Archive for January, 2011
Why Pay High Taxes For Your Trading Company?
Posted by Offshore Expert in Cyprus Company Formation on January 17, 2011
Higher taxes eat into the profits, the lifeblood of a successful business. So, from a business point of view, it's almost a cardinal sin and serious error of judgment not to look at all the options to reduce the tax as much as possible – legally and efficiently. The matter of tax and how to reduce it gets even more interesting when it comes to trading companies involved in cross-border trade i.e. international trading companies**. This is simply because for an international trading company, there are so many and relatively easy to implement tax mitigation options that to ignore them tantamounts to “NOT” a prudent choice in my opinion.
“Saving Tax” doesn't have to be taxing
A very popular and effective tax mitigation option, which International Trading Companies have is to move their tax bases to stable, low-tax jurisdictions. Popularity of low tax jurisdictions amongst the international trading companies is also due to the fact that it is relatively easy to implement highly tax efficient corporate structures for such companies. Let's have a quick look at it….
Trading between two companies involves one company buying the goods/services and the other company (seller) getting the payment in exchange. In ordinary cases (where, No low-tax jurisdiction alternatives have been used), the country which gets to charge the tax (corporate tax) on the profit made by the seller is the home country of the seller (i.e. where the seller is resident). But, by creating an intermediary company in a low-tax jurisdiction, it is possible to get the most of the profits (if not all) taxed in low-tax jurisdiction as opposed to the home country, thereby saving a substantial amount on the taxes otherwise payable in the home country. Such an intermediary company can be used to play a very effective role in any of the areas like sales, distribution or export-import to ensure that the above benefits are gained.
The exporters and importers alike could use such a corporate arrangement to ensure that the profits gained in exportation / importation (on eventual sales of the imported goods) is accumulated in the low-tax jurisdiction through the intermediary company. In fact, the intermediary company could be used to purchase directly from the producer or wholesaler and get the goods delivered to the buyer (customer). Moreover, in most cases, it is not a requirement to have the physical delivery of the goods in / through low-tax jurisdiction to gain the desired taxation benefits.
Are there any particular considerations for such corporate structures?
This corporate structuring has to be set up under certain rules and one of them is the arm's length principle, which is used (in effect) by many countries to ensure that the profits allocated to the low-tax jurisdictions are not unfairly large. The implementation of such rules varies from country to country and that's where certain countries, such as Cyprus (where there is absence of strict transfer pricing rules), are advantageous to operate from. In order to justify and rationalize the allocation of most of the profits to the low tax jurisdiction, specialist tax advice should be sought at the time of company incorporation to ensure that all the nuts and bolts are in place. With the aid of specialist tax advice, such a corporate structuring is certain to be very beneficial for trading companies in saving substantial amounts on tax.
“It is” but “Not all” about Tax saving
While the huge savings in taxes often provide an obvious advantage and incentive to move tax base to low-tax jurisdictions, there are many more strategic reasons and considerations, which also have to form a part of the decision making, such as:
1. Does this new base open a new market for your business, markets such as EU?
2. Does the new base offer your business the strategic locational advantage such as proximity to multiple trade hubs / continents?
3. Does the new base offer politically stable and economically strong (growth possibilities) region?
4. Does the new base have the advanced infrastructure for banking, telecom etc?
5. Will the new base enhance your company's brand and chances of securing more business?
6. Does the new base have favourable tax treaties with other countries?
7. Is the new base viewed with suspicion in the eyes of most of the countries? – Be careful with traditional tax havens / offshore jurisdictions. They may not be advantageous in the longer run.
8. Is the new base welcoming to the foreign companies?
So, what are the jurisdictions which international trading companies can use to attain the above benefits? Well, the answer in EU is unanimously Cyprus.
Cyprus: An “Ideal” location to operate your international trading company from
One of the best jurisdictions, which can be used to effect the above corporate structuring, is Cyprus. This is simply because of the natural tax advantages Cyprus holds in addition to its EU and Eurozone member status. At a high level, following are some of the most important benefits and reasons for international trading companies to consider shifting to / starting in Cyprus as a base for their international operations.
