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Incorporating a Cyprus Company

Cyprus as Member State of the European Union has developed into an ideal destination for doing business for foreign enterprises and individual investors who wish to take advantage of the suitability of the Cyprus legal entities.

When it comes to business through Cyprus, investors and businessmen have the option of using one of the following legal entities:

• a limited liability Company
• a partnership
• a branch of a foreign Company

A Cyprus Company is one of the most popular and effective method of tax planning. A Cyprus company can either be resident in Cyprus (provided its management and control is in Cyprus) or it can be non-resident (if its management and control is outside Cyprus).

The key condition of incorporating a Cyprus Company by a non-resident is the presence of the treaties for the avoidance of double taxation between the country of registration and the countries where the Cyprus Company or its subsidiaries will have activities.
The existence of these treaties, combined with the low tax paid by a Cyprus company offer the possibilities for effective international tax planning.

Tax Advantages of a Cyprus Company
A uniform 12.5% corporate tax rate, applicable to the worldwide income, is now levied on all resident companies

Dividend income from abroad to Cyprus is wholly exempt from corporation tax provided the direct holding is at least one per cent (1%) of the share capital of the overseas company. This exemption will not apply if the company paying the dividend engages in more than fifty per cent (50%) of its activities in producing investment income and the foreign tax burden on the income of the company paying the dividends is substantially lower than that in Cyprus.
There is no withholding tax on the payment of dividends, interest and royalties (provided the intellectual property rights are not used in Cyprus) to non-residents of Cyprus.
The new tax legislation adopts the appropriate European Union directive which enables reorganizations, mergers, acquisitions and amalgamations of companies without tax implications.
Dividend income and profits from the sale of securities are exempt from corporation tax.
With 2 exceptions, profits from a permanent establishment abroad are exempt from corporation tax.
There are no time restrictions on the carrying forward of tax losses.
There is group relief for the utilization of tax losses.
The registration procedure of a Cyprus Company:

1. Name of the Company

The first step in the process is to obtain approval of the proposed name of the company from the Registrar of Companies. The Registrar is unlikely to accept a name if: it is too similar to that of an existing company, it is considered misleading, too general or pompous, it suggests a royal, national or international connection or it includes certain words such as “Co-operative”, “Insurance”, “Bank”, “Financial Services. The name must include the word “Limited” or its abbreviation “Ltd” to signify limited liability status.

2. Company’s Memorandum and Articles of Association

This is the constitutional charter of the Company and is drafted by a local advocate. It is divided into two parts:

Once approval for the company name is obtained, the Memorandum and Articles of Association of the company are prepared and submitted for registration to the Registrar of Companies.
The Memorandum of Association primarily includes the objects and powers of the Company particularly as regards its dealings with the outside world, its limited liability character and its authorised capital.
The Articles of Association comprises the Regulations under which the Company operates as a legal entity and regulates the rights of the shareholders amongst themselves.

3. Share Capital

The share capital can be expressed in any currency and there is no minimum paid up capital. Authorised or Nominal Capital is the total capital, which the Company is allowed to issue to shareholders. Both Authorised and Paid up Capital may be increased very easily at any time by a Resolution of the Shareholders and as provided in the Company’s Articles of Association.

4. Directors

The minimum number of directors is one, who can be either an individual or a legal entity. The same requirement is provided for the shareholders. The difference is that the nationality of the directors is crucial, while the nationality of shareholders is immaterial.

5. Secretary

The appointment of the secretary is made by the directors and the articles of association should normally contain an appropriate provision to this effect. The existence of a secretary is a requirement of the law. For practical purposes a body corporate (i.e. a company) may be appointed secretary. A number of secretarial companies which can act as secretaries to Cyprus companies are available and operate satisfactorily.

6. Registered office

Every company must have a registered office from the day it commences business or from the fourteenth day after its incorporation, whichever is earlier. The registered office is the place where writs, summonses, notices, orders and other official documents can be served upon the company. The registered office is usually the place where the company’s Register of Members is kept, unless the company informs the Registrar of Companies of another place.

For more information about Cyprus Companies you may visit the site of the Registrar of Companies and Official Receiver of the Republic of Cyprus here .

Our law firm may assist you with the incorporation of a Cyprus Company and advice on structure of cross-border operations in a tax efficient manner.

For more information visit our website

http://paraskevasllc.com/incorporating-a-cyprus-company/
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There has been a recent increase in the interest of third country nationals obtaining immigration permits in the Republic of Cyprus, as Cyprus is a popular and very appealing destination for third country nationals who would like to obtain a Permanent Residency Permit in an EU country.

Non-EU nationals wishing to reside permanently in Cyprus can do so by applying for an Immigration Permit. This Permit is granted for an indefinite duration to non-EU nationals who comply with the requirements of applying under each Category.

