Michalis Tsitsekkos

& Associates LLC

BUSINESS
IN CYPRUS

ABOUT US
Michalis Tsitsekkos & Associates LLC is a successful law firm in the area of
commercial and corporate services. We provide legal and corporate services for
individuals and companies. The skills and experience of our Russian speaking
lawyers and staff enable us to deliver high quality and rapid results for the
benefit of our clientele.
By virtue of the professional growth
during our company's years of
operation we have increased the
number of our clients, including
small and big ones from former
Soviet countries.
Over the years we have accumulated
considerable practical experience of
working
in
the
demanding
environment and increasing local
competition. With todays tough
business and commercial conditions, we believe that our energy, creativity and
professionalism enable our clients to achieve their goals.
We offer an extensive range of services including among others:
Consultation on International Business Company formation (Belize, B.V.I.,
Panama, Seychelles, Marshall Islands, U.K., Scotland, Switzerland, Bulgaria,
Estonia, Latvia, UAE, Singapore, Hong Kong) and Cyprus Companies;
International Tax planning;
Drafting and reviewing legal documents;
Nominee, fiduciary, safe custody and escrow facilities;
International Trusts;
Partnerships & Investment Funds;
Re-domiciliation of Companies to Cyprus;
Banking services;
Liquidation of companies;
Compliance with the prevention of Money Laundering Activities;
Work permit & citizenship through investment in Cyprus;
Michalis Tsitsekkos & Associates LLC

 Trade-marks & trade-names registration in Cyprus, Europe and even

worldwide;
Registration pleasure yacht or business ship under the flag of clients
choice;
Real estate in Cyprus, i.e. buying, selling, leasing and inheriting immovable
property.
Furthermore, we have proven experience in litigation law suits and settlements.
Our experience has shown that our involvement at an early stage in managing a
dispute may help to prevent escalation and therefore save you money. We will
deal with your dispute professionally, dynamically and efficiently, with preagreed fees.
We may advise on all of the options open if dispute occurs and can assist from
initial negotiations and mediation right through to service of proceedings and
representation at court where required.

Due to international links which we have developed with numerous associates,

we are in the advantageous position to provide our clients with the service they
desire and, what is more, to do so promptly, effectively and efficiently at highly
competitive prices.
Michalis Tsitsekkos & Associates LLC

CYPRUS
Cyprus is an European island in the Eastern Mediterranean Sea. It is the third
largest island in Mediterranean Sea and one of the most popular tourist,
business, education and retirement destination. The island lies between Europe,
Africa and Asia which makes it a natural hub for business and trade.

BASIC FACTS
Official name

Republic of Cyprus

Capital city

Nicosia

Government
system
Languages

President Democratic Republic

Population

Greek and Turkish (English is widely

spoken)
840.000

Currency

Euro (EUR)

General advantages:
Advantageous geographical location crossroads of three continents
Europe, Africa, Asia;
English as a business language;
Pleasant climate;
European standard of living;
Comparatively lower set-up and maintenance costs of international
business entities;
Highly developed and efficient accounting, legal and banking sectors;
Strict confidentiality with the local authorities and the banks;
Excellent transport and telecommunication facilities;
Exemption from foreign exchange control;
Possibility for acquisition of immovable property.

Michalis Tsitsekkos & Associates LLC

Legal entities that can be established in Cyprus:

Companies (private or public);

General or limited partnerships;
Business/trade name;
European Company (SE);
Branch of overseas companies.

Tax Advantages:

One of the lowest corporate tax rate in Europe at 12.5%;

Tax-exempt business profits of non-resident companies;
Tax-exempt gains on the trading and disposal of securities;
Tax-exempt gains on the disposal of subsidiaries;
Tax-exempt dividend income (subject to applicable criteria);
Tax-neutral group reorganizations;
Tax-relief for group losses;
Full adoption of the EU Parent-Subsidiary Directive;
Full adoption of the EU Mergers Directive;
Full adoption of the EU Directive on Mutual Assistance and Cooperation;
Full adoption of EU Royalty and Interest Directive;
60 Avoidance of Double Tax Treaties.