-Corporate tax rate of 10% (Cyprus is the “Lowest-Tax” European Union jurisdiction)
-EU and Eurozone member (Respectable EU member state, not a traditional Tax Haven or Offshore Jurisdiction. This is very important consideration for long-term viability of the business)
-Cyprus is recognized as one of the best, investor-friendly tax system in European Union (EU)
-Tax Exemptions (No Tax) on:
Dividend Income
Profits from the sale of securities (shares, bonds, debentures etc)
Liquidation of the Cypriot Company
Profits (Capital Gains) on Permanent Establishment
- No Withholding taxes on payments of dividends, interest and royalties
- No debt-equity and thin capitalization rules
-Access to EU directives which helps further on taxation planning for trading with EU countries
-No Capital Gains Tax except for the real estate situated in Cyprus
-Absence of no strict Transfer pricing rules
-Vast network of Double Tax Treaties
-Interest deduction for borrowing costs provided
-Low Personal tax rate
-Unilateral tax-relief for foreign tax suffered is granted to all Cypriot companies
-Tax losses can be carried forward indefinitely
Where to seek help from?
Prosperous Consultants, a well renowned specialist tax advisory firm can help you set up your company base in Cyprus. Prosperous Consultants also provide many other related services to make your transition completely hassle-free.
If you would like further information about reducing your corporate tax burden, please Contact us
Setting Up a Limited Company – Pros and Cons
Posted by Offshore Expert in Holding Company on January 13, 2011
So, you've just won your first contract and your agency is asking you for the details of your UK limited company. What do you do; should you setting up a limited company? How do you know whether the limited liability company route is best for you, or would an alternative trading option be better? There are advantages and disadvantages to running UK companies. It is your personal circumstances, your career plans and aspirations and the nature of your contract that will determine the right trading option for you. You may also find that the decision is taken out of your hands, and that your agency or client insists that you set up a limited company before they will even do business with you.
UK limited company advantages
Company formation is incredibly fast and inexpensive. You can register a limited company with Companies House, the UK agency which regulates every ltd company in England and Wales, in a matter of hours and for as little as a few tens of pounds if using an online service. As a contractor you can benefit from significant tax advantages by trading through a ltd business. Most contractors pay themselves a minimum salary and take the company profits as dividends, which can result in much higher take-home pay compared to being paid a salary from other trading options.
You can claim legitimate business expenses from your own ltd company, such as the costs of running a home office with all the computers, software and equipment that requires, plus travel expenses, subsistence and even training costs. And, as its name suggests, a limited liability company can protect your personal assets, such as your home, if the worst happened and a client decided to sue your company.
Disadvantages of a limited liability company
Even though your company is a separate legal entity from you personally, you still have duties, obligations and responsibilities as a shareholder and director. This would not apply were you to contract via an alternative trading option.
After you register a limited company, you must send annual accounts prepared by your accountant, annual returns and notifications of any changes to shareholdings and company officers, such as directors and company secretaries, to Companies House
Your UK limited company must also file a corporate tax return with HM Revenue and Customs, the UK's tax collection agency; failure to do so can result in fines and even criminal prosecution.
Evaluate the pros and cons before deciding
Setting up a limited company can bring you many benefits, such as increased take-home pay, the ability to claim business expenses and protection from clients looking for a scapegoat.
But some contractors feel the burden of paperwork, such as corporate tax returns, and the responsibility of running a company are too great and choose alternative options for contracting.
Consider the pros and cons and consult a professional, such as a contractor accountant, before making your final decision about whether registering a limited company is right for you.
Dave Chaplin was an IT contractor in the City and knows what it takes to carve out a successful contracting career. He has turned all his and dozens of contractor experts' experiences into a fantastic resource of guides, advice & detailed contractor information, including loads of guidance about setting up a limited company.
Why Pay High Taxes For Your Trading Company?
