If you are currently doing business in EU, you must've noticed the changes in term of who to trust - and not to trust. One of the major changes is potentially disruptive: Today, it's very difficult to invoice companies in EU if your company is headquartered in popular tax haven jurisdictions, such as Belize and Seychelles.
As a business owner, you need to respond to the changes accordingly – while keeping your tax expenses manageable. One of the options that you have is by moving your EU operations to a jurisdiction that's not popularly known as a tax haven.
Depending on what you define as “tax haven”, there are offshore jurisdictions in Europe that, although not adopting zero-taxation, have low corporate income tax rates.
There are several jurisdictions that have corporate tax rates equal or lower than 15 percent. Montenegro, for example, has an annual corporate tax of 9 percent. Macedonia and Bulgaria have a corporate tax rate of 10 percent. Cyprus taxes businesses at 12.5 percent. Albania taxes corporations at 15 percent annually (source).
Of the four mentioned above, Cyprus is an interesting jurisdiction that you should highly consider as your headquarter for EU operations. Here's why.
Cyprus, an island country in the Eastern Mediterranean Sea, is known as a major tourist destination in the Mediterranean. It has an advanced, high-income economy and a very high Human Development Index (source). However, 2012-2013 is not a great period of time in Cyprus' history.
Before the infamous Greek debt crisis, there's Cypriot financial crisis. The crisis ended with a 10-billion-euros international bailout in 2013. Cyprus has managed to survive, and continues to recover rapidly.
The recovery is driven by strengthening traditional productive sectors, diversification and working on areas that attract foreign direct investment, including the country's enhanced role as an international financial center.
All of those sounds great, but what may interest you is these two upsides:
1. Cyprus' corporate tax rate: 12.5 percent
Indeed, Cyprus isn't a local-tax-exempt jurisdiction like Belize, Seychelles and Ras Al Khaimah. However, as an EU member, it offers a major perk when doing business with companies in EU: Compliance with EU companies' invoicing rules and regulations.
If you establish a company in Cyprus, you're liable to pay taxes on your income as the results of your business operations in Cyprus and overseas. The rate of 12.5 percent applies to all companies, with several exemptions (full-amount):
- Profits from securities sales,
- Interest isn't arising from the ordinary activities/closely-related to the ordinary activities,
- Profits of a permanent establishment overseas (certain conditions applied).
More info on the Cyprus tax exemptions and deductions.
2. Cyprus is not perceived as “tax haven”
Belize is “notoriously” known as a tax haven, and the authorities in onshore jurisdictions always try to limit access to such tax havens. As mentioned above, EU companies are now requiring businesses to provide required documents that can't be provided by such jurisdictions, such as Intra-Community VAT number.
When you are registering your company in Cyprus, you'll be given the Intra-Community VAT number, which is essential in doing business with EU-based companies.
How to get incorporated in Cyprus
You can always travel to Cyprus and set up a company there, but there's a better way: Using our service, we can help you in setting up an offshore company in Cyprus without the need for you to personally travel to Cyprus.
To get started, we need to make sure that you are fully aware of what you can or can't do with your Cyprus company – and in general, identifying whether going offshore is the best route for you. You'll then need to submit the required documents for us to kickstart the process.
Starting from EUR 1,650, our packages includes Cyprus company, Cyprus bank account, nominee services and Intra-Community VAT number.
Cyprus, although not popularly known as a tax haven, provides much more advantages to companies registered in the jurisdiction. Beyond the low tax rate, its stable political environment and rapid economic recovery, as well as the ability for you to do business with EU companies, make Cyprus a great headquarter for your business operations.
If you're looking for expert insights on Cyprus, consult with us. It's free of charge!