Setting Up Offshore Companies in Cyprus
An offshore company is a business entity that is set up in a country other than the owner’s country of residence. Entrepreneurs often choose this option for tax reasons, for greater privacy, or to take advantage of specific legal frameworks through offshore company registration.
Basic facts about this type of company
The question of the legality of founding an offshore company abroad is often asked. The answer is clear: Yes, it is absolutely legal! Establishing a legal entity in another country, such as an offshore company, is permitted and regulated by many countries, including member states of the European Union. However, the entrepreneur must ensure that he or she complies with all relevant laws and regulations in both the offshore country and the home country. There are now many attractive options when it comes to choosing a location for an offshore company. One of these is the EU country of Cyprus.
The member state of the European Union offers a number of advantages for offshore companies. By the way: Find out what is behind offshore companies. These include favorable tax regulations for assets, a high degree of privacy, anonymity and a stable legal framework. The OECD double taxation agreement further simplifies this structure.
The BS Holding service
Our service offers comprehensive and individualised advice on the topic of offshore companies. We specialize in assisting with international business companies (IBCs), which offer benefits such as privacy, asset protection, and favorable regulations in jurisdictions like Panama and the British Virgin Islands. This option is aimed at companies and individuals who are considering expanding their business internationally or who wish to benefit from tax advantages. With our advice, we ensure that you are well-informed before setting up. Our experienced team at BS Holding will take the time to understand your specific needs and objectives. They will then create a customized solution for your offshore company formation abroad. Feel free to contact us by email or via our form if you would like more information.
Set up an offshore company with experts
We handle all aspects and take them into account:
- 1,300 + happy clients
- 500 + successful company foundations
- 6 years of full-time experience
Offshore banking jurisdictions offer strong privacy laws and financial privacy benefits, making them attractive for establishing various business entities.
We also offer assistance with opening business accounts and ongoing administrative support so that you can set up and run your offshore company with peace of mind. Our advice is transparent and honest. We will explain the pros and cons of offshore company formation and ensure that you can make an informed decision. We will answer the question for you: ‘Why venture a new start abroad?’ Take advantage of our expertise and experience. With us at your side, setting up your offshore company will be a structured and stress-free process.
Put your trust in our expertise and let us pave your way to international business success together.
- Comprehensive and personalized advice on the topic
- Service aimed at companies and individuals looking to expand internationally or benefit from tax advantages
- Experienced team that understands clients’ specific needs and objectives and offers customized solutions
- Handling all aspects such as administrative processes, legal requirements and tax regulations
- Transparent and honest advice, explaining the pros and cons of setting up an offshore company abroad
- Assistance with opening business accounts and ongoing administrative support after company formation
- Expertise and experience in the field of offshore company formation
Advantages of an offshore company in Cyprus
In today’s globalized economy, expanding international business activities has become the norm. In order to benefit from tax advantages and internationalize their activities, more and more companies and individuals are turning to offshore companies. In contrast to a German GmbH, these are often more cost-efficient. Below, we will take a closer look at the advantages in Cyprus. This is a country that is often cited as a favored destination for the creation of offshore companies. Here are some of the key benefits you should consider when setting up a company abroad.
- Tax advantages: Cyprus offers one of the lowest tax rates in Europe, with a corporate tax rate of just 12.5%. By comparison, the average tax rate in the EU is 21.7%. In addition, there are no taxes on foreign income for persons with a non-dom status. This makes Cyprus a very attractive location for internationally active companies. Offshore companies in Cyprus are also exempt from capital gains tax and corporate income tax. That further enhances their appeal.
- Banking secrecy and discretion: Cyprus attaches great importance to data protection and discreet banking transactions. Banks maintain banking secrecy and protect the privacy of their customers with offshore accounts. Cyprus also has strict laws against money laundering and terrorist financing. This ensures that the country remains a safe place for businesses and investments.
- Anonymity: Cyprus has the ability to maintain a high level of anonymity when setting up offshore companies. In addition, the use of trust structures provides companies with an extra layer of anonymity.
- Low administrative burden: Compared to many other countries, setting up and running an offshore company in Cyprus is less administratively burdensome. The set-up can usually be completed within a few days.
- Limited liability risks: In Cyprus, liability risks are reduced with the Cyprus Limited. Companies can be set up with limited liability. This means that the personal liability of the founders or owners is limited to the capital contributed to the company.
If you are planning to set up an offshore company, the state of Cyprus is definitely worth a look as an alternative to Malta. Locations such as the United Arab Emirates are often mentioned in this context, but these are not part of the EU. Therefore, trading is more difficult and the advantages of offshore companies are fewer. If you are doing business, you should therefore rely on the European single market with a Cyprus Limited. Thanks to the legal certainty, you will have no problems with the government authorities and, above all, the formation costs are particularly low.
Clearing up myths and misunderstandings about an offshore company
There are many misunderstandings and myths surrounding the topic of offshore companies. Many of these arise due to ignorance or misinformation. We will therefore clear up the three most common myths and state the facts. Put your trust in our expertise and let us pave your way to international business success together.