Posted by Offshore Expert in Cyprus Company Formation on January 13, 2011
Higher taxes eat into the profits, the lifeblood of a successful business. So, from a business point of view, it's almost a cardinal sin and serious error of judgment not to look at all the options to reduce the tax as much as possible – legally and efficiently. The matter of tax and how to reduce it gets even more interesting when it comes to trading companies involved in cross-border trade i.e. international trading companies**. This is simply because for an international trading company, there are so many and relatively easy to implement tax mitigation options that to ignore them tantamounts to “NOT” a prudent choice in my opinion.
“Saving Tax” doesn't have to be taxing
A very popular and effective tax mitigation option, which International Trading Companies have is to move their tax bases to stable, low-tax jurisdictions. Popularity of low tax jurisdictions amongst the international trading companies is also due to the fact that it is relatively easy to implement highly tax efficient corporate structures for such companies. Let's have a quick look at it….
Trading between two companies involves one company buying the goods/services and the other company (seller) getting the payment in exchange. In ordinary cases (where, No low-tax jurisdiction alternatives have been used), the country which gets to charge the tax (corporate tax) on the profit made by the seller is the home country of the seller (i.e. where the seller is resident). But, by creating an intermediary company in a low-tax jurisdiction, it is possible to get the most of the profits (if not all) taxed in low-tax jurisdiction as opposed to the home country, thereby saving a substantial amount on the taxes otherwise payable in the home country. Such an intermediary company can be used to play a very effective role in any of the areas like sales, distribution or export-import to ensure that the above benefits are gained.
The exporters and importers alike could use such a corporate arrangement to ensure that the profits gained in exportation / importation (on eventual sales of the imported goods) is accumulated in the low-tax jurisdiction through the intermediary company. In fact, the intermediary company could be used to purchase directly from the producer or wholesaler and get the goods delivered to the buyer (customer). Moreover, in most cases, it is not a requirement to have the physical delivery of the goods in / through low-tax jurisdiction to gain the desired taxation benefits.
Are there any particular considerations for such corporate structures?
This corporate structuring has to be set up under certain rules and one of them is the arm's length principle, which is used (in effect) by many countries to ensure that the profits allocated to the low-tax jurisdictions are not unfairly large. The implementation of such rules varies from country to country and that's where certain countries, such as Cyprus (where there is absence of strict transfer pricing rules), are advantageous to operate from. In order to justify and rationalize the allocation of most of the profits to the low tax jurisdiction, specialist tax advice should be sought at the time of company incorporation to ensure that all the nuts and bolts are in place. With the aid of specialist tax advice, such a corporate structuring is certain to be very beneficial for trading companies in saving substantial amounts on tax.
“It is” but “Not all” about Tax saving
While the huge savings in taxes often provide an obvious advantage and incentive to move tax base to low-tax jurisdictions, there are many more strategic reasons and considerations, which also have to form a part of the decision making, such as:
1. Does this new base open a new market for your business, markets such as EU?
2. Does the new base offer your business the strategic locational advantage such as proximity to multiple trade hubs / continents?
3. Does the new base offer politically stable and economically strong (growth possibilities) region?
4. Does the new base have the advanced infrastructure for banking, telecom etc?
5. Will the new base enhance your company's brand and chances of securing more business?
6. Does the new base have favourable tax treaties with other countries?
7. Is the new base viewed with suspicion in the eyes of most of the countries? – Be careful with traditional tax havens / offshore jurisdictions. They may not be advantageous in the longer run.
8. Is the new base welcoming to the foreign companies?
So, what are the jurisdictions which international trading companies can use to attain the above benefits? Well, the answer in EU is unanimously Cyprus.
Cyprus: An “Ideal” location to operate your international trading company from
One of the best jurisdictions, which can be used to effect the above corporate structuring, is Cyprus. This is simply because of the natural tax advantages Cyprus holds in addition to its EU and Eurozone member status. At a high level, following are some of the most important benefits and reasons for international trading companies to consider shifting to / starting in Cyprus as a base for their international operations.
