Economic Substance Solutions

At ServPRO, we determine our client’s strategy according to the nature of the company and we work on a case-to-case basis, taking into consideration a number of factors. However, we can guide you through some basic steps, which would help your organization start building “substance” in Cyprus, such as:

Define the reasons for operating in Cyprus

– Apart from constructing a purpose and an organizational mission, the company needs to demonstrate the reasons for operating in Cyprus e.g. close proximity to target market: Middle Eastern countries.

Establish a physical presence with headquarters in Cyprus

– Purchase or rent corporate offices, set-up the Information Technology, corporate telephone lines and website.

Beneficial Ownership

– BO should belong to the Cypriot company and income should be recorded into the company’s bank accounts before flowing in any other direction. The Cypriot company should decide at its own discretion on how to deal with the income received and not merely acting as an intermediary on behalf of others.

Employ qualified staff

– A number of qualified employees residing in Cyprus, should man the corporate offices and handle day-to-day operations, such as answering the telephone calls and e-mails, providing customer support, produce invoices, etc.

Discover and appoint a qualified team of Directors

– The directors appointed should be residents of Cyprus and must have the required knowledge and skills to properly manage and control the company.

Enhanced activity

– There should be substantial sale and purchase transactions at the Headquarter offices, as well as acquisition of assets, opening and administering corporate bank accounts and maintain accounting books and records in Cyprus.

Major decisions to be taken in Cyprus

– It is important to demonstrate that the major decisions of the Cypriot company are taken in Cyprus.

Keep original records

– Original Minutes of the Directors’ and other meetings and conferences, contracts and other original records should be kept at the company’s offices.

Justify operations in Cyprus

– Not only at the formation but also after a reasonable time-period the company must continue validating the reasons for establishment in Cyprus e.g. by showing actual economic activity / transactions between the Cyprus company and the Middle East.

Set up a Cyprus International Trust

– The setting up of a Cyprus International Trust to hold the shares of the Cypriot company will further enhance the beneficial ownership of the Cypriot company as the beneficiaries have no control over the Cypriot company.

ServPRO and its experienced staff, can offer further financial / legal / business advice and guide you through a number of steps for adding value and ‘substance’ to your company. Our goal is to use our knowledge to help you comply with the OECD’s most current guidelines, and avoid tax disputes by the tax authorities and ensure fair taxation.

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