7.1 Under the Companies Law, Chapter 113, foreign companies may register a branch in Cyprus, provided that the approval of the Central Bank is obtained. Such approval is readily granted following receipt of satisfactory bank references for the foreign company. Once permission has been obtained, the following documents translated into Greek must be filed with the Registrar of Companies:-
- Certified copy of the Memorandum and Articles of Association, or the charter or other instrument defining the constitution of the company.
- Particulars of directors and secretary of the company.
- Name and address of at least one person resident in Cyprus who is authorised to accept service of notices on behalf of the company.
7.2 For a branch to obtain international status and take advantage of the attendant benefits, it must comply with the following requirements:
7.2.1 the shares in the company must belong, either directly or indirectly, to foreigners; and
7.2.2 the business of both the company and the branch must be carried on outside Cyprus.
There is a distinct difference between international branches which have their management and control located in Cyprus and those which operate as brass-plate entities due to location of their management and control abroad. Although both are able to enjoy the usual benefits available to international entities, it is crucially important to distinguish the two as they are subject to entirely different tax rates and may even be subject to varying tax treatment in their home countries.
Whenever the management and control of the activities of an international branch is located outside the island, its net profits will be totally exempt from tax. However, where the management and control of the branch is based in Cyprus, tax will be levied on its net profits at a rate of 4.25 per cent. Experience has shown that it is this tax element, when combined with tax provisions in the country of origin, which determines whether it is advisable to locate branch management and control in Cyprus or not.
The registration costs of international branches are relatively low and are likely to be in the region of CY£1,000, inclusive of the professional fees, stamp duty and other miscellaneous expenses.
The purpose of this publication is to assist clients and associates in clarifying and appreciating the range of opportunities which are available in or through Cyprus. Although every effort has been made to provide the reader with a clear and comprehensive picture of the island's beneficial regime, it should be appreciated that is not possible to cover all aspects comprehensively in a publication of this size.
Individuals or companies who are seriously considering using Cyprus for any of their international business activities are advised to obtain expert professional advice before taking positive action.