What is an International Business Company (IBC) / Cyprus Offshore Company?

There is no distinction in the Cyprus law between IBC's and local companies. The term "offshore" does not exist anymore. The companies are now known as "Cyprus Companies". The only reason that they are described as IBC's/ Cyprus Offshore Companies in this website is because their share capital is owned by non-residents either directly or indirectly.

About Cyprus
1. Cyprus Generally 1.1. General
Cyprus is a European country with all the facilities that are available in modern countries. The residents are very hospitable and friendly and business activity with the rest of the world is flourishing. There is availability of highly educated professionals and there are excellent transport and telecommunication channels.

1.2 Geography, Climate, Population and Language

Cyprus is situated in the Eastern Mediterranean. There is a very good climate here with about nine months of Summer and three months of Winter. The population is 746,000. The official language is Greek, but English is widely spoken.

1.3 Government and Legal System

As of 1st of May 2004, Cyprus is a member of the EU and almost all its directives have been incorporated in Cyprus laws. The structure of government is similar to that in western democracies, where human rights, political pluralism and private property are safeguarded. Cyprus is a member of the United Nations, and its specialized agencies, the council of Europe, and the British Commonwealth. The law in Cyprus is based on more or less the same principles as those applicable in the United Kingdom and statutes regulating business matters and procedures are similar.

1.4 The Economy

Cyprus has an open free market economy. The performance of the economy has been such that it has combined, high real growth, with low inflation and low unemployment. Trade and tourism are the most important sectors. Professional services are also thriving.

1.5 Transport and communication

There is a wide network of air routes connecting Cyprus with Europe, Africa and Asia. The island has two international airports. Cyprus has an excellent telecommunications service.

2. Why shall I choose Cyprus?

2.1. People
The people of Cyprus are known for their hospitality and friendliness. The crime in Cyprus is almost non-existent.

2.2. Infrastructure for international businesses

Cyprus has set up everything that is necessary to accommodate international businesses. The government is willing to provide all necessary assistance. Cyprus is a trustworthy European IBC's center. It is not considered as a tax haven. It is considered as a respectable International Business Center. It is internationally acceptable, that serious businesses from all over the world set up companies in Cyprus to access other markets of the world. Cyprus has complied with the OECD and EU regulations, regarding the issue of harmful tax competition and complied with the criteria set by the Financial Action Task Force, the International Monetary Fund (IMF) and the Council of Europe (COE) in the fight against money laundering.

2.3. Low or zero taxes and double tax treaties with other countries (please see Taxes) 2.4. Exchange Controls
An international business company or an international trust is not subject to any exchange control. Bank accounts can be opened in any currency, in cyprus or in any other country.

2.5. Banking Facilities

There are excellent banking facilities and banks in Cyprus have set up the necessary infrastructure to assist international business to open banks accounts within Cyprus or anywhere in the world and make transfers of funds through simple instructions, by fax or the Internet with quick execution.

Registration Procedure
1. Incorporation decisions and Memorandum and Articles of Association. The following decisions have to be taken:
1.1. Value of share capital
There is no minimum share capital requirement. However, a suggested minimum is CYP 1000. If the company will operate fully fledged offices there are special regulations only for nonEU citizens.

1.2. Shareholders
A minimum of one up to fifty shareholders can hold the share capital.

1.3. Directors
A minimum of one director is required.

1.4. Secretary
A secretary of the company must also be appointed.

1.5. Registered office

A registered office address must be decided, where all legal documents can be served. After the above (1.1. - 1.5.) the Memorandum and Articles of Association must be drafted and printed.

2. Application to the Registrar for company name.

The Registrar is unlikely to accept a name if: It is too similar to that of an existing company. It is considered misleading, too general, or pompous. It suggests a royal, national or international connection. It includes certain words such as "co-operative", "insurance", "bank", "financial

services", unless this is justified by the company objects. It is advisable to submit to the Registrar 2 or 3 different names, to provide more flexibility.

3. Registration of the company at the Registrar of Companies.

The Memorandum and Articles of Association must be signed by a lawyer and deposited to the Registrar together with the first directors and registered offiece address declarations. The Registrar then issues all incorporation documents, in Greek or English.

