Creating substance in Cyprus has become a definitive solution for overseas companies seeking to solidify their tax status in Cyprus, to resolve any taxation discrepancies and in order to meet criteria for regulatory legislature in place, such as:
Due to continuous reforms and tougher requirements for transparency and reporting, businesses are increasingly looking to Cyprus to build real economic substance and settle their activities here due to the well-known attractive tax and legal system.
Substance in Cyprus can be obtained:
When a company complies with all the practical standards of substance and becomes tax resident in Cyprus, it will be taxed on its worldwide income accrued or rising from sources both within and outside Cyprus at a flat rate of 12.5%.
Cyprus Tax Residency establishes that the entity will be subject to Cyprus tax law and to tax benefits arising from the Cyprus double tax treaty network. The main benefit of a tax treaty is the avoidance of double taxation on income earned.
Other benefits include:
Moreover, in order to support tax residency and thus economic substance of a Cyprus registered company, appropriate corporate governance procedures and indicators must be in place, such as: