Author: Prospectacy Business Services Team

There are reasons why Cyprus citizenship by investment can change your life. One of it is about optimizing your tax. Those who are looking for opportunities to optimize their tax can be attracted to the Cyprus’ law tax rates and there is also the possibility to restructure business and the optimization for tax.

Cyprus tax advantages in your business

Tax planning in Cyprus can reduce or fully eliminate your tax liabilities that are associated to some international activities. A structured Cyprus entity in a tax plan could:

• Reduce your taxation within the country in which your incomes came from.
• Reduce the amount from receiving money that were earned outside of the country.
• Reduce the taxation for ultimate shareholder in the structure of tax planning.
• Reduce the tax for international business activities, thus increases the return of investment.

Tips on how to optimize your tax and help your business save money

Shift of income for the following year                                          

Paying the taxes on income that you have received throughout the year is your responsibility. When the end of the year came, you can push some client and customer bills to the following year, that can give them a larger period and ensure that you will pay if that income will come to your company.

Charitable contributions

You can gain tax advantages if you donate to some charitable institutions. Donations can help to reduce your tax expenses. Aside from reducing your tax, you can also have a warm feeling that you do something for the other who are in need of help.

Invest equipment

If you will need additional equipment like office furniture, machines and computers, then you have to buy these before the end of the year comes. You can benefit from its depreciation that can lower your income tax.

Organization of expenses

Organizing all your business expenses during the whole year can help you by deducting them when the end of the year comes. Sometimes, small business didn’t keep track their expenses, so they are not deducting it. Make sure to keep of your business expenses and separate them from your personal expenses, because it can be a big help for your tax.

Working with tax laws’ Professional

Sometimes, tax law tends to change, and being updated to those changes is very important for you to comply with the law. The best way of keeping the right track with tax laws, is to work with some professional tax adviser.

Forming a limited liability company in Cyprus is very attractive owing to the advantageous tax systems prevalent in the country. Being a member of the European Union, the country offers one of the lowest tax percentages in Europe of 12.5%. The taxation policy is fully compliant with the OECD (Organization for Economic Co-operation and Development), so investors are guaranteed that there are no malpractices. Although the country is relatively smaller, it’s ideal to gain offshore benefits like so many of its counterparts in the region.

Cyprus Company Formation can answer your requirements for international tax planning.  There are many exemptions offered for foreign sources of income, withholding tax on outbound dividends, interests, and royalties. Profits gained from share transaction are also exempt in Cyprus. There are no exchange controls, weak capitalization rules, and no capital gains. The initial step should be to the have the approval of the Registrar of Companies and ensure that the proposed company is accepted. There are many agencies that will help you with the necessary documentation of memorandum of association, articles of incorporation, and other formalities. The first step is to decide on the type of company to form when investing in Cyprus.

The most popular types of companies to form are ‘Branch’, ‘Limited Liability’, and ‘Partnership’. By comparing the three options, you would understand which suits your business requirements. Forming a ‘Branch’ will mean that the foreign party is liable complexly for what is incurred within the Cypriot branch; it is required to be registered with the Registrar of Companies, and have all annual accounts to be filed in Greek. On the other hand, a ‘Limited Liability Company’ does not require a minimum share capital; it should also have a between one and fifty shareholders and an appointed director. All accounts must be audited and filed in Greek. If none of these features appeals to investors, they can also look at forming a ‘Limited Liability Partnership’ where the required partnership numbers should be between two and twenty members. At least one of the partners must be appointed in the capacity to absorb unlimited liability of the company. Although it is required to be registered formally via the Registrar of Companies, there is no mandated need for auditing accounts.

One may argue that the country is not particularly generous towards foreign investors with investment incentives; however, many investors do see the plus side of the low-taxation within the country. Apart from this, companies can benefit from the loans and grants available for investors in high-tech and economic sectors.