Transfer to Cyprus of the "seat of incorporation" of a company
The Republic of Cyprus is amongst the jurisdictions which allow re-domiciliation (i.e. the transfer of the company’s “seat of incorporation”) in and out of Cyprus having enacted an amendment to the Companies Law and a set of regulations explaining the practical application of such amendment. The alternative to the re-domiciliation is to dissolve the existing company and transfer its portfolio of assets to an entity incorporated in the alternative jurisdiction.
Companies Law Cap. 113 (hereinafter “the Law”) provides for the following:
- Foreign companies can be re-domiciled into Cyprus, and
- Cyprus registered companies can be re-domiciled abroad
The Law and associated regulations create opportunities for international investors and those involved in trading as foreign companies can now become tax resident of Cyprus and take advantage of the features of the most favorable tax regime within the European Union:
- The lowest rate of corporation tax in Europe – 12.5%
- Tax-exempt dividend income*
- No withholding taxes on payments of dividends, interest and royalties* irrespective of recipient
- No taxation on profits from the sale of securities (no minimum holding period, percentage etc.)
- No taxation on profits of foreign permanent establishments
- No taxation on the liquidation of a Cypriot company
- Broad network of tax treaties
- Unilateral tax credit relief irrespective of the existence of a tax treaty
- No substance, debt-equity and thin capitalization rules
- Full adoption of the EU Directives
The Cyprus tax regime can now be utilised by foreign companies without the need to fully restructure and the business of the company can continue without interruption and hence a significant saving in administration and other costs.
- Application for re-domiciliation
A foreign company registered in a country which allows re-domiciliation and
with a provision in the Memorandum and Articles of Association for the possibility of re-domiciliation 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.
Once the application and accompanying documents are approved by the Registrar of Companies, the foreign company will obtain a temporary Certificate of Continuity and will be able to continue its business activities subject to the Cypriot Companies Law and Tax legislation.
- Companies carrying out licensed activities
Companies which carry out activities requiring a licence and regulated by legislation in the country of origin and for which similar licences are required in Cyprus, should provide the Registrar with an official permit from the relevant authority in the country of origin.
A foreign company undertaking an activity for which a licence is required in Cyprus, should obtain such a licence in accordance with the laws of the Republic of Cyprus before it commences carrying out its business activities in Cyprus. Such companies include Financial Services Companies, Insurance Companies and Banking Institutions.
- Registration in Cyprus
Upon examination of all the documentation, the Registrar provisionally registers the foreign company in Registry of Cyprus companies.
From the date of issuance of the temporary registration certificate, the foreign company is considered as a legal entity duly-incorporated in accordance with the laws of Cyprus and is temporarily registered in the Republic for the purpose of the Law.
Within six months from the issuing of the temporary registration certificate, the foreign company must present a certificate or any other similar document from the relevant authority of the country of its incorporation and any other evidence as may be requested, to the Registrar of Companies in Cyprus showing that it has been removed from the companies' registry in the country of origin.
Once the filing of all the above documentation is completed, the Registrar will issue a Certificate of Continuity confirming that the foreign company has been registered as a company continuing in the Republic of Cyprus.