-Corporate tax rate of 10% (Cyprus is the “Lowest-Tax” European Union jurisdiction)
-EU and Eurozone member (Respectable EU member state, not a traditional Tax Haven or Offshore Jurisdiction. This is very important consideration for long-term viability of the business)
-Cyprus is recognized as one of the best, investor-friendly tax system in European Union (EU)
-Tax Exemptions (No Tax) on:
Dividend Income
Profits from the sale of securities (shares, bonds, debentures etc)
Liquidation of the Cypriot Company
Profits (Capital Gains) on Permanent Establishment
- No Withholding taxes on payments of dividends, interest and royalties
- No debt-equity and thin capitalization rules
-Access to EU directives which helps further on taxation planning for trading with EU countries
-No Capital Gains Tax except for the real estate situated in Cyprus
-Absence of no strict Transfer pricing rules
-Vast network of Double Tax Treaties
-Interest deduction for borrowing costs provided
-Low Personal tax rate
-Unilateral tax-relief for foreign tax suffered is granted to all Cypriot companies
-Tax losses can be carried forward indefinitely
Where to seek help from?
Prosperous Consultants, a well renowned specialist tax advisory firm can help you set up your company base in Cyprus. Prosperous Consultants also provide many other related services to make your transition completely hassle-free.
If you would like further information about reducing your corporate tax burden, please contact us!
How Do I Become an EU (European Union) Citizen in Cyprus?
Posted by Offshore Expert in Cyprus Company on January 12, 2011
In simple terms, the European Union (EU) Citizenship is the complementary citizenship (referred to as “additional to national citizenship” in the Treaty on the functioning of the European Union) automatically granted to the nationals of an EU Member state. So in order gain EU citizenship, you have to be a national of any of the EU member States first.
Citizens of the European Union enjoy many of the associated rights including the right to move and reside feely within the territory of the member states. But, it is getting increasingly tougher to gain the citizenship of the most of the EU member states. This is partially fuelled by the concerned voices raised by the nationals of the EU member states in light of the high unemployment rate and the global financial crisis. One of the EU states which is actively promoting investment and immigration into its country is Cyprus. Cyprus offers Immigration Visas, which can be leveraged by the financially healthy individuals (/ their companies) of the Non-EU Nationals to move to Cyprus permanently with a view to gain Cyprus / European Union citizenship in due course. Of course, there are immigration policies that need to be complied with and these are set below. Please ensure you read and understand the requirements set out below if you are looking to immigrate to Cyprus.
When Cyprus Immigration approves you for a “Category F” Visa permit, you are automatically allowed to stay in Cyprus permanently, for an indefinite period of time – No need to apply for a visa or to reapply for a new Cyprus entry visa. While this offers a route to become a European Union (EU) Citizen, it is also true that Cyprus offers its unique advantages for a healthy and prosperous living through an advanced infrastructure, efficient professional services, highly qualified and multilingual labour force, favourable tax regime, lot of investment opportunities and one of the best climates in whole of the Europe.
If you apply for a Cyprus Category F permanent migration / immigration visa you automatically have the option to become a Cyprus Citizen (you can apply for Full Cyprus Citizenship in the sixth year of residency) which means you can travel to any European Union Country or European Member State and move freely in these Countries. You can also start up your own business, buy a new home and there are no restrictions. For example, if you become a Cyprus Citizen you are free to move permanently into the UK and you will no longer require a visa to get entry into the UK. Cyprus Category F visa also allows your dependants to be included and therefore your whole family can move to any part of Europe e.g. UK (as mentioned in our previous example). In essence, you are also free to further migrate to UK, Germany, Ireland, Spain or any other European Member state Country, if you wish to.
We would suggest you speak to Prosperous Consultants Immigration Visa Specialists in Cyprus who will be able to give you all the advice on how you should proceed.
For further information please contact us
Why Pay High Taxes For Your Trading Company?
Posted by Offshore Expert in Cyprus Company Formation on January 11, 2011
Higher taxes eat into the profits, the lifeblood of a successful business. So, from a business point of view, it's almost a cardinal sin and serious error of judgment not to look at all the options to reduce the tax as much as possible – legally and efficiently. The matter of tax and how to reduce it gets even more interesting when it comes to trading companies involved in cross-border trade i.e. international trading companies**. This is simply because for an international trading company, there are so many and relatively easy to implement tax mitigation options that to ignore them tantamounts to “NOT” a prudent choice in my opinion.
