CYPRUS AS A BASE FOR INTERNATIONAL ACTIVITIES · PDF filecyprus as a base for international...
Transcript of CYPRUS AS A BASE FOR INTERNATIONAL ACTIVITIES · PDF filecyprus as a base for international...
OXFORDTAX SOLUTIONS
By Athos Fouttis
OXFORD MANAGEMENT LTD
CORPAG SERVICES (CYPRUS) LTD
By Athos Fouttis
OXFORD MANAGEMENT LTD
CORPAG SERVICES (CYPRUS) LTD
CYPRUS AS A BASE FOR INTERNATIONAL ACTIVITIES
TAX PLANNING
CYPRUS AS A BASE FOR INTERNATIONAL ACTIVITIES
TAX PLANNING
London 4 hoursMoscow 3 hours
Abu Dhabi 3 hours
Cairo 1 hour
New York 12 hours
OXFORDTAX SOLUTIONS
500 weekly flights500 weekly flights TelecommunicationTelecommunicationConference facilitiesConference facilities
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340 sunny days340 sunny daysBeautiful beachesBeautiful beaches
Snow mountainsSnow mountains
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WHY CYPRUS
Double tax treaties
Strategic location
Friendly relations
Excellent telecommunications
Bonded & warehouse facilities
Modern banking
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No exchange control
Profits after tax repatriated
Tax sparing credits
WHY CYPRUS
“Low tax” not a tax haven
OXFORDTAX SOLUTIONS
WHY CYPRUS
Easy residence permit
No estate duty
No capital gains tax
No social insurance contributions for non EU persons
No stamp duty
Duty Free items for company & employees
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WHY CYPRUS
Easy accessibility by air & sea
International agreements
Low cost of living
Low set up & running costs
Qualified personnel
Non discriminating legal system
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WHY CYPRUS
Educated and hospitable people
No crime
Pleasant climate
Confidentiality
Nominee / Trustee functions
English used in business
OXFORDTAX SOLUTIONS
TAX RATE
COMPANY TAX 10%
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SHIPOWNING COMPANIES 0%
SHIPMANAGEMENT COMPANY- Tonnage Tax or income tax 4.25%
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TAX EXEMPT PROFITTAX EXEMPT PROFIT
NO CAPITAL GAINS TAXNO CAPITAL GAINS TAX
••Only on sale of immovable Property situated in Only on sale of immovable Property situated in CyprusCyprus
••Sale of shares in companies which own Sale of shares in companies which own immovable property in Cyprus and not listed on immovable property in Cyprus and not listed on any recognised stock exchange.any recognised stock exchange.
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TAX EXEMPT PROFITTAX EXEMPT PROFIT
Dividend from abroad Cyprus company holds> 1% share capital
Exemption does not apply if foreign entity
> 50% of its income from investment activityAND
Pay tax substantially lower than Cyprus
Dividend from abroad Dividend from abroad Cyprus company holdsCyprus company holds> 1% share capital> 1% share capital
Exemption does not apply if foreign entityExemption does not apply if foreign entity
> 50% of its income from investment activity> 50% of its income from investment activityANDAND
Pay tax substantially lower than CyprusPay tax substantially lower than Cyprus
OXFORDTAX SOLUTIONS
TAX EXEMPT PROFITTAX EXEMPT PROFIT
Substantially lower = Less than 5% but it covers not only tax paid by the paying company but also tax paid by lower level subsidiaries.
Investment activity = No clear definition
Substantially lower = Less than 5% but it covers not Substantially lower = Less than 5% but it covers not only tax paid by the paying company but also tax paid only tax paid by the paying company but also tax paid by lower level subsidiaries. by lower level subsidiaries.
Investment activity = No clear definition Investment activity = No clear definition
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TAX EXEMPT PROFITTAX EXEMPT PROFIT
Divided income (if both criteria is not met.)15% - Defence Tax
Tax credit for any withholding tax or tax sparing credit (where applicable) is allowed.
