Tax Residency in Cyprus

A key factor for successful tax planning using a Cyprus company is to show that the company is tax resident in Cyprus.

According to Cyprus tax law, a Cyprus company must be managed and controlled from Cyprus in order to be considered as tax resident in Cyprus and enjoy the advantages of our tax system (10% corporation tax). Thus it is necessary that the majority of the Board of Directors to stay and work in Cyprus. For foreign clients this is achieved by appointing 2 nominee directors in the Board of Directors and management and control is fully evidenced by supporting minutes and other documentation depending on the facts of each case.

Another important consideration is the opening a bank account in Cyprus. We strongly advice our clients to open a company’s bank account with a Cyprus bank.

As soon as the company is registered the company’s accountant files an application to register the company with the Inland Revenue (Tax Office) so that the company gets a tax identification number. In addition, the accountant and the lawyer of the company confirm to the Inland Revenue that the company is managed and controlled from Cyprus so that the Inland Revenue issues what is called “tax residence certificate”. From then on the company has to file every year accounts with the Inland Revenue and pay tax in Cyprus if it makes taxable profits.