Legal Framework for International Business Companies

International businesses can register in Cyprus as limited companies. Limited companies are companies with share capital, and the liability of their shareholders in case of winding up, is limited to the nominal value of the shares they hold. The letter "LTD", which stands for "Limited", appears at the end of their name - for example "Aliera LTD". Limited companies can be owned by a small number of investors in which case they are "private" or their shares can be registered on the stock exchange and therefore available to the public, i.e. "public companies".

A private limited company

A private limited company means a company which by its Articles:

Prohibits an invitation to the public to subscribe for its shares or debentures. Limits the number of its member to 50. Restricts the right to transfer its shares and prohibits the issue of bearer shares.

Liability of shareholders
The liability of the members of an International business company is limited to the nominal value of the shares they own.

Memorandum and Articles of Association

A memorandum and articles of association must be drafted and printed. The memorandum defines the company's powers, particularly regarding it's dealings with it's external environment. The articles of association set out the rules governing the company's internal affairs, such as meetings and voting rights.

Income and place of activities

The income of the company can be derived from Cyprus or anywhere in the world. However, the management, control and administration of the company has to be from Cyprus.

Registrar of Companies requirements

Statutory documents regarding the following matters must be filed at the Registra's office and are available for public inspection:

Directors Secretary Shareholders Registered address Audited Financial Statements Alteration of Articles and Memorandum of Association Alteration of the name of the company Increase of capital Allotment of shares Particulars of charges and mortgages Annual return stating the directors, sharholders, secretery and registrered address.

Statutory books
The following registers and books must be kept at the registered office address:

Register of directors and secretary Register of members /shareholders Minute book of general meetings and directors' meetings Register of all specific and floating charges on the undertaking or any property of the company Register of directors share holdings Register of debenture holders

Proper accounting books must be kept and financial statements in accordance with IFRS's & IAS's must be prepared and audited by qualified accountants.

Exchange control
International business companies as well as their expatriate employees are exempt from exchange control.

Prohibition of money laundering activity

Strict anti-money laundering provisions apply to international business companies under the Prevention and Suppression of Money Laundering Activities Law.

Tax Incentives for International Business Companies

The worldwide income of an international business company is taxable in Cyprus, provided that its management and control is from Cyprus. Please see related article and be advised on this very important topic. Tax is calculated on net profits as adjusted for tax purposes every calendar year.

Corporation tax
International business companies are taxed at 10% on their worldwide profits, provided that the share holder is a non- resident. Please be advised on this topic. No tax needs to be paid when an international business company makes payment for dividends, interest and royalties to overseas tax residents. No tax is payable on dividends received under certain relaxed conditions. Interest received is taxable. Please be advised on this topic.

Capital Gains Tax and Inheritance Tax

No capital gains tax needs to be paid in Cyprus on the sale of assets which are property of an international business company, provided the property is outside Cyprus (eg. land). There is no capital gains tax on the transfer, or sale of the shares of an international business company. Also there is no inheritance tax.

Estate Duties
No estate duty is payable on property situated outside Cyprus.

VAT
Please be advised on this very important topic. An international business company can register with the VAT authorities in Cyprus and claim VAT refunds on expenses and purchases made in Cyprus. In certain circumstances registration might be desirable and therefore voluntary and in certain circustances it may be obligatory. In many cases there is no VAT on the sales of International Business Companies but there are cases where VAT rules have to be followed and cases where VAT output has to be charged. There are also cases where there is an obligation to register with another member state.

Inland Revenue Requirements

All companies registered in Cyprus are required to submit a company income tax retrun and tax computations to the income tax service for every calendar year, based on audited financial statements which must be kept at the registered office of the company available on demand for inspection by the income tax authorities. The corporation tax of 10% on net profits is payable:

By provisional self assessments during the accounting year in 3 equal instalments By self assessment seven months after the end of the accounting year

Double Tax Treaties / Agreements for the avoidance of double taxation

A double tax treaty is an agreement between two countries, mentioned in the agreement as contracting states, so that income earned in country "A" by a resident in country "B" is not taxed in country "B" without any regards to the tax already paid in country "A". For example if a person from country "B" has income from country "A" and already paid 10% tax on this income in country "A", and the tax on this income in country "B" is 30%, he will pay only the difference to the tax authorities of country "B", in other words only 20%. This is the main aim of the double tax treaties, but for economic development reasons one may find out that the total taxes can be further reduced. The double tax treaties also include provisions for tax fraud, and exchange of information and in certain circumstances include provisions which exclude certain persons from the benefits of the agreement.