Divided income (if both criteria is not met.)Divided income (if both criteria is not met.)15% 15% -- DefenceDefence TaxTax
Tax credit for any withholding tax or tax sparing Tax credit for any withholding tax or tax sparing credit (where applicable) is allowed.credit (where applicable) is allowed.
OXFORDTAX SOLUTIONS
CYPRUS DOUBLE TAX TREATIES
CanadaCzech RepublicDenmarkEgypt
GermanyGreeceIrelandPolandRussia
ItalyMaltaRomaniaSlovakiaS. Africa
SwedenU.K.YugoslaviaIndiaSyria
TAX SPARING CREDITS
OXFORDTAX SOLUTIONS
CYPRUS HOLDING STRUCTURESCYPRUS HOLDING STRUCTURES
Zero tax on dividends received from overseas (provided that the Cyprus company holds > 1% of the shareholding of the paying company).Payments of dividends, interest and royalties to non residents are not subject to any withholding tax.Large network of tax treaties including USAParent subsidiary directives.
Zero tax on dividends received from overseas Zero tax on dividends received from overseas (provided that the Cyprus company holds > 1% of the (provided that the Cyprus company holds > 1% of the shareholding of the paying company).shareholding of the paying company).Payments of dividends, interest and royalties to non Payments of dividends, interest and royalties to non residents are not subject to any withholding tax.residents are not subject to any withholding tax.Large network of tax treaties including USALarge network of tax treaties including USAParent subsidiary directives.Parent subsidiary directives.
OXFORDTAX SOLUTIONS
PARENT SUBSIDIARY DIRECTIVEPARENT SUBSIDIARY DIRECTIVE
Dividends – NilAssociated = > 20% shareholdingFrom 1/1/07 > 15%
1/1/09 > 10%
Dividends Dividends –– NilNilAssociated = Associated = > 20% shareholding> 20% shareholdingFrom 1/1/07 > 15%From 1/1/07 > 15%
1/1/09 > 10%1/1/09 > 10%
PARENT SUBSIDIARY DIRECTIVEPARENT SUBSIDIARY DIRECTIVE
Interest/ Royalties – Nil
Associated = > 25% Shareholding
Interest/ Royalties Interest/ Royalties –– NilNil
Associated = Associated = > 25% Shareholding> 25% Shareholding
INDIRECT TAXINDIRECT TAX
VAT VAT 15%15%
OXFORDTAX SOLUTIONS
INCOME TAX ON INDIVIDUALSINCOME TAX ON INDIVIDUALS
0 CY 1000 0%10001 15000 20%
15001 20000 25%20001 And over 30%
0 CY 1000 0 CY 1000 0%0%10001 15000 10001 15000 20%20%
1500115001 20000 25%20000 25%20001 And over 20001 And over 30%30%
OXFORDTAX SOLUTIONS
BENEFITS FOR USING THE TAX BENEFITS FOR USING THE TAX TREATIESTREATIES
Avoid double taxationReduce withholding taxStructure legal operations to minimize taxationInternational law to protect you (treaty above local law in case of conflict)
Avoid double taxationAvoid double taxationReduce withholding taxReduce withholding taxStructure legal operations to minimize taxationStructure legal operations to minimize taxationInternational law to protect you (treaty above local International law to protect you (treaty above local law in case of conflict)law in case of conflict)
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BENEFITS FOR USING THE CYPRUS TREATIES
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• Very favourable terms. Usually very low or nil withholding tax
•Large selection of treaties
•Treaties with most Central & Eastern European countries. (The developing Countries)
Austria
Belgium
Belarus
Bulgaria
Canada
China
Czech Republic
Denmark
Egypt
France
Germany
Greece
Hungary
India
Ireland
Italy
Austria
Belgium
Belarus
Bulgaria
Canada
China