Michalis Tsitsekkos & Associates LLC

VAT
Cyprus introduced VAT in 1992 by Law 246/90, which is based on the British
VAT Legislation of 1983, adjusted to be consistent with the characteristics of the
Cypriot economy.
VAT is imposed in any:
x transaction that takes place in Cyprus (the place where the goods are
located when there are delivered to the client;
x when it is taxable transaction that is made by a person in the context of
promoting /continuing its business;
x VAT returns must be submitted quarterly and the payment of the VAT
must be made by the 10th day of the second month that follows the month
in which the tax period ends.
VAT rates:
x Standard rate of 19%;
x Reduces rate 9% e.g. food and alcoholic drinks;
x Zero rate 0% e.g. selected medicines, shipping and ship management
services.
Exemptions:
x
x
x
x
x

Rental income from immovable Cyprus property;

Transaction within Europe 0%;
Financial services;
Hospital and medical care;
Disposal of immovable Cyprus property where the application of building
permission has been submitted prior to the 1st of May 2004;
x Postal and insurance services;
x Management services provided to Cyprus funds.

Michalis Tsitsekkos & Associates LLC

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DOUBLE TAX TREATIES

Cyprus Tax Treaty Partners

Austria

Kuwait

Montenegro

United Arab
Emirates

Bulgaria

Malta

Slovenia

Estonia

Belarus

Mauritius

Slovakia

Finland

Belgium

Norway

Czech Republic

Portugal

Canada

Poland

Azerbaijan

Bosnia

China

Romania

Armenia

Lithuania

Denmark

Russia

Kyrgyzstan

Spain

Egypt

South Africa

Moldova

The States of
Guernsey

France

Sweden

Tajikistan

Swiss
Confederation

Germany

Syria

Uzbekistan

Iceland

Greece

Singapore

Ukraine

Kingdom of
Bahrain

Hungary

Thailand

Lebanon

Georgia

India

United Kingdom

Seychelles

Iran

Ireland

USA

San Marino

Ethiopia

Italy

Serbia

Qatar

Latvia

Michalis Tsitsekkos & Associates LLC

CYPRUS COMPANIES
Over the past twenty years Cyprus has developed into one of the most favorable
places for international business because of its tax regime combined with its
transparent legal system. Cyprus Companies are governed by the Companies
Law Cap.113 and are registered through the Department of Registrar of
Companies and Official Receiver.
Requirements:
Name: the Company name must necessarily end in "LIMITED" and must be
approved by the Registrar of Companies;
Shareholder: for private companies minimum 1 shareholder maximum 50;
Share capital: standard 1000 and issued capital up to 1000 divided into
1000 shares of nominal value 1.00 Euro each.
Director & Secretary: minimum number of directors is one. A director can
be a physical or legal person of any nationality. The company must have a
Cyprus resident secretary (individual or legal person);
Registered office: the registered office and address should be in Cyprus;
Financial Statements: submit audited F/S to local tax authorities and
Registrar of Companies. First reporting period can be up to 18 months
from the date of incorporation and thereafter annually.
Advantages:

Corporate tax 12.5%;

VAT rate 19%;
Extensive Double Tax Treaties;
Profits from sale of shares are exempt from taxation;
Distribution of dividend income under certain conditions is fully exempt
from tax;
Fully compliant with the Anti-Money Laundering legislation framework;
Low operation cost;
Reliable and transparent business practices.
Process of registration of a Company:
Approval of company name
in 3-5 days.

Submission of documents to
the Registrar.

Michalis Tsitsekkos & Associates LLC

Approval by the Registrar

in 5-10 days.

CYPRUS INTERNATION TRUST

Cyprus Trust Law is based on the English system. In 1992, Cyprus enacted the
International Trust Law (Law No. 69/1992) which establishes Cyprus as a
financial centre and a serious trust jurisdiction. The law applies to those trusts
whose settlor and beneficiaries are non-permanent residents of Cyprus.
Advantages:

Exempt from taxation;

Short limitation period (two years) for challenging a trust;
Strong legal system based on English Common Law;
No formalities for registration;
Flexibility, stability and management services;
Confidentiality, asset protection, no exchange control;
Laws relating inheritance or succession in Cyprus or any other country
cannot affect the validity of the international trust.

Uses:

International Tax planning and business structuring;

To hold property for minors or successive generation of a family;
To protect property against spendthrift people;
To provide secretly for others;
To provide for a couple on the marriage whilst ensuring that the property
so provided is tied up in the event of that marriage failing;
To establish a fund for the benefit of family members according to future
needs as and when they arise;
As an investment vehicle;
To provide pensions for employees and dependants;
To enable charitable objects to be carried out;
As part of commercial arrangement.