By the time of writing Cyprus has concluded double tax treaties with the following countries:
Armenia, Austria, Belarus, Bulgaria, Canada, China, Czech republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Kyrgyzstan, Malta, Moldova, Norway, Poland, Romania, Russia, Slovakia, South Africa, Syria, Sweden, Tajikistan, Thailand, Turkmenistan, Ukraine, United Kingdom, United States, Uzbekistan, Yugoslavia, Singapore, Mauritius, Lebanon and Seychelles.

New laws, regulations and practices in the EU environment

1. The prestige of Cyprus as an International Business Center has been enhanced and Cyprus became more attractive to investors. The infrastructure has been improved and the procedures became faster through automation and more personnel. Cyprus has complied with the EU and the OECD regulations regarding harmful tax competition, and with the regulations of the Financial Action Task Force, the International Monetary Fund, and the Council of Europe in the fight against money laundering. 2. The term Offshore has been removed from the legislation and all companies are now known as Cyprus companies. 3. The Management and Control Principle was incorporated in the Cyprus tax law as from 1st January 2003 in order to determine whether a company is Cyprus tax resident. In other words a company can not be considered Cyprus tax resident merely because of registration in Cyprus (see related article). 4. EU directives were incorporated in Cyprus Law, for example Parent-Subsidiary Directive; Merger Directive; Savings Directive; Interest and Royalty Directive; Mutual Assistance Directive on Taxes; the Vat Directives; and the Convention for the Elimination of Double Tax in connection with the adjustment of profits of associated enterprises. 5. The audited financial statements have to be prepared under the International Financial Reporting Standards, by requirement of the Company Law. This was applied previously, as well, but now it became obligatory under the Company Law. 6. The audited financial statements have to be filed with the Registrar of Companies in the Greek language and be available for public inspection. However there are proposals that the English lanquage be acceptable. 7. Companies which have subsidiaries are obliged to prepare audited group financial statements which are also filed with the Registrar of Companies and are available for public observance. However there are proposals so as to exclude small groups from preparing audited group financial statements.

8. The ultimate beneficial owner either EU on non EU national has to be disclosed to the commercial bank that opens the bank a/c as before, and this information is kept confidential. This disclosure applies to all jurisdictions after the 11th September, otherwise the bankers refuse to open a bank a/c. 9. The corporation tax rate is 10% as from 1st January 2003. 10. The Mutual Assistance Directive on direct taxes for exchange of information on all forms of taxation including VAT with other EU member states has been incorporated in Cyprus Law. This Law also provides for collection of tax debts (in Cyprus and on behalf of the other Member State) created by Cyprus tax residents in other EU Member States, and vice versa. Exchange of information provisions exist in all the agreements for the avoidance of double taxation currently in force. An example of such an exchange of information is whether purchases or expenses declared in one country were declared as sales or income in Cyprus, and whether they were declared at the same amounts. A second example is whether the recipient of royalties, fees, profits, etc, is in fact a tax resident of Cyprus and the beneficial owner of the royalties. A third example is the exchange of information on transactions between related companies ie. for how much the goods were purchased by the Cyprus subsidiary and sold to the holding company overseas etc. The exhange of information as regards VAT is done through the VIES system (Vat Information Exchange System). The companies are obliged to report their EU sales of goods (both normal sales or triangular sales) and this information is made available to the other Member States. 11. Auditors in Cyprus are now being monitored by control visits by the Institute of Certified Public Accountants of Cyprus in cooperation with the Association of Chartered Certified Accountants of UK. In other words auditors have to accept a visit by a committee which reviews audit files to express an opinion on whether proper audits are performed and reports back to the Institute for misconduct. 12. The Director's Report which is included in the financial statements has to mention 11 points by Company Law requirement and the auditor has to include in his report whether the directors report is consinstent with the financial statements. 13. The names of Shareholders, Directors and Secretary of the Company are available to public inspection at the Registrars office, as before. 14. There is another form of taxation which is called Defence Tax and is approximately 9.45%, and it is levied on companies with Resident Shareholders only. The Defence Tax is payable two years after the end of the tax year concerned. In the case where a company is using a resident (Cypriot) Trustee Shareholder, a declaration by the Director of the company has to be made to the Income Tax Service in Cyprus, so as to avoid this tax. The declaration by the Director states that he is in possession of sufficient evidence to justify the fact that the Beneficial Shareholder is not a Cyprus Resident and that he undertakes the obligation to submit this evidence, in case it is required by the Cyprus Income Tax Service.

