Business Substance in Cyprus
A solid economic presence is essential for large corporations
Substance in Cyprus
Business Substance in Cyprus. Why setting up an economic presence is essential?
Business substance has become on of the most important tools for international tax planning.
Establishing an economic substance in Cyprus is a mandatory vehicle that can be used to eliminate suspicions regarding Tax avoidance from local and international authorities. International authorities and governments have become more aware and have increase their efforts and mechanisms to fight tax avoidance.
Domestic and EU laws are now aligned in order to minimize tax avoidance.
An inadequate implementation of economic substance of your company in a low Tax jurisdiction can be easily perceived as tax abuse or avoidance from the authorities.
Economic/ Business Substance in Cyprus
The Special Purpose Vehicle model (SPV). Why to avoid it?
A proper business substance solution.
According to OECD model, companies need to meet these basic requirements in order to qualify for tax treaty benefits:
- Company is a Tax Resident of the registered state, and
- Company is the “beneficial owner” of the income distribution such as interest and dividends
A solid substance solution approach.
When comes to applying an economic substance solution for your company there is no standard and secure approach. Every case is treated differently. Requirements can be more demanding according from case to case in order to show a solid corporate operation in the country.
What to consider before setting up an economic substance in Cyprus?
2. Managing directors have to be qualified for the position and have understanding of the business nature. I addition, the company director or the majority of directors have to be Cyprus Residents. Having the same directors with the mother company would make the authorities question.
4. Accounting, Bookkeeping records and Audited financial statements should be available and archived preferably at the company’s premises.
SPL Substance solutions in Cyprus.
Our firm has the experience and capacity to develop the best possible and solid substance tailored to your needs and operations. We provide advisory and suggest solution, provide management services including registered office and address. Setup of accounts and utilities. Secretarial and administration services, employment services, company formation and bank account openings.