We have in depth experience in establishing and working with a variety of corporate vehicles in many jurisdictions.
The Cyprus Jurisdiction
Cyprus enjoys an international reputation as a low tax jurisdiction and as a Centre of excellence for financial services. Cyprus, officially the Republic of Cyprus, is an island in the Eastern Mediterranean, east of Greece. It is the third largest island in the Mediterranean Sea and one of its most popular tourist destinations. Taking into consideration and acknowledging the competition targeting Cyprus from other low tax or no tax jurisdictions, we remain confident that Cyprus continues to provide a complete value proposition for foreign investors as a financial and Fiduciary Business Centre. Numerous incentives and tax reasons for using a Cyprus company include:
- Internationally acclaimed entities offering legal, accounting and banking related services – Legal system based in English common law with amendments to incorporate EU directives
- Member of the EU since 2004 and a member of the Eurozone since 2008
- Modern tax regime acceptable by the EU.
- One of the lowest corporation tax rates in Europe (12.5%).
- Dividend income is exempt from corporation tax.
- Effective tax on royalty income of 2.5%.
- No capital gains tax on profit from sale of securities.
- No withholding tax on payments to non-residents (dividends, interest and royalties).
- Non-resident entities are only taxed on their Cyprus-sourced income.
- Profits from overseas permanent establishments are exempt from corporation tax.
- Wide treaty network and use of EU Directives.
The BVI, Belize and Seychelles Jurisdictions
Advantages of Registering a Corporate Business
British Virgin Islands, Belize or Seychelles offshore companies are offering various tax benefits to non-residents, thus promoting what is called offshore business. Are extremely popular and widely perceived as offshore tax havens. BVI Company formation offers a host of benefits not readily available in most other jurisdictions. The concessions and benefits may come in different forms. It may be a zero income tax for all (British Virgin Islands Business Companies), a complete tax exemption for all international business operated by non-residents (Seychelles or Belize International Business Companies), an ultra-low income tax for international businesses (Seychelles Special License Companies pay 1.5% tax), local tax exemption for investments (Portugal, Iceland); In addition, some countries offer superior legal protection from creditors and potential litigants who might attempt to seize an individuals’ wealth. This is the other most important reason why offshore jurisdictions are so popular – asset protection.
Some of the more important factors contributing to the success of the British Virgin Islands are:
- BVI are a British Overseas Territory, with the inherent political stability that this brings.
- Currency of the BVI is the U.S. dollar and there is no domestic currency whatsoever. Not only are there no currency controls, but with the US$ used as the BVI currency, it is essentially impossible for the government to regulate the money supply and hence to ever impose currency controls.
- BVI is well served by air transportation and international communications. It is in the Atlantic time zone, making it the same time as Eastern Standard Time (New York, Toronto) in the summer and one hour earlier in the winter. (There is no Daylight Savings Time in the BVI.)
The Luxembourg Jurisdiction
Advantages of Registering a Corporate Business
Luxembourg is one of the largest global financial centers, benefiting from flexible and attractive legal, regulatory and tax regimes and a significant concentration of professional service providers to the financial services industry.
Tax Residency: A company is considered to be tax resident in Luxembourg if either its legal seat or place of central administration is located in Luxembourg.
Taxable Income: Luxembourg tax resident companies are taxed on their worldwide income. Non-Luxembourg tax resident companies are taxed only on income generated in Luxembourg.
Taxable Accounting Period: The taxable period for a company in Luxembourg is either the calendar year or its accounting year.
Tax Returns: Every company needs to submit an annual tax return by 31st of May of the following tax year.
Tax Assessments of the year: Assessments are issued after the end of the tax year and are usually finalized within 5 years. If the tax return is found to be incorrect or incomplete (with or without intention of fraud) the period increases to 10 years.
Corporation Tax: Corporation tax is levied at the rate of 21% for companies with taxable income above €15,000 and at 20% for companies with taxable income less than €15,000.
Taking into account the Employment Fund Surcharge of 7% on corporation tax liability and the Municipal Business Tax (see below in Other Taxes) then the effective tax for a corporation in Luxembourg rises to 28.15% and 29.22% respectively (27.75% and 28.80% respectively before 31 December 2014) is payable by companies whose balance sheet at the end of the fiscal year consists more than 90% of financial assets, transferable securities and cash at bank. In addition, a minimum corporate tax will be imposed on all other companies. This minimum corporate tax will depend on the balance sheet total of each company.