If the company has a Non-resident Shareholder, then the Director does not have to make this declaration and the company does not have to pay this tax. The purpose of this article is not to list all changes but to give an indication of the main ones. Also please note that the content of each paragraph is not exhaustive.

Cyprus International Business Companies

Main features of Cyprus International Business Companies (IBCs) Examples of the use of Cyprus as a basis for operations Forms they can operate Advantages of International Business Companies Types Of International Business Companies Registration Procedure (1) MAIN FEATURES OF CYPRUS INTERNATIONAL BUSINESS COMPANIES (IBCs)

We would like to point out at the outset, that as you may know, an International Business Company, is a private company limited by shares, governed by the provisions of the Companies Law Cap 113, which is identical to the English Companies Act of 1948. For our clients, we have already reserved a number of company names with the Office of the Registrar of Companies in order to facilitate immediate establishment/incorporation of such an IBC. The available names are: - The activities of IBCs, other than management are confined worldwide. - The share capital may belong to shareholders of any nationality. - Any profit made can be derived from activities anywhere in the world - Minimum capital of a Cyprus IBC is CYP 1,000 or CYP 10,000 in case a fully fledged office is required. From 01.01.2008 the capital of an IBC should be expressed in Euro only. - the tax regime applicable form whatever sources is at the rate of 10% on the net profits of the company. - Dividends paid out of profits taxed at the reduced rates are not liable to any

further tax, neither can a refund be made. - Cyprus IBCs must have a registered office in Cyprus. They are usually structured with nominee directors, secretary and shareholders. The beneficiaries details are confidential and are not placed on any public file. The beneficiaries could be natural persons or corporate bodies. It is through these confidentiality requirements that Cyprus companies enjoy a greater international reputation amongst business persons than companies in other jurisdictions. - Foreign employees pay income tax at rates from 0 to 6% if working outside Cyprus and receive the salary through Cyprus, and from 0 to 30% if working in Cyprus. Foreign employees working outside Cyprus are totally exempt from Cyprus income tax as long as they receive their salaries in Cyprus. - No exchange control restrictions regarding movement or operation of foreign currency accounts. - Duty free allowances are provided to Cyprus IBCs so as to import duty free vehicles, office equipment and other items necessary for their business. - Like all other Cyprus companies, Cyprus IBCs , are required to have their accounts audited by auditors authorized by the Minister of Finance. The aforesaid audited accounts should be given out to the Income Tax authorities and to the Central Bank of Cyprus. - Management services of the company including provision of nominee shareholders, directors, secretarial services, as well as special Banking services including operation of bank accounts, arranging letters of credit, invoicing e.t.c. (2) EXAMPLES OF THE USE OF CYPRUS AS A BASIS FOR OPERATIONS

The presence of Cyprus for registered IBCs may take a variety of forms which could differ from case to case. Cyprus may be simply used for the incorporation of a company, without locally residing directors and with only a registered office, required by law. A more usual usage of Cyprus appears in the occasions that local management and control are being made in Cyprus, by holding board meetings so as to appear that decision-making occurs in Cyprus and therefore a genuine and effective management from Cyprus is established. Genuine and substantial local management and control, can be also established by the operation of a fully fledged and equipped office consisted of foreign managers and employees. Cyprus offers for this purpose a great degree of stability and respectability derived from its fastest growing economy, and offers the required infrastructure in addition to other advantages such as its geographical position, low operational costs , tax advantages to foreign employees, excellent relations with the European Union establishing Cyprus into an attractive basis for operations of this kind. Examples of the use of a Cyprus IBCs A)The provision of different sorts of services or offering of goods to companies or individuals in various countries of the world through Cyprus could most importantly enjoy the very Low Corporate Tax benefit. The aforesaid benefit occurs because the taxable profits of these companies are

only taxed in Cyprus at the rate of 10%. The sales invoices are issued and paid on the name of the Cyprus IBC but the services are rendered by the non-Cypriot company, its profits though aretaxed on the name of the Cyprus company at the minimal rate of 10%.

