ESTABLISHING SUBSTANCE IN CYPRUS
Recent developments have underlined the need for businesses to have real substance in order to operate and benefit from tax residence in Cyprus.
Creating sufficient substance in Cyprus is a key element in order to minimize the risk of denial of double tax treaty benefits and of a foreign tax authority seeking to challenge a company’s tax residency status and try to tax it under its own legislation.
The below, although not exhaustive, are some of the factors that may assist in creating and defending the substance of companies established in Cyprus:
- Employ qualified and knowledgeable directors and managers who are located in Cyprus and exercise the day to day operational functions of the company
- Strategic decisions actually being taken by directors’ meetings in Cyprus
- Maintaining full documentation of the decision making process and administration of the company taking place in Cyprus
- Accounting function should be performed within Cyprus, while books and records of the company should be kept in Cyprus
- Establish separate fully-fledged offices in Cyprus. This may also be in a form of leasing/renting different office spaces within a service provider’s business premises. The company’s letterheads, brochures, websites should include the local address and telephone numbers and not foreign details. The company must have its own telephone , fax and internet lines
- Comply with all legal and regulatory requirements in Cyprus and ensure that all statutory filings, i.e. VAT, tax, social insurance filings as well as payments, are up to date.
Numerise can provide a wide range of services to assist a company in enhancing presence in Cyprus and in strengthening its economic substance which include:
- The review of the current level of substance of a company in Cyprus and making recommendations based on best practices
- Assistance with setting-up of an office, hiring local personnel, dealing with migration formalities and drafting of employment contracts;
- Tax and legal support regarding the redomiciling of a company to Cyprus
- Support with respect to ongoing administrative functions of companies (accounting, payroll and HR solutions)
- Rental of office space / separate offices
- Telephone – fax line (dedicated) , emails and Website setup
- Employment services – recruitment and registration
- Appointment of experienced qualified professionals as directors