“Saving Tax” doesn't have to be taxing
A very popular and effective tax mitigation option, which International Trading Companies have is to move their tax bases to stable, low-tax jurisdictions. Popularity of low tax jurisdictions amongst the international trading companies is also due to the fact that it is relatively easy to implement highly tax efficient corporate structures for such companies. Let's have a quick look at it….
Trading between two companies involves one company buying the goods/services and the other company (seller) getting the payment in exchange. In ordinary cases (where, No low-tax jurisdiction alternatives have been used), the country which gets to charge the tax (corporate tax) on the profit made by the seller is the home country of the seller (i.e. where the seller is resident). But, by creating an intermediary company in a low-tax jurisdiction, it is possible to get the most of the profits (if not all) taxed in low-tax jurisdiction as opposed to the home country, thereby saving a substantial amount on the taxes otherwise payable in the home country. Such an intermediary company can be used to play a very effective role in any of the areas like sales, distribution or export-import to ensure that the above benefits are gained.
The exporters and importers alike could use such a corporate arrangement to ensure that the profits gained in exportation / importation (on eventual sales of the imported goods) is accumulated in the low-tax jurisdiction through the intermediary company. In fact, the intermediary company could be used to purchase directly from the producer or wholesaler and get the goods delivered to the buyer (customer). Moreover, in most cases, it is not a requirement to have the physical delivery of the goods in / through low-tax jurisdiction to gain the desired taxation benefits.
Are there any particular considerations for such corporate structures?
This corporate structuring has to be set up under certain rules and one of them is the arm's length principle, which is used (in effect) by many countries to ensure that the profits allocated to the low-tax jurisdictions are not unfairly large. The implementation of such rules varies from country to country and that's where certain countries, such as Cyprus (where there is absence of strict transfer pricing rules), are advantageous to operate from. In order to justify and rationalize the allocation of most of the profits to the low tax jurisdiction, specialist tax advice should be sought at the time of company incorporation to ensure that all the nuts and bolts are in place. With the aid of specialist tax advice, such a corporate structuring is certain to be very beneficial for trading companies in saving substantial amounts on tax.
“It is” but “Not all” about Tax saving
While the huge savings in taxes often provide an obvious advantage and incentive to move tax base to low-tax jurisdictions, there are many more strategic reasons and considerations, which also have to form a part of the decision making, such as:
1. Does this new base open a new market for your business, markets such as EU?
2. Does the new base offer your business the strategic locational advantage such as proximity to multiple trade hubs / continents?
3. Does the new base offer politically stable and economically strong (growth possibilities) region?
4. Does the new base have the advanced infrastructure for banking, telecom etc?
5. Will the new base enhance your company's brand and chances of securing more business?
6. Does the new base have favourable tax treaties with other countries?
7. Is the new base viewed with suspicion in the eyes of most of the countries? – Be careful with traditional tax havens / offshore jurisdictions. They may not be advantageous in the longer run.
8. Is the new base welcoming to the foreign companies?
So, what are the jurisdictions which international trading companies can use to attain the above benefits? Well, the answer in EU is unanimously Cyprus.
Cyprus: An “Ideal” location to operate your international trading company from
One of the best jurisdictions, which can be used to effect the above corporate structuring, is Cyprus. This is simply because of the natural tax advantages Cyprus holds in addition to its EU and Eurozone member status. At a high level, following are some of the most important benefits and reasons for international trading companies to consider shifting to / starting in Cyprus as a base for their international operations.
-Corporate tax rate of 10% (Cyprus is the “Lowest-Tax” European Union jurisdiction)
-EU and Eurozone member (Respectable EU member state, not a traditional Tax Haven or Offshore Jurisdiction. This is very important consideration for long-term viability of the business)
-Cyprus is recognized as one of the best, investor-friendly tax system in European Union (EU)
-Tax Exemptions (No Tax) on:
Dividend Income
Profits from the sale of securities (shares, bonds, debentures etc)
Liquidation of the Cypriot Company
Profits (Capital Gains) on Permanent Establishment
- No Withholding taxes on payments of dividends, interest and royalties
- No debt-equity and thin capitalization rules
-Access to EU directives which helps further on taxation planning for trading with EU countries
-No Capital Gains Tax except for the real estate situated in Cyprus
-Absence of no strict Transfer pricing rules
-Vast network of Double Tax Treaties
-Interest deduction for borrowing costs provided
-Low Personal tax rate
-Unilateral tax-relief for foreign tax suffered is granted to all Cypriot companies
-Tax losses can be carried forward indefinitely
Where to seek help from?