Country X
(origin of non Cyprus Company)

Country Y
(provision of services by non-Cyprus company)

Cyprus
(Cyprus IBC's invoice)

B) International general trading can also enjoy the very Low Corporate Tax Benefit. In such an occasion the engagement of the Cyprus offshore company in international trading does not require for the goods be transported through Cyprus, but can be transported directly from the supplier to the purchaser. The goods are transported directly from the supplier to the purchaser and the relevant purchase/sales invoices shall be issued on the name of the Cyprus offshore company, and the profits made under the agreement shall be taxed at the rate of 10%. The money transactions relating to the aforesaid business actions are being made via Bank Accounts belonging to the Cyprus offshore company, held in (interest is not taxable on money deposited and held in Cypriot Banks) or outside Cyprus and can be transferred by

Cyprus
(Cyprus IBC's invoice)

Country X
(origin of non-Cyprus Company)

Country Y
(supplier/purchaser of the non-Cyprus Company)

(3) FORMS THEY CAN OPERATE A) International business companies in Cyprus can operate in the following legal forms: a) Limited liability company. Under the Companies Law Cap 113 which is almost identical to the United Kingdom s former Companies Act 1948, there are two main types of limited liability companies public and private. Private companies are by far the most popular form of incorporation both for local and international investors basically due to their less onerous disclosure, simplicity regarding its registration as well as

to other requirements. A Private company is one which by its articles: - the liability of its members is limited up to the amount unpaid for their subscribed shares. - the word "limited" must appear at the end of the name of the company. - any invitation to the public to subscribe for shares is prohibited. - companies can be formed by even one shareholder as subscriber. This legal entity can be a legal entity or an individual. If there are more than one shareholders they could be either a legal entity or an individual or both. - meetings of the board of directors can be held either in Cyprus or abroad. - The minimum number of directors is one and there is no maximum. Directors may be local or foreign. Alternative directors may be also appointed. It is not necessary for directors or the secretary to be shareholders. The appointment and removal of directors is made by the shareholders. Cyprus IBCs companies must have at least one local director unless the secretary is local. - The minimum number of shareholders is one. However provision of nominee shareholders can be arranged on request free of charge where anonymity is required. - Bank accounts of any kind may be opened, in any currency, either in Cyprus or abroad. Those opened in Cyprus may be operated without any exchange control permission. - The company must have a Memorandum and Articles of Association.

Memorandum and Articles of Association I.The Memorandum of the company is consisted of: - the company s name, the address of the registered office which must be in Cyprus, the main objects for which the company is formed, the amount of the authorized and paid up capital which must be of a minimum CYP 1,000.00 (if no administrative office is required) or CYP10,000,00 (if an office will be required) the names, addresses and description of the subscribers together with the number of shares for which they could describe. II. The Articles of Association consists of the maters regulating: - the internal management of the company, provisions as to dividends, debentures, accounts and audit, voting rights, general meetings of the company, appointment-removal of directors, powers and general meetings of directors, winding up of the company. b) A branch of an overseas company. A company incorporated outside Cyprus (overseas company) is able according to

s.347 of the Companies Law Cap.113 to register in Cyprus under the legal form of a branch. For the registration of a branch according to s.347 of the Companies Law Cap.113, the following documents duly transferred in Greek are required: (i) A certified copy of the Memorandum and Articles of Association, or the charter. (ii) Particulars of the directors and the secretary of the company. (iii) he name and address of at least one person residing in Cyprus authorized to accept on behalf of the company any notices required to be served to the company. Taxation of branches of oversea companies managed and controlled in Cyprus is identical to the same rate as the offshore companies, at 10% on their net profits. In the case that their management and control is conducted outside Cyprus the profits of the branch are exempted from all taxes. The same advantages for offshore companies apply also for the offshore branches. c) A Partnership Partnerships Law Chapter 116 provides for two general types of partnerships 1. General Partnership. In the General Partnership every partner is liable jointly and severally with all the other partners for an unlimited amount for the debts and obligations of the partnership. Partner can also be a company with limited liability or another partnership. 2. Limited Partnership. The Limited Partnership is a Partnership in which at least one of the partners must have unlimited liability for all the debts and obligations of the Partnership, whereas the remaining partners may have limited liability. Cyprus offshore Partnerships enjoy full tax exemption in Partnership profits. An investor may enjoy the advantages of the tax exemption position of the Partnership and at the same the limited liability of the Partnership. The minimum number of Partners required for Partnerships (whether general or limited) is two and the maximum is twenty. Registration of a Partnership The procedure for registration of a partnership is as follows: - Securing the Partnership s name - Preparing the Partnership contract. - filing with the Registrar of Companies a special form in which certain information is given as to the names, addresses, description of the Partners, the unlimited or limited liability of each partner, the duration of the partnership, the person authorized to sign and bind the company etc. - filing a copy of the exchange control approval of the non-resident partners. (4) ADVANTAGES OF CYPRUS International Business Companies (IBCs)

