INVESTMENT SCENARIOS

Cyprus is not considered to be a tax haven destination. The term “offshore companies” is used only to denote the fact that company is an International Business Company (IBC), a company that has:

• Non-residents beneficial owners
• Activities outside Cyprus

There is no longer a distinction between local companies and IBC’s.

An offshore company can be used in the following areas:

Trading companies

Straight forward trading companies engaged in international trade through:

-       buying and selling goods

-       providing consultancy and other services

-       acting as commission agents

taking advantage of the advantages offered to offshore companies.

Re-invoicing companies

Acting as middlemen, offshore companies can help transfer the profits from their beneficial owners to themselves by channeling buying and selling through them.

Royalty companies

The offshore company is the owner of the technology and collects royalties from:

-       its beneficial owners

-       other investors

Finance companies

Funds available to the offshore company can be used to finance its beneficial owners. Interest will be paid to them (which is a deductible expense) after the deduction of withholding taxes in accordance with the double taxation treaties.

Investment/dividend companies

Dividends received by the Cyprus offshore company are totally exempted from income tax. Also through the Double Taxation Treaties there may be very favourable withholding taxes. 

Property owner companies 

The offshore company becomes the owner of immovable property in the country of its beneficial owner, in which case:

-       the funds used for the acquisition belong to the offshore company

-       on disposal of the asset by reason of sale, inheritance or as a gift no taxes are paid either locally or in Cyprus, because the shares of the offshore company are transferred instead of the property