CCLOGIC.COM provides comprehensive information and help in order to incorporate your Cyprus Company!
Cyprus Company Incorporation 2011 – why Cyprus Company?
Posted by peter in Cyprus Company Formation, Holding Company on January 6, 2011
First of all I whish all our readers a happy new year 2011, we want to start this year by quickly outline the different benefits a Cyprus Company has compared to many offshore jurisdictions.
A Cyprus Company can be registered for VAT (actually the rate is 15%) this is of the benefit for the owners and the companies business customers because they are able to deduct the VAT they have paid to your company from their local VAT amount they have to pay to the local VAT / Tax office. Further Cyprus has the lowest VAT and Tax within the European Union which is from a competition point of view a great advantage since you can offer your services and goods to a lower price than your competition in other EU countries can.
A Cyprus Company only pays 10% corporate TAX which is the lowest in the entire European Union, again from a competition point of view it is a great advantage since the company will be able to reinvest more money into the business activities or to the owners in order to be more profitable and to grow, then the competition in other EU countries.
A Cyprus Company don’t pay any tax on Interest or Dividends, means more profit to the owners, further it is allowed to make loans in a Cyprus company which is not allowed in almost any other EU company.
Cyprus has a Double Tax Agreement with the Seychelles which means the company has to pay tax in the Country of operation, so towards your clients it can look like it is a European Company they do business with but structured correctly it is a Seychelles company, so the operation has to be managed in the Seychelles which is properly not an issue to prove, since the tax rate in the Seychelles is 0% the corporation has no tax to be paid.
With a Cyprus Company the owners comply to European Laws which means more trust to your company compared to any Offshore jurisdiction like Panama, Belize, St. Kiits etc. – it also means that the Cyprus company avoid to be on different governments radar while doing legal business, this also towards the banks who have to transfer money to the bank from customers who bought a service or products from the company.
A Cyprus Company can help you to grow your wealth if structure right, no other country will offer you that benefit that’s why Cyprus is the most popular jurisdiction even in 2011 to do business.
A Cyprus Holding Company has a lot more to offer than just the above mentioned, for instant if the goal is to make huge profits but at the same time to achieve Asset Protection then a Cyprus Holding Company offer you all this, do you for instant know that it costs a lot of money to try to sue a Cyprus company for any reason or to try any debt collection? – No this is not known by many, but compared to for instant UK, Germany, Sweden or Denmark where you can get a court order for almost free in order to collect your debts then it costs a fortune for the creditor to collect those money. Also all asset’s in a Cyprus Holding company are “moveable” means you can if done right move your assets to another company so that if a creditor should penetrate the company in question there will be no assets.
A Cyprus Company can be structured by using Nominee Directors and Shareholders 100% anonym, that’s not possible in most other European Countries and one of the strongest benefits Cyprus has to offer.
Why do I need to be anonymous?
The reasons are many, it could be in a process to take over a competing company but where the real buyers want to stay anonymous to avoid any complications in the take over. It could as well be that the owners have a business running to 1 target group of industries as retailers but as well want to be Whole Sale for the competition, who would buy from a competitor if they know? – no one will so it can be of benefit to have the ownership of the Whole Sale company to be anonymous, in order to get the business from the competition. These are only a few reasons, as first mentioned there are many more.
Most important is that regardless what the purpose of the Cyprus Company is, you are always in front of your competition.
We hope you enjoy reading, stay tuned to the next publication.
Did you know that there is a Offshore Company Forum available where you can ask questions but as well read about others experience, issues and much more, forums are born to help the public, so use it this opportunity to learn more and be prepared to take out your competition or simply start a profitable business.