Andros Pelecanos’s Cyprus Company and Offshore Services
In recent years Andros Pelecanos in Cyprus has established himself as an important international business centre due the Offshore Companies excellent infrastructure, geographical location and Cyprus’s advantageous tax system. The island has one of the lowest fixed rates of corporation tax in the European Union (EU). On 1st May 2004, Cyprus became a full member of the European Union. The country's tax system was reformed and as from 1st January 2003 the tax legislation is EU and OECD compatible.
This means that organisations can easily set up a company in Cyprus and operate with the minimum trade tariffs to the rest of Europe. The free movement of goods and workforce between the EU countries helps to reduce costs and barriers to entry, placing Cyprus companies in a very competitive position.
There are multiple benefits to Cyprus company formation, both financial and structural. One of the major benefits is the fixed rate corporation tax which is set at 10%. This is significantly lower than most European countries, with typical rates ranging between 20% up to 35% (such as in Malta). This fact alone means that establishing a company in Cyprus increases the bottom line profitability of a business.
Due to the high level of expertise to be found in Cyprus, company formation is both cost effective and quick to complete. It is also extremely attractive to companies that operate in countries familiar with British based legislation as the legal system in Cyprus has been strongly influenced by British law. Businesses used to this system find it very easy to do business here, especially as English is widely spoken and used. The Continental System of administrative Law has been introduced and applied by virtue of the Constitution.
Many organisations also use Cyprus as a location to set-up subsidiaries of their main registered company which can then be used to channel earnings and distribute dividends in a more efficient manner. The advantage of doing so is that the total capital tax paid on earnings from shares and other holdings can be reduced. The subsidiaries can simply act as asset holding investments of the main parent company and in some instances the additional bonus of Cyprus company formation means that dividend income is also tax exempt.
Cyprus company formation also allows businesses greater flexibility with their corporate structuring, with many organisations that choose to establish themselves here splitting into multiple divisions, thus spreading the asset base of the holding company and allowing the profit earning elements to be distributed into lower tax paying areas.
The development of Cyprus’ favourable tax scheme and the drive by the government to encourage the island as an international business centre has greatly increased the amount of business it conducts with the rest of Europe and indeed the world. This in turn continues to benefit the local economy which has been strengthened by the influx of investment from abroad.