The Immigration Permit grants non-EU nationals, as well as their wife/husband and children under 18 years old, the right to permanently reside in the country and travel to Cyprus without immigration entry procedures.

Third country nationals can apply for immigration permits subject to Cyprus Immigration Laws under 6 Categories, which are referred to in Regulation 5 of the Aliens and Immigration Regulations, as:



Immigration Permit in Cyprus
Category A: for persons who intend to work as self-employed in agriculture, cattle breeding, bird breeding or fish culture in the Republic of Cyprus, provided they have possession of land or have permission to have possession of land and have fully and freely at their disposal a capital of €430,000.00. Such employment should not negatively affect the general economy of the Republic of Cyprus.

Category B: for persons who intend to work as self-employed in mining enterprises in the Republic of Cyprus, provided they have in their possession such a permit and have fully and freely at their disposal a capital of €350,000.00. Such employment should not negatively affect the general economy of the Republic of Cyprus.

Category C: for persons who intend to work as self-employed in a trade or profession in the Republic of Cyprus, provided they have or can acquire such a permit and have fully and freely at their disposal a capital of €260,000.00. Such employment should not negatively affect the general economy of the Republic of Cyprus.

Category D: for persons who intend to work as self-employed in a profession or science in the Republic of Cyprus, provided they have academic or professional qualifications, for which there is demand in Cyprus.The applicants must also possess sufficient funds or have a secured income.

Category E: for persons, who have been offered permanent employment in the Republic of Cyprus, provided the employment will not create unjust local competition.

Category F: Persons who possess and have fully and freely at their disposal a secured annual income, high enough to give them a decent living in Cyprus, without having to engage in any business, trade or profession. The annual income required should be at least €10,000 for a single applicant and moreover at least €5000 for every dependent person, but the Immigration Control Board may demand additional amounts as necessary. Most applicants come under this Category, the majority of them being pensioners or retired persons.
For the granting of an Immigration Permit, an application is submitted to the Civil Registry and Migration Department directly or through the District Aliens and Immigration Branches of the Police. The application should be accompanied by the appropriate documents, depending on the Category for which it is submitted.



Applications for Category F which are the most usual should be accompanied by the original of documents regarding the income of the applicants.
The applications are examined by the Immigration Control Committee which submits a relevant suggestion to the Minister of the Interior for a decision to be taken.
An Immigration Permit will be automatically cancelled if the interested person fails to acquire residence in Cyprus within one year from the approval of the application, in case he/she is residing outside Cyprus. It will also be cancelled if he/she acquires permanent residence abroad or be absent from Cyprus for a period of two years



New Accelerated Procedure for Permanent Residency in Cyprus
Regulation 6(2) of the Aliens and Immigration Regulations provides for the fast-track process to obtain the Permanent Residency permit. The conditions which have to be met for a non EU national to obtain the Permanent Residency are:

The applicant must prove that he has a secured minimum annual income of €30.000 and that this income is derived from abroad and not from working in Cyprus. Moreover, the required minimum annual income is increased by €5.000 for each dependent person.
The applicant must submit the application form together with the Title of ownership or contract of sale of a property in Cyprus worth a minimum of €300.000. He should also provide proof of payment for at least €200,000. The contract of sale must be deposited to the Land Registry before the applicant submits his application for Permanent Residence.
The applicant should provide a confirmation letter from a Cypriot Bank stating that he has deposited a minimum of €30.000 in a 3-year Fixed Deposit Account.
The applicant must have no Criminal Record and provide sufficient proof from the relevant authorities of his country.
The applicant is not allowed to engage in any profession in Cyprus and should submit a statement to this effect.
The applicant has to visit Cyprus at least once every two years.
It usually takes around 2-3 months for the examination, processing and approval of the application.
Any third country national that has applied for an Immigration Permit under Category F can submit additional documents in order to have their application examined according to the provisions of Regulation 6 (2) of the Aliens and Immigration Regulations on a much faster basis. The application will be examined on a fast track basis by the Civil Registry and Migration Department and will be submitted immediately to the Minister of Interior for a decision.



Due to the changes that may arise in the legislation and/ or procedures, this article does not constitute legal advice but is a summary of residence permit applications in Cyprus. For up to date and detailed advice please contact a legal professional.

http://paraskevasllc.com/permanent-residency-permits-in-cyprus-for-non-european-union-nationals/

https://paraskevasllc.com/
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Incorporating a Cyprus Company

Cyprus as Member State of the European Union has developed into an ideal destination for doing business for foreign enterprises and individual investors who wish to take advantage of the suitability of the Cyprus legal entities.

When it comes to business through Cyprus, investors and businessmen have the option of using one of the following legal entities:

• a limited liability Company
• a partnership
• a branch of a foreign Company

A Cyprus Company is one of the most popular and effective method of tax planning. A Cyprus company can either be resident in Cyprus (provided its management and control is in Cyprus) or it can be non-resident (if its management and control is outside Cyprus).

