Customised Tax Solutions in Cyprus

Transcription

1 Customised Tax Solutions in Cyprus

2 2 Contents A. About Orangefield-Cyprus 3 About us 4 Our Services 5 Cyprus An attractive jurisdiction 6 Real Estate Company Structure 14 Cyprus Company trading in shares and other securities 15 Aircraft leasing company 16 Yacht leasing copany 17 B. Cyprus Tax in a Nutshell 7 Tax planning structures 18 C. Tax Planning Structures 10 D. Double Tax Treaties 22 Top Holding Company Structure 11 Intermediate Holding Company Structure 12 E. Contact us 26 Cyprus Financing vehicle Structure 13

3 3 A. About Orangefield-Cyprus

4 4 About us Orangefield-Cyprus Ltd is the Cyprus office of Orangefield group - an independent global service provider with a wide range of management, administrative and trust services to private and corporate clients as well as private equity -, hedge - and real estate funds all over the world. Orangefield group provides services to all types of legal entities, ensuring good corporate governance and efficient management, in compliance with the laws and regulations in the relevant countries. Our offices are located in Amsterdam, Rotterdam, Eemnes, Berlin, Munich, Soest, Frankfurt, Hannover, Vienna, London, Barcelona, Madrid, Malta, Cyprus, Luxembourg, New York, Dallas, Toronto, Hong Kong, Beijing, Shanghai, Singapore, Johannesburg, São Paulo, Mauritius, Aruba, Curaçao, British Virgin Islands. The group employs over 500 persons across the world. The Cyprus office of Orangefield group was established in 2006 with a view to provide quality corporate services in Cyprus with utmost efficiency to international groups and financial institutions. Our team consists of young and dynamic professionals who serve clients at a multi-national level. Our clients include groups listed on stock exchanges internationally and leading banking and financial institutions.

5 5 Our Services Corporate and fiduciary services Fund Administration Escrow Services Fund Administration services Energy Desk Accounting Services Tax Planning & Consulting Services Bank Administration Services International Expansion Services Payroll Services Digital Office Services Yacht Leasing Services Intellectual Property Rights Residence Permit and Cypriot Citizenship Process Service Agent

6 6 Our Services Tax planning and consulting services Virtual and digital office facilities and real office use Corporate management services including multi-jurisdictional formation of corporate private and public entities, Funds (ICIS), partnerships, trusts, Cyprus Investment firms, Societas Europaea (including provision of directors, registered office, secretary,etc) Accounting and Book-keeping services, payroll services, tax and VAT compliance Opening and operating of bank accounts (both local and foreign) Our services are provided with high benchmarks for quality, loyalty, discretion and confidentiality

7 7 Cyprus An attractive jurisdiction Member State of the European Union since 2004 Wide network of agreements for the avoidance of double taxation Included in OECD s white report Highly skilled, flexible and professional work force and simple administrative procedures Highly competitive level of fees, wages and other costs Compliance with the European Union Laws, Code of Conduct for Business Taxation and Common Law based legal system; and Tax regime beneficial towards foreign investors

8 8 B. Cyprus Tax in a Nutshell

9 9 Cyprus Tax in a nutshell Cyprus tax residency is determined by the effective management and control Corporate tax rate 12.5% Dividend income is exempt from Income Tax* Profit from the disposal of securities is exempt* 80% of income from royalties is exempt from Income Tax Profits from permanent establishment outside Cyprus are exempt from Income Tax* Taxable losses are carried forward up to 5 years* Group relief for utilisation of tax losses* Dividends paid to foreign resident shareholders are free from Withholding taxes or any other taxes Interest paid to a non resident company is exempt from Withholding taxes *Subject to conditions

10 10 Cyprus Tax in a nutshell (continued) All expenses incurred for the production of income are tax deductible No thin capitalisation rules No transfer pricing rules; transactions incurred at arm s length principles Capital gains tax only imposed on profit on disposal of immovable property situated in Cyprus or shares of non listed Cy-Co owing immovable property Double tax treaties have been concluded with 54 countries from all continents and another 50 being negotiated Unilateral credit relief on foreign taxes Cyprus tax authorities provide binding advance tax rulings Cyprus permits the transfer of corporate seat into and out of Cyprus with no exit taxes or re-incorporation fees Cyprus has implemented the Merger Directive meaning that reorganizations, i.e. mergers, divisions, transfers of assets and exchange of shares involving Cyprus and EU companies are exempt from tax.