Czech Republic
Denmark
Egypt
France
Germany
Greece
Hungary
India
Ireland
Italy
Kuwait
Mauritius
Malta
Norway
Poland
Romania
Russia
Slovakia
South Africa
Singapore
Sweden
Syria
Thailand
United Kingdom
U.S.A
U.S.S.R
Yugoslavia
Kuwait
Mauritius
Malta
Norway
Poland
Romania
Russia
Slovakia
South Africa
Singapore
Sweden
Syria
Thailand
United Kingdom
U.S.A
U.S.S.R
Yugoslavia
CYPRUS DOUBLE TAX TREATIES
OXFORDTAX SOLUTIONS
PROPOSED AGREEMENTSPROPOSED AGREEMENTS
UNDER NEGOTIATION
Algeria Kazakhstan SingaporeAlgeria Kazakhstan SingaporeArmeniaArmenia MalaysiaMalaysia SloveniaSloveniaBaltic States Moldova Baltic States Moldova Spain Spain Bangladesh PortugalBangladesh Portugal Sri LankaSri LankaGeorgiaGeorgia Qatar TurkmenistanQatar TurkmenistanVietnam Seychelles IndonesiaVietnam Seychelles Indonesia
OXFORDTAX SOLUTIONS
D.T.T. D.T.T. -- CYPRUS AND RUSSIACYPRUS AND RUSSIA
DIVIDENDS 0% 5%* 0%
ROYALTIES 0% 0% 0%
INTEREST 0% 0% 0%
MANAGEMENT FEES 0% 0% 0%
DIVIDENDS 0% 5%* 0%
ROYALTIES 0% 0% 0%
INTEREST 0% 0% 0%
MANAGEMENT FEES 0% 0% 0%
OLD D.T.T.OLD
D.T.T.NEW D.T.T.NEW D.T.T.
CYPRUS LAW.
CYPRUS LAW.
* 10% If capital < US$100.000* 10% If capital < US$100.000
D.T.T. D.T.T. -- CYPRUS AND USACYPRUS AND USA
DIVIDENDS 15/5 * 0%
ROYALTIES 0% 0%
INTEREST 10% 0%
DIVIDENDS 15/5 * 0%
ROYALTIES 0% 0%
INTEREST 10% 0%
D.T.T.D.T.T. CYPRUS LAW.
CYPRUS LAW.
OXFORDTAX SOLUTIONS
* Holding conditions apply* Holding conditions apply
Holding conditionsHolding conditionsDuring the part of the paying corporationDuring the part of the paying corporation’’s taxable year which s taxable year which precedes the date of payment of the dividend and during the wholprecedes the date of payment of the dividend and during the whole e of its prior taxable year (if any), at least 10% of the outof its prior taxable year (if any), at least 10% of the out--standing standing shares of the voting stock of the paying corporation was owned bshares of the voting stock of the paying corporation was owned by y the recipient corporation; andthe recipient corporation; and
Not more than 25% of the gross income of the paying corporation Not more than 25% of the gross income of the paying corporation for such prior taxable year (if any) consists of interest or divfor such prior taxable year (if any) consists of interest or dividends idends (other than interest derived from the conduct of banking, insura(other than interest derived from the conduct of banking, insurance nce or financing business and dividends or interest received from or financing business and dividends or interest received from subsidiary corporations, 50 % or more of the outstanding sharessubsidiary corporations, 50 % or more of the outstanding shares of of the voting stock of which is owned by the paying corporation at the voting stock of which is owned by the paying corporation at the the time such dividends or interest is received) time such dividends or interest is received)
OXFORDTAX SOLUTIONS
WITHOLDING TAXWITHOLDING TAX
NILNIL-- Tax payments out of CyprusTax payments out of CyprusNIL - payments out of CyprusNIL NIL -- payments out of Cypruspayments out of Cyprus
OXFORDTAX SOLUTIONS
NOT TREATY RATES IMPOSEDBY VARIOUS COUNTRIES
Country Dividends Interest Royalties% % %
UK 23 20 33USA 30 30 30Canada 25 25 25Australia 30 10 30Germany 25 35 25France 33.33 15 25Japan 20 20 20Russia 20 15 15China 20 20 20Spain 25 25 25
OXFORDTAX SOLUTIONS
AUSTRALIAN CO.