a) a great degree of respectability amongst companies registered in other tax incentive or tax haven countries. (Cyprus is not black listed in any country in the world) b) Cyprus is not considered to be a tax haven or "laissez faire" country but a tax incentive country c) no withholding of tax on dividends d) no capital gains tax (except on sale of immovable property situated in Cyprus) e) freely transferable accounts of any currency may be kept either in Cyprus or anywhere abroad without any exchange control restrictions f) no exchange control restrictions g) all expenses incurred for the earning of income as well as annual allowance on fixed assets are allowed as deductions h) company's foreign employees working in Cyprus are liable to personal income tax at a rate from 0 to 20% and if working outside Cyprus but receiving their salary through Cyprus at a rate from 0 to 2% i) the foreign employees are exempt from social insurance contributions j) the net profits of the company are subject to a corporate tax at the flat rate of 10% and if such profits are derived from dividends received from another Cyprus IBC, then no further tax is payable other than the flat rate of 10% paid only by the distributing company. This rate is paid irrespective of whether they are managed and controlled from Cyprus or elsewhere k) shareholders are not liable to an additional tax on dividends over and above the amount of corporate tax paid by the company l) exemption from stamp duty on any contracts entered into by offshore entities m) no estate duty on the inheritance of the shares provided the deceased was not domiciled in Cyprus A Cyprus IBC is entitled to open any external accounts in any currency with any bank in Cyprus but it should open and operate the so called local disbursement account wherefrom all payments of the company in Cyprus (if any) should be effected. Our Firm can arrange the opening of such A/C (or A/Cs) with ANY Cypriot Bank

Alpha Bank Bank of Cyprus Popular Bank Hellenic Bank The National Bank of Greece Universal Bank

Arab Bank

We are also at your service to arrange the opening of bank accounts with any other Offshore Banking Unit operating in Cyprus. (5) TYPES OF INTERNATIONAL BUSINESS COMPANIES Offshore Banking Units (O.B.U.S) Offshore Banking Companies as subsidiaries of foreign banking corporations or offshore branches of such corporations may be registered in Cyprus. International enterprises or their subsidiaries, established in countries where there is good banking supervision, could obtain a license from the Central bank of Cyprus to operate in Cyprus as an OBU. Today in Cyprus are operating 28 Offshore Banking Units, 2 Administered Banking Units and 2 Cyprus representative offices from oversea Banks. A captive Insurance Company is a wholly owned or controlled subsidiary company formed by a non-insurance parent (or association of companies or individuals) for the purpose of participating in the risks of the parent enterprise or its group (subsidiary or associate). The risks assured can be those that can be insured in the normal way, or those for which insurance coverage is difficult to obtain or highly costly. Captive Insurance Companies They are regulated by the provisions of the Insurance Companies Law, and may be registered in Cyprus as offshore companies under certain provisions and requirements imposed by the Central Bask. In addition to the usual conditions imposed by the Central Bank to offshore companies the Captive Insurance Companies must also comply with the Insurance Companies Law and in particular with the following: (i) The minimum paid up share capital must be CYP 10,000.00 (ii) Full compliance with the provisions of the Insurance Law as to the filing of the accounts and other relevant documents (the Council of Ministers may allow certain modification of this requirement) (iii) Proof no financing from local sources (iv) Adequate cover to the satisfaction of the Super-intendent of Insurance, regarding claims from third parties, that these claims shall rank in priority to the claims of any other company in the group. (v) All local expenses incurred must be covered by funds to be imported from abroad. The captive insurance company shall advise the Central Bank annually of all funds imported into Cyprus from abroad. Besides the usual benefits and advantages available to offshore companies, Captive Insurance Companies may gain the benefit of obtaining insurance at lesser net cost and have a flexibility which can be related to all aspects of the