11 11 C. Introduction to tax planning: Tax Planning Structures

12 12 Introduction to tax planning: Tax planning structures Holding Company structure Cyprus Holding Co Dividends received by the CyCo are tax exempt No Withholding taxes on dividends paid by the CyCo Profit from the disposal of shares is tax free Non-EU or Non- Treaty subsidiary EU or Treaty subsidiary Minimum shareholding requirements do not apply Access to Double tax treaties Consolidation exemptions available for small groups

13 13 Introduction to tax planning: Tax planning structures Intermediate Holding Company structure EU or Treaty Holding Co Cyprus Holding Co Dividends received by the CyCo are tax exempt No Withholding taxes on dividends paid to the Holding Co Profit from the disposal of shares is tax free Minimum shareholding requirements do not apply Consolidation exemptions available Non-EU or Non- Treaty subsidiary EU or Treaty subsidiary

14 14 Introduction to tax planning: Tax planning structures Cyprus Financial Vehicle structure Holding Co grants loan to Cyprus Holding Co EU or Treaty Holding Co Used as a financing vehicle for high tax operating treaty Companies Profits of the Cy-Co taxed at 12.5% Income tax but no defence tax No Withholding tax on outgoing dividends and interest from Cyprus to ultimate investor Credit relief for interest withholding taxes Cyprus Holding Co grants loans to subsidiaries Cyprus Holding/ Financing Co Minimum interest margins apply for backto-back financing arrangements: % margin is required for advances more than 200m Non-EU or Non- Treaty subsidiary EU or Treaty subsidiary % for advances between 50m and 200m % for advances up to 50m % for advances made on an interest free basis

15 15 Introduction to tax planning: Tax planning structures Real Estate Investment structure Cyprus Holding Co (listed) Profit from the disposal of shares in real estate Co is tax free in Cyprus Dividends received by the CyCo are tax exempt Non-EU or Non- Treaty subsidiary EU or Treaty subsidiary No Withholding taxes on dividends paid to the Holding Co Credit relief for interest withholding taxes

16 16 Introduction to tax planning: Tax planning structures Cyprus fund/company trading securities EU or Treaty Holding Co Profit from disposal of securities* is tax exempt No Withholding tax on outgoing dividends and interest from Cyprus to ultimate investor Credit relief for withholding taxes Access to double tax treaties Cyprus Trading Fund/Co * Securities are defined as shares, bonds, debentures, futures, forwards, swaps, Repos, units in open or close ICIS, mutual funds etc

17 17 Introduction to tax planning: Tax planning structures Aircraft Leasing company EU or Treaty Holding Co Cyprus Holding Co Cyprus Leasing Co Cy subsidiary company leases or acquires aircraft and leases to airline Lease rentals included in taxable profits which are taxed at 12.5% Annual tax depreciation provided at 10-12% The monthly maintenance deposit payable to the Lessor is not subject to corporation tax in Cyprus (tax ruling obtained) Profit from disposal of shares and securities is exempt from tax No Withholding tax on outgoing dividends and interest from Cyprus to ultimate investor

18 18 Introduction to tax planning: Tax planning structures Yacht Leasing company EU or Treaty Holding Co Cyprus Holding Co Yacht leasing performed under Britishbased legal framework Simple registration process for yacht leasing scheme Provision for VAT reduction for yacht purchaser who will lease the yacht (based on type and size of yacht and time in EU waters) Effective VAT rate could be brought down to 3,4 %* No minimum lease period Cyprus Leasing Co Convenient lease repayment terms * Subject to conditions

19 19 Introduction to tax planning: Tax planning structures Structure using a Cyprus IP-owning company EU Non- EU Holding Co Cyprus IP owning Company EU or Treaty Subsidiary Net profits of the Cyprus Company subject to an effective tax rate lower than 2.5%* Profit from the disposal of IP subject to effective tax rate of 2.5%* Zero exit fee on sale of shares of entity owning the IP rights Reduced foreign withholding tax on royalty payments under the DTT No withholding taxes on dividends paid to the holding Company *assuming other expenses are incurred

20 20 Introduction to tax planning: Tax planning structures Cyprus International Trust Asset protection against creditors Income and gains of an international trust derived from sources outside the Republic shall be exempted from all kinds of tax in Cyprus and no estate duty shall be chargeable in respect of assets belonging to an international trust Possible orphan structures via charitable trusts Life insurance contracts Asset protection Anonymity of shareholder Life insurance contract owning transfers ownership of Company to insurance company