Royalties received 900.00 900.00
Dividends received (95.75)
900.00 995.75
====== ======
Royalties paid 1.000.00
Sub royalty paid (900.00)
Net profits 100.00
Tax (4.25)
Net profit/dividends 95.75
=======
Royalties Paid 1.000.00 1.000.00
Withholding Tax (100.000) (NIL)
900.00 1.0000.00
LICENCING
SUB LICENCING
DIRECT VIA CYPRUSDIRECT VIA CYPRUS
CYPRUS
EXAMPLE – ROYALTIES FROM GERMANY
GERMANY
OXFORDTAX SOLUTIONS
DOUBLE TAX TREATIES
BUSINESS PROFITSAn enterprise of country “A” can carrybusiness in country “B”No tax will be payable in country “B” unlessa “permanent establishment” is being established.
OXFORDTAX SOLUTIONS
PERMANENT ESTABLISHMENT
INCLUDES:A place of managementa branchan officea factorya workshopa mine, an oil or gas well, a quarry or any other place of extraction of naturalresources
OXFORDTAX SOLUTIONS
PERMANENT ESTABLISHMENT
Does NOT include:
• Facilities for storage, display, delivery of goods•Other exemptions
OXFORDTAX SOLUTIONS
OXFORDTAX SOLUTIONS
D.T.T D.T.T ––CYPRUS AND RUSSIACYPRUS AND RUSSIA
Display shop
Tax at 10% in CYPRUS
No Russian Tax
OXFORDTAX SOLUTIONS
D.T.T. – CYPRUS AND POLAND
OXFORDTAX SOLUTIONS
PERMANENT ESTABLISHMENT
Construction, assembly 12 months building site etc.
NON TREATYCYPRUS
IBC
POLAND
TAXED IF EXCEEDS
12 MONTHS
CONSTRUCTION / ASSEMBLY PERMANENT ESTABLISHMENT
POLAND
TAXED FROM
DAY 1
OXFORDTAX SOLUTIONS
For Polish Tax purposes For Polish Tax purposes –– No tax in No tax in Poland as no Poland as no ““permanent establishmentpermanent establishment””. . As per treaty ( As per treaty ( < 12 months)< 12 months)
For Cyprus tax purposes For Cyprus tax purposes –– No tax in No tax in Cyprus on profit generated from Cyprus on profit generated from ““permanent establishmentpermanent establishment”” overseas. As overseas. As per domestic law definition. (per domestic law definition. (> 3 months)> 3 months)
OXFORDTAX SOLUTIONS
CONSTRUCTION AND ASSEMBLY PROJECTSPERMANENT ESTABLISHMENT
No timeperiod
No timeperiod
6 Months6 Months 12 Months12 Months 18 Months18 Months 24 Months24 Months
CanadaCzechiaSlovakiaDenmarkEgyptGermanyMaltaItalySwedenU.K.U.S.A
FranceHungaryKuwaitIndiaPolandRomaniaSyriaS. AfricaYugoslaviaCIS Countries
BulgariaGreeceNorwayIreland
AustriaChina
OXFORDTAX SOLUTIONS
TREATY APPLY TO RESIDENTS
Resident “any person who, under the laws of that state, is liable to tax therein by reason of
his domicile, residence, place of managementor any other criterion of a similar nature.”
OXFORDTAX SOLUTIONS
“TIE BREAKER”
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“PLACE OF EFFECTIVE MANAGEMENT”
NO U.K. TAXNO U.K. TAX
TAX AT 10%TAX AT 10%
SHIFT PLACE OF MANAGEMENTSHIFT PLACE OF MANAGEMENT
U.K. REGISTERED
COMPANY
CYPRUS
BRANCH
Operations in Europe and elsewhere (not in U.K.)Invoice through Cyprus
“TIE BREAKER” Clause