sponsor s risk management programme. Shipping Management Companies Cyprus has been for years now a very attractive destination for the registration and management of Shipping and Maritime operations Companies .Since 1963 Cyprus created the legal infrastructure for the establishment of Cyprus as a maritime center aiming at the registration of vessels under Cypriot flag. Now Cyprus ranks 6th in the world regarding the number of ships registered under the Cypriot flag with over 2.600 ships and exceeding 26 million Gross Tonnage (GT). For more information o Shipping Companies click Hyperlink on Shipping Companies Construction and Engineering Companies They are particularly advisable for operations anywhere in the world, and especially for operations in the Middle East countries, and have been already conducting enterprises for American, British, Dutch, and Greek Interests. Cyprus as the country which offering a high degree of stability amongst the neighboring countries could be used as a set up for minimum taxation on potentially maximum operations especially derived from the establishment of the benefit of double taxtreatie. Employment Companies Proved to be very attractive as they have been extensively used for American, Dutch, Austrian and British employment of expatriate staff, and by paying a low Cyprus tax will avoid the higher taxation in their home country, providing recruitment of labor for contract or other work undertaken outside Cyprus. They can be also very beneficial in the occasions of countries whose national tax law allow, in the event of payment of tax in another country, to remit their salaries to their home countries without payment of any further local income tax, like in the case of Australian, Austrian, and French residents. Quite advisable of the above advantages a fully justified commercial justification could be applied in the case of provision of foreign labour in the South Mediterranean and MiddleEastern countries. Finance Companies Particularly advisable as they can be actively involved in the dealing and managing investments, providing investment advice or establishing and operating collective incentive schemes and financing of joint ventures or other attainments in countries with which Cyprus has a double tax treaty, in which withholding tax is either nil or very low. In addition to that the benefit of an offshore finance company could be used in decreasing the taxable profits made by the subsidiaries by way of interest charges made on loans obtained or to on-lend funds to entities which belong to the same group as well as to non related parties. Holding and Investment Companies They can be used in conjunction with Cyprus treaties and could provide extremely advantageous results by centralizing group s investments through a central non-

Cypriot company used as a basis for holding and managing their own investments worldwide. They could be also advantageously used with effective tax planning in conjunction or not with the use of treaty countries. Companies of this kind are mostly used for holding participation in jointures or other acquisitions in countries of Eastern and Western Europe and the Middle East as well as to countries in Africa India and China reducing to the minimum level the dividend withholding taxes as well as avoiding any tax credits imposed on the group the company belongs. In addition to that the dividends derived from the non-Cypriot (offshore) company could be well used for reinvestment in other subsidiaries avoiding in this way any tax liabilities arising for the parent company according to the domestic taxation system, especially for services such as invoice factoring, staff recruitment, construction contracts, joint ventures, patent exploitation, e.t.c. Trading Companies These account by far the greatest amount of Cyprus offshore companies. This kind of companies could be utilized for transit trade via the Cyprus seaports, as well as for activities in connection with trading in the geographical area of Cyprus or anywhere else in the world. They may also store maintain, break bulk or repackage their own transit goods in rented private or public warehouses. Trading companies are also allowed to derive income from portofolio investments in shares traded on the Cyprus Stock Exchange. Moreover another advantage of trading companies is offered by extracting untaxed profits form countries which Cyprus has a double tax-treaty. In some cases they are used (especially by European-based companies) for undertaking the whole overseas trading and marketing activities entrusted to a Cyprus subsidiary. (company-branch) In general a very wide scope of for companies of this kind can be secured and serve interests for countries in any part of the world. In case that a foreign company wishes to sell or manufacture its products in the Cypriot market must do so through a wholly or partially owned local company. Headquarters Companies Particularly attractive for multinational as well as national companies aiming at centralized management control as well as for companies incorporated in distant tax heaven countries. The entrepreneurial environment, the developed infrastructure of Cyprus and the considerable tax advantages serve interests for Eastern and Western European as well as Middle and far Eastern regions. Moreover the growing management of overseas affairs of business or the rendering of services abroad from Cyprus, by expatriate executive gave Cyprus the reputation of an international business center with more than 2,000 International Business Companies maintain fully fledged offices. Invoicing Companies This type of companies could be utilized for re-invoicing of goods, fabric and services from any region in the world for any intention and to any destination enjoying the low taxation status. They can be also very easily managed since all that is required for their maintenance is a registered office and capable personnel or accountants to organize invoices and transactions.

Royalty Companies The Cyprus national tax systems in accordance with the laws relating to the operation of double tax treaties, create opportunities for efficient tax planning rendering Royalty companies (concerning the income received from the transfer of exploitation of intellectual and industrial property rights) extremely attractive. There is a variety of schemes and arrangements applicable so as to widen the number of countries from which royalties may be received untaxed or reduced tax. I addition to those operating from fully fledged offices in Cyprus, there are many Royalty Companies which maintain only a register ed address in Cyprus, and Cypriot or foreign directors. Real Estate Companies These companies may be very advantageously used both for investment and for dealing in land, especially from the effective application of the network double tax treaties. In the case of European countries exceptionally interesting arrangements may be made as there are already quite a number of companies related to real estate, representing a wide variety of interests, however Asian real estate companies have been incorporated in a quite large scale, recently. Trust Companies Trust Companies may be used especially in conjunction with other tax advantages for managing trust funds or pension funds outside Cyprus, or Cyprus trusts on a professional level. There is no minimum capital requirement, and for the operation of such company prior authorization from the Central Bank of Cyprus must be obtained. Internet and E-Commerce Companies The beneficial tax regime applicable for IBCs can be also applied in the case of internet and e-commerce companies. The developed infrastructure of Cyprus and telecommunications are also important reasons for the attraction of a fat growing number of companies being incorporated with intention to host their e-commerce sites or ventures. The advantage of Cyprus double tax treaties can be also applied on the income derived from the activities of these companies which may finally achieve total avoidance of tax in both countries. Manufacturing Companies They usually operate both in the form of corporate entities as well as participating by forming a subsidiary in manufacturing activities, particularly in the Cyprus region, where a variety of tax and other important incentives are offered to companies of this kind, as well the benefit applied under the relevant double tax treaties. Printing and Publishing Companies Printing of books and journals in Cyprus by IBCs for sale and distribution above is considered to be an onshore business and apart from the usual tax advantages of an onshore company the low cost of local printing as well as the excellent infrastructure and good telecommunications make Cyprus an ideal place for the incorporation of a company of this kind. However Printing and Publishing companies incorporated and operating abroad may always use the benefits of the

very low Cyprus taxation and double tax treaties by forming a subsidiary in Cyprus.

(6) REGISTRATION PROCEDURE

- The registration procedure commences with the submission to the Registrar of Companies of a proposed business name fro approval. takes approximately from 2-4 days. In this respect we have already "off the shelve" a number of names, which you may select one, unless you have in mind a particular name you may wish to use. - Soon after the approval of the name, the Memorandum & Articles of Association of the company are being drafted. - After this the memorandum and Articles of Association are filed with the Registrar of Companies together with forms H.E.1., H.E.2., H.E.3. ., H.E.1. is an affidavit prepared and duly signed by the lawyer of the company. H.E.2 provides for the registered office of the company and H.E.3. provides for the appointment of the directors as well as for the secretary of the company. - As soon as registration of the company is effected the Registrar of Companies he issues a Certificate of Registration together with certified copies of the list of directors and secretary, shareholders, registered office address, Memorandum and Articles of Association, a copy of the Certificate of Registration and Incorporation in Greek, and English will be required as well as in any other language requested on payment of a translation fee. - The relevant procedure for registration of the company can be completed within a period of 10 days whereupon the company can start operating immediately . - In the occasion that a company is urgently required we have ready made registered companies the whole procedure could be completed within a period of 48 hours. Relevant Documents needed for registration At the same time we submit various other documents and information including:

1) Secondly a copy of the shareholders passport shall be also sent to us as proof of who these persons are. 2) If they require us to act as their nominee shareholders and register the company and hold their shares on behalf of the beneficial shareholders without them having to come to Cyprus a Special Power of Attorney prepared by us would have to be signed so as to allow us to carry on the aforesaid action