The key condition of incorporating a Cyprus Company by a non-resident is the presence of the treaties for the avoidance of double taxation between the country of registration and the countries where the Cyprus Company or its subsidiaries will have activities.
The existence of these treaties, combined with the low tax paid by a Cyprus company offer the possibilities for effective international tax planning.

Tax Advantages of a Cyprus Company
A uniform 12.5% corporate tax rate, applicable to the worldwide income, is now levied on all resident companies

Dividend income from abroad to Cyprus is wholly exempt from corporation tax provided the direct holding is at least one per cent (1%) of the share capital of the overseas company. This exemption will not apply if the company paying the dividend engages in more than fifty per cent (50%) of its activities in producing investment income and the foreign tax burden on the income of the company paying the dividends is substantially lower than that in Cyprus.
There is no withholding tax on the payment of dividends, interest and royalties (provided the intellectual property rights are not used in Cyprus) to non-residents of Cyprus.
The new tax legislation adopts the appropriate European Union directive which enables reorganizations, mergers, acquisitions and amalgamations of companies without tax implications.
Dividend income and profits from the sale of securities are exempt from corporation tax.
With 2 exceptions, profits from a permanent establishment abroad are exempt from corporation tax.
There are no time restrictions on the carrying forward of tax losses.
There is group relief for the utilization of tax losses.
The registration procedure of a Cyprus Company:

1. Name of the Company

The first step in the process is to obtain approval of the proposed name of the company from the Registrar of Companies. The Registrar is unlikely to accept a name if: it is too similar to that of an existing company, it is considered misleading, too general or pompous, it suggests a royal, national or international connection or it includes certain words such as “Co-operative”, “Insurance”, “Bank”, “Financial Services. The name must include the word “Limited” or its abbreviation “Ltd” to signify limited liability status.

2. Company’s Memorandum and Articles of Association

This is the constitutional charter of the Company and is drafted by a local advocate. It is divided into two parts:

Once approval for the company name is obtained, the Memorandum and Articles of Association of the company are prepared and submitted for registration to the Registrar of Companies.
The Memorandum of Association primarily includes the objects and powers of the Company particularly as regards its dealings with the outside world, its limited liability character and its authorised capital.
The Articles of Association comprises the Regulations under which the Company operates as a legal entity and regulates the rights of the shareholders amongst themselves.

3. Share Capital

The share capital can be expressed in any currency and there is no minimum paid up capital. Authorised or Nominal Capital is the total capital, which the Company is allowed to issue to shareholders. Both Authorised and Paid up Capital may be increased very easily at any time by a Resolution of the Shareholders and as provided in the Company’s Articles of Association.

4. Directors

The minimum number of directors is one, who can be either an individual or a legal entity. The same requirement is provided for the shareholders. The difference is that the nationality of the directors is crucial, while the nationality of shareholders is immaterial.

5. Secretary

The appointment of the secretary is made by the directors and the articles of association should normally contain an appropriate provision to this effect. The existence of a secretary is a requirement of the law. For practical purposes a body corporate (i.e. a company) may be appointed secretary. A number of secretarial companies which can act as secretaries to Cyprus companies are available and operate satisfactorily.

6. Registered office

Every company must have a registered office from the day it commences business or from the fourteenth day after its incorporation, whichever is earlier. The registered office is the place where writs, summonses, notices, orders and other official documents can be served upon the company. The registered office is usually the place where the company’s Register of Members is kept, unless the company informs the Registrar of Companies of another place.

For more information about Cyprus Companies you may visit the site of the Registrar of Companies and Official Receiver of the Republic of Cyprus here .

Our law firm may assist you with the incorporation of a Cyprus Company and advice on structure of cross-border operations in a tax efficient manner.

For more information visit our website

http://paraskevasllc.com/incorporating-a-cyprus-company/
Add a comment...


Cyprus International Trusts

A comprehensive definition of “trusts” under Cyprus law does not exist. However, the court, through case law, has deemed that a trust arrangement is a structure whereby the holder of a property (the “trustee”) has an obligation to manage that property for the benefit of another (the “beneficiary”).

The trust is created by transferring the legal ownership of the trust property from the previous owner (the “settlor”) to the trustee, though the beneficial ownership over that asset belongs to the beneficiary. The terms upon which the trustee should manage the property are usually written and expressed in a trust deed.

The validity of the trust will depend on the existence of the following three certainties:

Certainty of intention – express intention of the settlor to create the trust;
Certainty of subject matter – readily identifiable assets that will form the trust property;
Certainty of objects – beneficiaries must be ascertained or ascertainable.
Cyprus International Trusts Law
Cyprus trust law is mainly regulated by the Trustee Law, Chapter 193 and the International Trusts Law of 1992, and is essentially based on the English system.

