CYPRUS AS A BASE FOR INTERNATIONAL ACTIVITIES · PDF filecyprus as a base for international...

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OXFORD TAX 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

Transcript of CYPRUS AS A BASE FOR INTERNATIONAL ACTIVITIES · PDF filecyprus as a base for international...

Page 1: CYPRUS AS A BASE FOR INTERNATIONAL ACTIVITIES · PDF filecyprus as a base for international activities ... licencing sub licencing direct ... cyprus example – royalties from germany

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

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London 4 hoursMoscow 3 hours

Abu Dhabi 3 hours

Cairo 1 hour

New York 12 hours

OXFORDTAX SOLUTIONS

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500 weekly flights500 weekly flights TelecommunicationTelecommunicationConference facilitiesConference facilities

OXFORDTAX SOLUTIONS

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340 sunny days340 sunny daysBeautiful beachesBeautiful beaches

Snow mountainsSnow mountains

OXFORDTAX SOLUTIONS

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WHY CYPRUS

Double tax treaties

Strategic location

Friendly relations

Excellent telecommunications

Bonded & warehouse facilities

Modern banking

OXFORDTAX SOLUTIONS

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No exchange control

Profits after tax repatriated

Tax sparing credits

WHY CYPRUS

“Low tax” not a tax haven

OXFORDTAX SOLUTIONS

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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

OXFORDTAX SOLUTIONS

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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

OXFORDTAX SOLUTIONS

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WHY CYPRUS

Educated and hospitable people

No crime

Pleasant climate

Confidentiality

Nominee / Trustee functions

English used in business

OXFORDTAX SOLUTIONS

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TAX RATE

COMPANY TAX 10%

OXFORDTAX SOLUTIONS

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SHIPOWNING COMPANIES 0%

SHIPMANAGEMENT COMPANY- Tonnage Tax or income tax 4.25%

OXFORDTAX SOLUTIONS

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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.

OXFORDTAX SOLUTIONS

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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

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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

OXFORDTAX SOLUTIONS

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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

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CYPRUS DOUBLE TAX TREATIES

CanadaCzech RepublicDenmarkEgypt

GermanyGreeceIrelandPolandRussia

ItalyMaltaRomaniaSlovakiaS. Africa

SwedenU.K.YugoslaviaIndiaSyria

TAX SPARING CREDITS

OXFORDTAX SOLUTIONS

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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

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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%

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PARENT SUBSIDIARY DIRECTIVEPARENT SUBSIDIARY DIRECTIVE

Interest/ Royalties – Nil

Associated = > 25% Shareholding

Interest/ Royalties Interest/ Royalties –– NilNil

Associated = Associated = > 25% Shareholding> 25% Shareholding

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INDIRECT TAXINDIRECT TAX

VAT VAT 15%15%

OXFORDTAX SOLUTIONS

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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

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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)

OXFORDTAX SOLUTIONS

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BENEFITS FOR USING THE CYPRUS TREATIES

OXFORDTAX SOLUTIONS

• Very favourable terms. Usually very low or nil withholding tax

•Large selection of treaties

•Treaties with most Central & Eastern European countries. (The developing Countries)

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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

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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

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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

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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

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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

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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

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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

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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

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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

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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

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PERMANENT ESTABLISHMENT

Does NOT include:

• Facilities for storage, display, delivery of goods•Other exemptions

OXFORDTAX SOLUTIONS

OXFORDTAX SOLUTIONS

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D.T.T D.T.T ––CYPRUS AND RUSSIACYPRUS AND RUSSIA

Display shop

Tax at 10% in CYPRUS

No Russian Tax

OXFORDTAX SOLUTIONS

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D.T.T. – CYPRUS AND POLAND

OXFORDTAX SOLUTIONS

PERMANENT ESTABLISHMENT

Construction, assembly 12 months building site etc.

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NON TREATYCYPRUS

IBC

POLAND

TAXED IF EXCEEDS

12 MONTHS

CONSTRUCTION / ASSEMBLY PERMANENT ESTABLISHMENT

POLAND

TAXED FROM

DAY 1

OXFORDTAX SOLUTIONS

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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

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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

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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

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“TIE BREAKER”

OXFORDTAX SOLUTIONS

“PLACE OF EFFECTIVE MANAGEMENT”

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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

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