Requirements:

The settlor must not be permanent resident of Cyprus;

No beneficiary other than a charity is a permanent resident in Cyprus;
The trust property does not include any immovable property in Cyprus;
There must be a least one trustee resident in Cyprus at all times.

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CYPRUS PARTNERSHIPS
A partnership is a single business that is managed by two or more people
(maximum 20) sharing common ownership and control with the aim of making
profit.
Cyprus Partnerships are governed
by the Partnership and Business
Names Law, Chapter 116.
Advantages:
Simple structure;
Segregation of duties and
responsibilities;
Low tax expenses.
There are two types of partnerships:
1. General Partnership: every partner is jointly and severally liable for all
debts, obligations and liabilities of the partnership.
2. Limited Liability Partnership: in limited partnerships some of the partners
have unlimited liability while the liability of the others is limited to the
extent to which they have contributed to partnership capital. A limited
partner may not take part in the management of a partnership and has no
authority to bind the partnership.
Procedure:
1. Trade name approval;
2. Preparation and provision of Operating Agreement/Partnership
Agreement that will specify the decision making process, how the partners
will resolve future disputes, divide profits, allocate responsibilities
between them and change the ownership structure;
3. Registration forms should be submitted to the Registrar of Companies.

Michalis Tsitsekkos & Associates LLC

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ALTERNATIVE INVESTMENT FUNDS

The Alternative Investment Funds Law of 2014 (the AIF Law) was enacted by
the Cyprus House of Representatives on 10/07/2014. The law aims to strengthen
the funds regime in Cyprus and is in line with the recent developments in the EU.
Advantages:

No investment restrictions;
Foreign dividend income exempt from tax in Cyprus;
No withholding tax on dividends from Cyprus to the foreign shareholders;
Capital gains exempt in Cyprus;
Can obtain a Tax Residency Certificate;
Low set up and maintenance costs.

AIFS

AIF WITH LIMITED NUMBER

OF INVESTORS
Fixed or variable capital
company
Investment limited
partnership

Forms

Common fund
Fixed or variable capital
company
Investment Limited
Partnership

Manager

can be self managed (if it

is a company) or
appoint a fund manager

Can be self managed (if it

is a company) or
appoint a fund manager

Custodian

can be in the EU or
in a third country

if total assets of fund are

less than 5mln, or it has
5 investors then the
appointment of custodian
is required

Restrictions

investor type
overall investment policy

no to general public
maximum investors 75
investors must be
professional/well
informed investors

Michalis Tsitsekkos & Associates LLC

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CYPRUS INVESTMENT FIRMS

According to the Law 144 (I)/2007 Cyprus Investment Firms (CIFs) are firms
which are authorized to perform investment activities on a professional basis in
the Republic of Cyprus. CIFs are regulated by the Cyprus Securities and Exchange
Commission (CySEC).
Investment Services:
Investment services and Activities
Reception and transmission of
orders
Execution of clients orders
Dealing on own account
Portfolio management
Investment advice
Underwriting and/or placing of
financial instruments on a firm
commitment basis
Placing of financial instrument
without a firm commitment basis
Operation of Multilateral Trading
Facilities

Ancillary services
Safekeeping and administration
of financial instruments
Safe custody services
Granting credits or loans to an
investor for transaction purposes
Advice on capital structure,
industrial strategy and related
matters
Foreign exchange services
Investments research and
financial analysis
Services related to underwriting

Requirements:
Initial issued and paid up share capital requirement depends on the
activities provided;
Head office must be situated in the Republic;
Management must be undertaken by two experienced persons;
At least two executive directors and two independent nonexecutive
directors. Majority of directors must be resident of Cyprus.
Advantages:
Profits from CIFs activities;
Corporate tax is 12.5%;
No withholding tax from, on dividend, interest and royalties paid to nonresidents,
There is no Special Defence Contribution Tax on dividends received by CIF
from another Cyprus resident company or/and non-resident company.
Michalis Tsitsekkos & Associates LLC

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INTELLECTUAL PROPERTY
Cyprus is an ideal location to establish an IP structure as a result of its efficient IP
tax regime coupled with the protection afforded by EU Member States and all
major IP treaties and protocols in which Cyprus is signatory.
Cyprus IP regime, offers protection in:
1. Copyrights: Scientific works, literary works, musical works, sound
recording, films, publications, software programmes etc.;
2. Patented inventions;
3. Trademarks.
Advantages:
Income taxable at an effective rate up to 2.5%;
80% notional deduction on IP related income and capital gains from
disposal of IP right;
Double tax treaties;
Competitive amortization provisions over a 5 year period;
Wide range of qualifying IP right.