General
Under the Cyprus International Trusts Law, an international trust is described as a trust created by a non-resident settlor for the benefit of non-resident beneficiaries.

The law goes further in providing that:

The settlor of the international trust, being any person who is of full age and of sound mind, must not be a resident of Cyprus in the year preceding the year of the creation of the international trust;
No beneficiary, other than a charity, should be a resident of Cyprus in the year preceding the year of the creation of the international trust; and
There must be at least one trustee resident in Cyprus at all times.
Perpetuity
A Cyprus trust has no limit on its duration and may be valid and enforceable without containing a fixed maturity date.

Cyprus law to apply
Any issue relating to a Cyprus international trust shall be determined in accordance with the applicable law of Cyprus and no reference to the laws of any other jurisdiction will be made. Therefore, the validity, interpretation or effect of any trust or transfer of property to a trust will be examined on the basis of the laws of Cyprus only and will not be affected by any inheritance or succession laws in force in any country.

Trustees
The administration of the trust property by the Trustees should be made prudently and in strict compliance with the terms of the trust.

Any action taken by the Trustees contrary to or in excess of the terms of the trust deed will be deemed as a “breach of trust” and such Trustees will be personally liable for the full extent of any loss incurred as a result of such breach.

The Cyprus International Trusts Law provides the trustees with extensive investment powers, ensuring the Trustee’s capability of performing his tasks. Pursuant to these powers, the Trustee may hold, maintain or invest in any movable and immovable property in Cyprus and abroad.

Reserved powers to the settlor
The settlor under a Cyprus trust is provided with a right to reserve certain powers, whether retained or given to him in his capacity as a protector or inspector for the application of the trust or otherwise.

The powers that may be reserved by the settlor are outlined in section 4A of the relevant law, some of which are set out below:

the amendment or revocation of any terms of the trust;
the allocation, distribution, payment or other disposition of income or capital from the trust property or the issuance of binding directors to the trustee for that purpose;
the appointment or termination of any trustee, inspector, protector or beneficiary;
changing the applicable law governing the trust or place (forum) of management of the trust;
the restriction of the exercise of any power of the trustee, for example requesting that these be exercised only subject to the approval of the settlor or any other person expressly mentioned in the trust deed.
The retention of any of the above powers by a settlor of an international trust shall not, in accordance with Cyprus law, in any way affect the validity of the trust or delay the execution of the trust and should not give rise to an intention of the settlor to defraud its creditors.

Registration and cost
Registration
Certain information on Cyprus International Trusts, such as its name, date of establishment and trustees, need to be recorded with the relevant authorities in Cyprus within 15 days from the trust’s establishment, though this registration does not include the requirement for disclosure of the trusts’ beneficiaries.

Cost
While the costs for registration are approximately EUR 80, a fixed stamp duty of EUR 430 is payable on the creation of an international trust.

Taxation
Taxation on Cyprus trusts will be considered on the basis of the beneficiaries’ residence.

Where the beneficiary is resident in Cyprus, the income and gains of an international trust from sources within and outside Cyprus are subject to any taxation which is imposed in Cyprus.

On the other hand, where the beneficiary is not resident in Cyprus, only the income and gains of an international trust from sources within Cyprus will be subject to taxation in Cyprus.

It is possible for trusts to come under the score of double taxation treaties. This will depend on whether the other signatory state recognizes trust structures and principles of equity and whether the trust itself meets the eligibility criteria set out in the given treaty.

Advantages of a Cyprus trust
In addition to the favorable tax regime applicable on Cyprus trusts, as described above, we set out below a brief summary of a few of the many other advantages of a Cyprus trust.

Asset protection
A Cyprus trust cannot be set aside by the settlor’s creditors unless and to the extent that the creditors can prove that the trust was created specifically for the purpose of defrauding such creditors. An action by any creditor of the settlor challenging the validity of the trust, on grounds of fraud, must be brought within two years from the date of the transfer of the trust property to such trust.

Pre-Migration arrangement
A Cyprus trust may prove to be an efficient pre-migration vehicle, as high net-worth individuals moving to a high tax country may opt to place some of their funds in an Cyprus International Trust, before such move.

Protection and flexibility of overseas investments
It may be used as a tax planning device for investments overseas. By investing in overseas business through a Cyprus International Trust, both settlor and beneficiaries will be offered with the maximum possible protection and will be able to avoid remittance of their profits from such investments to the country of their residence, which will also enable them to retain the flexibility of their overseas funds.

Estate planning
An individual, through the use of a Cyprus trust, can determine its succession and inheritance plan without being affected by any inheritance laws of any country.

Flexibility
A trust under Cyprus law may be removed from the Cypriot jurisdiction and vice versa. In an ever-changing business world, the availability of the choice between applicable laws is proved to be a significant benefit.
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