Cyprus company formation has become more popular as of late and for good reasons too. They have the lowest fixed rate of corporation tax in the European Union. This means that businesses can legitimately set up a company formation in Cyprus, and deal without trade tariffs to the rest of Europe. This is due to the free movement of goods and labor between the European Economic Community.Europeis trying to compete as one strong unit together and so taking down tariffs and barriers to entry amongst themselves is present.
There are many multiple benefits to Cyprus company incorporation, most of which are financial or structural to businesses. The first thing that should be mentioned is the fixed rate corporation tax which is set at 10%, this is really low if compared with other European countries. Maltais the highest at 35%, however most of the well developed countries set rates at between 20-30%. So it can be seen that setting up a Cyprus company can be very advantageous to your take home profit as a business.
Many companies use Cyprus company formation for setting up subsidiaries of their main registered company. This can then be used to funnel through earnings from certain contracts or share dividends to spread out the company’s earnings more evenly. In doing so there is less capital tax paid on earnings from shares and other company related holdings. These subsidiaries can be seen as asset holding smaller companies that the main company has invested in. In some cases dividend income is tax exempt which is another added bonus of Cyprus company formation.
Another good point about Cyprus company formation is that it allows you to be flexible with your corporate structuring. Many companies that set up in Cyprus are split into multiple different divisions, each of which are registered as their own company. This spreads the asset base of the overall holding company and allows the profit earning elements to be spread out into lower tax paying areas. The reason why Cyprus has such an inviting tax scheme is just that, to try and gain business within Europe to register in their region. If they can encourage business to the local economy with favorable rates then the local economy will be strengthened greatly.
Whilst shareholder information is disclosed under public records the beneficial ownership info is never disclosed to any regulating body. Which holds advantages for people who own company shares in Cyprus through secondary means such as investing through a company that is home based. Overall it is a viable and interesting business strategic move, and is one that is often looked at by businesses throughout the European Union. It hold the opportunity of spreading capital risk and also saving money on tax payments which can increase overall the bottom line of the holding company.