“Substance is considered as a significant element in tax planning”
“Management and Control” are the principles determining the tax residency of a company. Due to the fact that the establishment of the management and control in Cyprus is not formally defined, it is suggested the following parameters to be taken into consideration:
- The majority of the Company’s Directors to reside in Cyprus
- The local directors of the company to take important company decisions in Cyprus
- Maintenance of company’s headquarters in Cyprus
- Company’s economic substance in Cyprus
there are some minimum common elements of substance that a company is required
to have, which are the following:
- Company’s actual physical presence in Cyprus, either by leasing or owning an office in a business centre
- Employment of people in the company’s office (either full-time or part-time)
- Existence of exclusive telephone, fax, internet, website and email addresses
- Company’s opening of bank account in a Cypriot bank, which will be operated by a Cypriot member of the Board of Directors
- Continuous existence of appropriate accounting books in Cyprus and on-time submission of the company’s annual financial statements
- Company must be suitably capitalized and must have in its premises the required Share Purchase Agreements according to the provisions of Cyprus Law.
The above comments must considered to be only general guidelines since substance’s requirements must be taken into account depending on each individual case.The content of this circular is for information purposes only and is not tax or legal advice. Our team of specialists is ready to assist you in detail on all tax matters.