21 21 Introduction to tax planning: Tax planning structures Alternative Investment Funds (AIFs) AIFs can be considered the formation of the non-harmonised funds that concerns not only transferable securities but alternative investments (Hedge Funds, private equities, real estate, infrastructures) fully aligned with the AIFMD. Legal Forms. AIFs can be structured in the following forms: Limited Liability Company, with either variable or fixed capital Limited partnerships Common Fund, only for the unlimited type of AIFs where investors participate as co-owners of the assets Umbrella Fund

22 22 KOPTEKST IS HOOFDSTUKTITEL Introduction to tax planning: Alternative Investment Funds (AIFs) (continued) Tax Benefits: Wide Network of Treaties for the avoidance of double taxation; Dividend income is exempt from Income Tax*; Profit from the disposal of securities** is exempt; 80% of income from royalties is exempt from Income Tax; Profits from permanent establishments outside Cyprus are exempt from Income Tax*; Interest paid to a non-resident company is exempt from Withholding taxes. * Subject to conditions **In accordance with the Cyprus Income Tax Law, "Securities" means shares, bonds, debentures, founders' shares and other securities of companies or other legal persons, which are legally incorporated in the Republic or abroad and options thereon

23 23 Introduction to tax planning: Tax planning structures Cyprus Public Companies listed in foreign stock exchanges Public Companies share the same benefits as other legal entities Flexible Securities and Exchange Commission Compliance with the transparency directive Prospectus may be submitted in a language other than Greek Taxed as other corporate entities in Cyprus Public Companies listed in Cyprus Stock Exchange Emerging Companies Market (E.C.M.) Low listing requirements No capital threshold Exempt from CySec supervision Appointment of a Nominated Advisor, ensuring issuer s actions within institutional framework

24 24 D. Double Tax Treaties

25 25 Double Tax Treaties Cyprus has an extensive network of Bilateral Double Tax Treaties. Withholding taxes deducted from income received in Cyprus Dividends (%) Interest (%) Royalties (%) Dividends (%) Interest (%) Royalties (%) 1. Armenia 0/5 5/nil Finland 5/ Austria France 10/15 10/nil 0/5 3. Azerbaijan Germany 5/ Belarus 5 /10 / Greece /5 5. Belgium 10 /15 10/nil Hungary 5 /15 10/nil 0 6. Bosnia and Herzegovina 10/0 0 10/0 19. India 10 /15 10/nil Bulgaria Ireland 0 0 0/5 8. Canada 15 15/nil 10/nil 21. Italy China Kuwait 10 10/nil 5/nil 10. Czech Republic 0/ Kyrgyzstan Denmark 0 / Lebanon 5 5/nil Egypt Lithuania 5/nil Estonia Malta 0 10/nil 10

26 26 Double Tax Treaties Withholding taxes deducted from income received in Cyprus Dividends (%) Interest (%) Royalties (%) Dividends (%) Interest (%) Royalties (%) 27. Mauritius Slovenia 5 0/ Moldova 5 / South Africa Montenegro Spain 0/ Norway 0 / Sweden 5 10/nil Poland 0/5 5/nil Syria 0/15 10/nil 10/ Portugal 10/0 10/0 10/0 46. Tajikistan Qatar Thailand 10 10/15 5/10/ Romania 10 10/nil 5/nil 48. Ukraine Russia 5 / UAE San Marino United Kingdom 0/ /5 37. Serbia USA 5/15 10/nil Seychelles Uzbekistan Singapore 0 0/7/ Yugoslavia 10/0 0 10/0 40. Slovakia 10 10/nil 5/nil

27 27 Double Tax Treaties Withholding taxes deducted from income paid from Cyprus Same DTT provisions apply for income paid from Cyprus however according to Cyprus Income Tax Law no taxes are withheld for payments of dividends and interest to non residents in the Republic. No tax is withheld on royalties paid for use outside Cyprus.

28 28 E. Contact us

29 29 Contact us CONSTANTINOS ECONOMIDES Managing Director OFFICES ADDRESS: KIBC, 6 th Floor Telephone Profiti Ilia No 4 Mobile Constantinos.Economides@orangefield.com Germasogeia, Limassol, 4046, Cyprus P.O. Box 50734, 3609, Limassol, Cyprus MARY TRIMITHIOTOU Director Telephone Mobile Mary.Trimithiotou@orangefield.com