Michalis Tsitsekkos & Associates LLC

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CYPRUS CITIZENSHIP BY INVESTMENT

Citizenship by Investment
Individual scheme
The applicant can elect to invest at least 5mln in:
Cyprus government bonds bought from primary market;
Financial instruments of companies and shares of Cyprus public
companies;
Real estate and land developing;
Purchase, establishment or participation in businesses/companies that are
based or have activities in Cyprus;
Personal fixed term deposits for 3 years in Cypriot banks of at least 5mln.
Combination of any of the above;
Any applicant who was the holder of deposits in Laiki Bank and suffered as
impairment in the value of his/her deposits of at least 3mln as on March
15th 2013, as a result of the measures imposes on the bank.
Collective Investment scheme
The applicant can elect to invest at least 2,5mln in collective investment scheme
with a total value of at least 12,5mln, in:

Cyprus government bonds;

Financial instruments;
Real estate and land developing;
Cyprus business and companies.

Terms and conditions for individual or collective investment scheme:

o Clean criminal record;
o Applicant must be over 30 years old;
o Own a permanent residence in Cyprus of a market value of at least
500.000 plus VAT;
o Retain the investment for 3 years.
Time requires:
o 3 months to be approved
Michalis Tsitsekkos & Associates LLC

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Permanent Residence programme

According to the provisions of the Regulation 6(2) of the Aliens and Immigration
Regulations, the Minister of Interior, having notified the Council of Ministers, has
decided to issue Immigration Permit to applicants from third countries, in cases
where the following conditions are satisfied:

ADVANTAGES

1.

Resident
country.

of

an

EU

member

2.

Fast procedure

3.

Applicants family can also get the

permit (under conditions)

4.

Not need to live in Cyprus just

visit once every two years

5.

No need to pay the whole amount

in order to initiate the procedure

1. Bank Deposit: Deposit of a minimum

capital of 30.000 from abroad into an
account in Cyprus, which is pledged for a
period of 3 years.
2. Secured Annual Income: Prove that the
applicant has at his/her disposal a
secured minimum annual income of
30.000. The annual income should
increase by:
5000 for every dependent person
8000 for every parent
3. Purchase of a property: Purchase of a
dwelling or other building, of a total
market value of at least 300.000 and
official receipt of payment of at least
200.000, without VAT irrespective of the
date for the delivery of the dwelling.

Terms and conditions for individual or collective investment scheme:

o Clean criminal record;
o No intention of employment in Cyprus;
o Visit Cyprus a least once every two years.
Time requires:
o 2 months to be approved

Michalis Tsitsekkos & Associates LLC

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RENEWABLE ENERGY
According
to
Renewable
Energy Sources (RES) in
Cyprus reached 192.9MW,
which is the equivalent of
approximately 7.5% of the
total electricity generation for
the years 2015 2016.
The Ministry of Energy,
Commerce, Industry and
Tourism, wants to reach a
minimum capacity of 584MW
by 2020, as per the National
Action Plan (NAP).
The productivity of energy from RES is expected to see considerable growth in
the years come and significant investment is required in order for Cyprus to
achieve the targeted capacity as per National Action Plan (NAP).
Relevant Organizations:
Energy Service of the Ministry of Commerce, Industry and Tourism
CERA - Cyprus Energy Regulatory Authority
EAC - Electricity Authority of Cyprus
CIE - Cyprus Institute of Energy

Michalis Tsitsekkos & Associates LLC

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SHIPPING
Cyprus is an internationally well-known shipping centre, as a result of its
excellent geographical position at the crossroads of three continents (Europe,
Africa, Middle East), a perfect place for ship owing, ship management, ship
chartering and ancillary shipping related services.
Cyprus Shipping Sector Facts
Largest third party Ship
Management Centre in the
EU
2nd largest Ship Management
Centre in the world
3rd largest merchant fleet in
the EU
10th largest merchant fleet in
the world

