A Cyprus Holding Company is gaining international accreditation and is chosen by many entrepreneurs and multinational groups, for all or any of the following reasons and tax benefits offered. A Cyprus Holding Company is a power tool in the hands of the diligent interpreneur giving him the power to reduce his taxes in many cases to zero.
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It is well known in the international financial circles that the Cyprus holding company offers a great many tax advantages which make it a simple but powerful tool for international tax planning. We make the Cyprus Holding Company registration simple for you. Usually 5 working days are enough for the company registration. The procedure for the incorporation of a Cyprus holding company is fairly simple, fast and fuss free. Your presence is not necessary. Everything can be done through fax, email and courier. A Cyprus holding company registration, also allows for the use of nominee directors and shareholders for full confidentiality and tax residency of the company in Cyprus. Our firm can offer you full nominee services of directors, shareholders and secretaries if you require. In about 5 of days we can register your Cyprus Holding Company, with the Tax Authorities for your TIC number and in 2 days the vat registration number if required will also be secured. A Cyprus company is usually called a Cyprus IBC which means Cyprus International Company. For more details on how to register a Cyprus IBC follow the link. A Cyprus Holding company requires no special license to operate in Cyprus and worldwide in its capacity as a holding company.
One of the major advantages of a Cyprus holding company registration,is that distribution of dividends to non-tax resident beneficiaries (UBOs) is done without the need for cutting back withholding tax, irrespective of whether the beneficiaries hold their shares directly as shareholders or just as beneficiaries through nominee shareholders thus securing their anonymity. This is also true irrespective of whether the beneficiaries or shareholders are real persons or corporations.Another big advantage of the Cyprus Holding Company registration, is that where the shareholders or beneficiaries are not tax resident here, deemed distribution is also not applied, and again this is true for real persons and or corporations.A third very important advantage of the Cyprus holding company registration, is that if a tax resident company pays out dividends to another tax resident company no withholding tax applies except for indirect dividends paid after four years from the end of the tax year in which the profits arose. These provisions are valid for real persons or corporations.
The legislation for the special defense contribution tax provides for the deemed distribution of dividends to real persons or corporations every two years. See more information for the Cyprus holding company registration to understand how simple it is to register a company. A Cyprus holding company is just another Cyprus IBC and therefore its incorporation follows the same procedures and formalities. The only difference is that in the memorandum of association in the section for the activities of the company the first paragraph states that the company will carry out holding activities. See more on Cyprus Company registration.
Any dividends received by a Cyprus holding company, which is tax resident or non-tax resident which maintains a permanent establishment it the country, are not taxable! There are some exceptions to this rule however:
So if the foreign company paying the dividends engages its activities in more than 50% in investments and the dividends paid are of income of more than 50% from such investments such dividends will be taxable provided that the tax paid on such income abroad, is substantially lower than the Cyprus corporate tax which is 12.5% and is lower than that of many other countries in the EU and outside. If you want to do some reading on the subject and on tax planning just follow this link: Cyprus Tax Planning-Cyprus Taxes.
So if that income is taxed for example at 5% abroad, such income will be taxed under the special defence contribution law. This tax hike however can be compressed in two ways. First by taking refuge in the provisions of the double tax treaty of the third country in question. Tax credit is usually given for any foreign tax paid on the profits of the company which is making the dividend pay-out. Secondly the application of a unilateral tax credit relief, such as tax credit which can be given by Cyprus on any third country withholding tax paid on the dividends paid out. Tax is not paid on any dividends paid out to a tax resident company by some other tax resident company. However dividends paid indirectly after four years from the end of the tax year in which the revenue accrued by the dividend paying company. No special defense contribution tax is paid on dividends coming from dividends on which such tax has already been paid. If you need more technical material on Cyprus Company Incorporation its procedures, costs and other advice follow that link.