cyprus will not be deemed a local company as it will not be considered a Cyprus tax-resident company. Even if registered in this country, the offshore company will be managed from the owner’s home country.

Offshore companies allow for many activities to be completed, however, the main restriction imposed on them refers to not completing any activity in Cyprus. In other words, the offshore company will only sell products or offer services outside the country it is registered in.

One of the advantages of opening an offshore company in Cyprus is that there are no disclosure requirements when it comes to the shareholders of the company. However, if any authority requires information on the owners of such a company, the Cypriot Companies Registrar and tax authorities will release such information.

Another benefit of the offshore company is that it can be turned into an onshore company without too much effort.

Our law firm in Cyprus can help foreign investors who want to set up offshore companies here. Our lawyers can also explain the features of such companies and how they can help overseas investors.

Requirements for opening an offshore company in Cyprus

The offshore company falls under the same regulations as local companies and the main law to provide for its establishment is the Company Law.

In order to open a Cypriot offshore company, one must fulfill the following conditions:

1. the minimum number of shareholders for setting up an offshore company in Cyprus is one;
2. the company must have at least one director who needs not be a Cyprus resident;
3. the company must also have a secretary who, just like in the case of the director must not be a Cypriot resident;
4. the company is not allowed to issue bearer shares and must have a minimum share capital of 1,000 euros;
5. the company must also appoint a local agent who will handle the relation with the authorities in Cyprus;
6. an offshore company is required to have a registered seat in Cyprus, even if it will not complete any activity here.

One of the corporate requirements after the offshore company has been established is to hold an annual general meeting of the shareholders. Compared to Cyprus-resident company, the offshore company can hold this meeting anywhere.

Our attorneys in Cyprus can offer more information on the requirements related to opening an offshore company.

Aspects to consider when opening an offshore company in Cyprus

An offshore company in Cyprus is named an international business company. Here are the main aspects to take into account when opening such an establishment in this country:

• Decide on a legal form: an offshore company in Cyprus represents a separate legal entity and can be a private limited liability company either by:
  • Limited shares; or     
  • By member personal warranty.

Generally, in our Cypriot lawyers‘ experience, the offshore companies in Cyprus are opened as limited liability companies;

• Choose a company name: it has to be approved by the Registrar of Companies;
• Memorandum and articles of association: the shareholders’ number in a limited liability company in this country can be from 1 to 50. Our Cypriot lawyers can offer more details on this matter;
• Establish the minimum share capital: a limited liability company in Cyprus may have a minimum share capital of EUR 1,000;• Name the directors of the business and the company secretary;
• Set up the registered office: each company in Cyprus must have a registered office and address in the country which should be submitted to the Registrar of Companies;
• Other considerations: our attorneys in Cyprus can provide further information on what these other considerations consist of.

Creating an offshore company by buying a shelf company in Cyprus

One of the easiest ways of establishing an offshore company is by purchasing a ready-made company in Cyprus. This is usually the fastest way of setting up any type of business in Cyprus, however, in the case of offshore companies there will be no need for obtaining additional licenses and permits which is why the shelf company is a good option for foreign investors.

Our Cypriot lawyers can explain the procedure of buying a shelf company and turning it into an offshore one. We can also help with the procedure.

Taxation for offshore companies in Cyprus

The corporate taxes which are applied to domestic businesses generally apply to Cypriot offshore companies, too. 
The profit taxation for offshore companies and branches with a management board in the country is 12,5%, being one of the lowest in Europe.
There are no withholding taxes on dividends, royalties and interests paid by international business companies, either. Another important aspect to consider when opening an offshore company in Cyprus is that it will not be subject to the Special Defence Contribution.

When it comes to the annual filing requirements in terms of taxation, the representatives of a Cyprus offshore company must submit annual returns and annual accounts with the Companies House and the tax authorities.

What are the advantages of an offshore company in Cyprus?

Establishing an offshore company in Cyprus can bring many benefits to those deciding for this business form. Among these, the most important ones refer to:

• Cyprus which is an EU member state, and which has access to many double tax treaties;
• offshore companies can use nominee services for some of the most important functions in the company;
• the offshore company is a great tool for those who want to use it as a holding company with subsidiaries in Cyprus;
• there are no restrictions when it comes to foreign ownership or natural persons and legal entities setting up such a company;
• the Cyprus offshore company can be used for many purposes, including as an investment company;
• the annual maintenance fees of an offshore company in Cyprus are relatively low compared to other business forms.

If you need to know more about Cyprus offshore company formation, we invite you to get in touch with our reputed law firm in Cyprus.