Advantages:
Open Registry: allowing non-Cypriot citizens to register ships under the
Cypriot flag;
Competitive ship registration fees;
Recognition of Competence Certificates from many countries;
Beneficial owners protection through nominee or trustee shareholders;
No tax on shipping activities other than Tonnage Tax;
No tax on shipping profits including profits from the sale of ships;
No tax on dividends paid from shipping profits;
No estate duty or capital gains tax;
No income tax for seafarers on Cyprus-flagged ships;
No stamp duties on documents or mortgage deeds;
Non-shipping income tax is subject to corporate taxation at the normal
rate of 12.5%;
White list of Paris Memorandum of Understanding.

Michalis Tsitsekkos & Associates LLC

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RE DOMICILIATION
Within the scope of the Cyprus Company Law Cap.113 as it was amended in
2006, a foreign company can transfer / re-domicile the companys registered
office in the Republic of Cyprus.
The foreign company should be registered in a country which allows redomiciliation and which companys Memorandum and Articles of Association
provide for the possibility of re domiciliation.
Advantages:
To enter into a more favourable tax regime (corporate tax 12,5% and
many tax exemptions, such as dividends and interest income);
To enter into a jurisdiction within the European Union and to be able to
merge with other companies established within the EU;
An opportunity to transfer its current status (contracts agreements, etc.)
as it was in its current jurisdiction into Cyprus.

Michalis Tsitsekkos & Associates LLC

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IMMOVABLE PROPERTY
Immovable Property tax is imposed on the market value as at 1 January 1980 and
applies to immovable property locates in Cyprus owned by the taxpayer on 1
January of each year. This tax is payable on 30 September each year.
Immovable Property Tax Table:
VALUE OF CYPRUS PROPERTY
From- Up to
Rate
Accumulated Cyprus

%
Immovable Property Tax
0 40.000
0.60
240
40.001 - 120.000
0.80
880
120.001 - 170.000
0.90
1.330
170.001 - 300.000
1.10
2.760
300.001 - 500.000
1.30
5.360
500.001 - 800.000
1.50
9.860
800.001 - 3.000.000
1.70
47.260
3.000.001 and over
1.90
Capital Gains Tax:
The Capital Gains Tax is at a fixed rate of 20% on both individuals and companies
on gains arising from the sale of immovable property situated in Cyprus.
Tax Exemptions:

Property owners with total property value not exceeding 12.500;

Agricultural land;
Public cemeteries, churches and other religious buildings;
Public hospitals;
Schools;
Building owned by the Government, embassies and consulates;
Common use areas;
Properties under Turkish occupations;
Preserved buildings and buildings used by charities.

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OUR CONTACTS
Address: 21 Aglantzias Avenue, Complex 21B, 2nd Floor, Office 1, 2108 Aglantzia,
Nicosia, Cyprus
Postal address: P.O. Box 14189 - 2154, Aglantzia, Nicosia Cyprus
Telephone: +357 22462050, +357 99666171
Fax: +357 22336464
E-mail: [email protected]

www.tsitsekkos.com.cy
Website: www.tsitsekkos.com.cy

Michalis Tsitsekkos & Associates LLC

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Publication MI1-16/2016:
This publication has been prepared for general guidance on matters of interest
only and does not constitute professional advice. You should not act upon the
information contained in this publication without obtaining specific professional
advice. No representation or warranty (express or implied) is given as to the
accuracy or completeness of the information contained in this publication, and, to
the extent permitted by law, Michalis Tsitsekkos & Associates LLC, employees
and agents do not accept or assume any liability, responsibility or duty of care for
any consequences of you or anyone else acting, or refraining to act, in reliance on
the information contained in this publication or for any decision based on it.
Michalis Tsitsekkos & Associates LLC

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MICHALIS TSITSEKKOS & ASSOCIATES LAWYERS LIMITED COMPANY

Office Address: 21, Aglantzias Ave., Block 21 B, Floor 2, Office 1
2108 Aglantzia, Nicosia , Cyprus
Postal Address: P.O. Box 14189 2154, Aglantzia, Cyprus
Tel.: +357 22462050, Fax: + 357 22336464
E-mail: [email protected]