Cyprus Law permits the so-called “re-domiciliation” process allowing a company to transfer its “seat” of incorporation into, or out of Cyprus, in accordance with Companies (Amendment) Law of 2006, Law No. 124(I)/2006) (the “Law”).
This law provides a major advantage for a foreign company that can transfer its seat to Cyprus and perhaps later to any European country.
What is the Re –Domiciliation process?
A re-domiciliation of a company is also known as a “transfer of seat”, which it refers to a procedure of a company transferring its seat of incorporation, to and from a jurisdiction. The company continues to exist under the laws of a new jurisdiction, into which it transfers its seat, and ceases to exist under the jurisdiction of its incorporation.
It’s remarkable that this process provides a solution to the company to continue its existence and not to be liquidated and incorporated from scratch to a different country. This allows an existing company to transfer its registered office and address to another jurisdiction by acquiring all the benefits there.
On a European level, the re-domiciliation of companies within the EU is not prohibited and each member state has its own strict regulations for the re-domiciliation process. However, Cyprus is included in the list of very few countries which allow the re-domiciliation of third-country companies (Non-EU) into and out of the Republic of Cyprus.
Why re-domicile to Cyprus?
Undoubtedly, Cyprus attracts a lot of foreign investors and international merchants as they gain a lot of benefits by either incorporating a Cyprus company or by re-domiciling their existing company to Cyprus.
Some of the main advantages are below:
- The foreign company continues to maintain its legal identity;
- Cyprus is a member of the European Union;
- Cyprus can be used as a key to transfer the foreign company in any other European country;
- Cyprus has one of the lowest corporate tax rates in Europe;
- Tax-exempt dividend income – (less stringent regulation and scrutiny);
- There are no withholding taxes on payment of dividends, interest and royalties;
- There is no taxation on profits from the sale of Securities;
- There are widespread double tax treaties in force;
- There is full adoption of the EC Directives.
What is the procedure to re-domicile into Cyprus?
The process to re-domicile a foreign company to Cyprus is simple from a practical perspective, as long as there is the appropriate guidance.
A lawyer is an essential part of this process as there is a need to prepare and submit documents both to the Courts of Cyprus and to the Department of Registrar of Companies and Official (the “Registrar”).
The procedure to re-domicile a foreign company to Cyprus is divided into the different parts below:
- Company’s name approval;
- Application for re-domiciliation of the foreign company to Cyprus and submission of all the supporting documents;
- Issuance of Temporary Certification of the foreign company;
- Issuance of Permanent Certificate of Continuation.
Are there any restrictions?
It is crucial for a foreign company that intends to re-domicile in Cyprus or abroad, not to start any proceedings for its dissolution or have any pending court orders against it. If any of these exists, then the procedure of re-domiciliation may not be allowed by the Registrar.
Why should consider this process?
Cyprus is an attractive solution for investment and specifically for British enterprises and businesses. Our legal system is based on British Common Law and there are lots of similarities with UK companies’ law system, which arguably, investors can benefit from it.
Thus, as per the uncertainty caused by Brexit, Cyprus can be the key for many companies that wish to be based within the European Union, under a tax favorable system.
The content of this article is intended to provide a general guide to the subject matter and does not constitute legal advice.
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