Probably the most common myth about offshore companies is that they are only used by people who want to evade taxes. However, this is far from the truth. Yes, there are some individuals and companies that abuse offshore structures to avoid or evade taxes. However, this is not the main purpose of an offshore company.
Many companies choose to set up such a structure in offshore countries like Cyprus for perfectly legitimate reasons. These include:
- The protection of asset
- The planning of company succession
- Access to new markets
- Taking advantage of a more favorable business environment
Offshore corporations can also provide confidentiality in dealings and facilitate location-independent operations for online businesses. Offshore financial centers are a really popular option. All of these activities are legal in Cyprus and are carried out in accordance with the laws and regulations of the relevant jurisdiction.
Another widespread misconception is that offshore companies can do whatever they want and need not fear any legal consequences. But this is not true. In reality, an offshore company, like any other company, is subject to the laws and regulations of the country in which it is registered.Take Cyprus for example: offshore companies in Cyprus must fulfil a number of legal requirements. These include:
- Complying with accounting and reporting requirements
- The preparation of annual financial statements
- Compliance with local tax laws
In addition, they are obliged to comply with international standards to combat money laundering and terrorist financing. So make sure that your international business company complies with all guidelines. In our tax comparison in Europe, you can also find out what the tax situation in Europe looks like.
There are many other myths about offshore companies that need to be clarified. For example, some believe that offshore companies can only be used by wealthy individuals or multinational corporations. In reality , however, offshore structures are open to companies of all sizes. Even a small business can utilise them effectively. Another myth is that offshore companies are always based in exotic or remote locations. In fact, there are many offshore jurisdictions such as EU member and holiday destination Cyprus.
Make sure you are fully informed and clear up any misunderstandings before you decide to set up a company. A well-informed decision minimises potential risks and offers the many advantages of the offshore structure.
Practical steps for offshore company formation in Cyprus
Setting up an offshore company can be a strategic decision for many companies. Cyprus is an attractive choice in this context. These are the reasons why you should emigrate:
- The stable economy
- The favorable tax framework
- The simple incorporation processes
Below you will find a step-by-step guide to setting up a company in Cyprus.
- Choose a company name: The first step is to choose a unique name for your company abroad and register it with the Registrar of Companies in Cyprus. Offshore company registration is crucial for establishing a company in an overseas jurisdiction, offering asset protection and tax benefits. In this context, you should also consider whether you want to emigrate directly to Cyprus or keep your residence in Germany.
- Appoint managing directors and shareholders: At least one person must be entered in the commercial register as the managing director when the company is founded. This person can also act as the sole shareholder.
- Submit legal documents: You must prepare and submit the articles of association and other legal documents. By the way: Some portals state that you must also submit the yellow slip. However, this is not true. You only need this document for emigration.
- Proof of permanent establishment: A company in Cyprus must provide proof of a physical place of business. You therefore need a postal address. But that’s no problem at all! We offer you a unique opportunity with our office space in Paphos
- Open a bank account: Once the company is incorporated, you need to open a bank account for the company in Cyprus (can be online abroad).
Bank accounts for the offshore company: how to set them up in Cyprus
An essential aspect of setting up an offshore company in Cyprus is opening offshore bank accounts. This can usually be done easily online. You should have all the necessary documents to hand. This includes a valid ID and proof of the origin of the funds. Companies in Cyprus are obliged to participate in the automatic exchange of information (AEOI). This means that they must automatically pass on information about account holders and certain account information to other countries in order to combat tax evasion. You should take this aspect into account when planning your offshore structure in Cyprus.
BS Holding offers a specialized bank account opening service for offshore companies in Cyprus. Thanks to our experience and relationships with the leading banks on the island, we can carry out this process quickly and efficiently. The service includes in-depth counselling. In this way, we ensure that the selected bank and account meet the client’s business requirements. We also take care of all the formalities and provide ongoing support after the account has been opened.
Offshore debacle: Lessons learnt from mistakes and how Cyprus avoids them
With the support of BS Holding, your offshore company will not become a debacle. Many offshore companies get into trouble due to mistakes or misunderstandings, especially if they do not follow local laws and regulations. Mistakes often happen, especially in countries such as Singapore, Dubai, Belize or Panama. This can lead to legal problems and penalties. Choosing the right offshore jurisdiction is crucial as it influences economic stability, tax benefits, and compliance with international regulations. However, Cyprus has introduced robust laws and regulations in this regard so that you can avoid such cases and avoid problems with the tax authorities. With BS Holding’s extensive support and advice, we ensure that your company fulfills all requirements and is legally protected. We always keep you up to date with important news and changes to avoid potential errors.
Simply ask us your questions. We’ll give you the right answers because we know everything about the subject! Rely on our expertise to set up and run your offshore company successfully.
Conclusion
It is a widespread misconception that a residence in Germany and an offshore company are mutually exclusive. In fact, German entrepreneurs can set up such a company and still maintain their residence in Germany. However, you should bear certain legal and tax aspects in mind in order to gain an advantage. For example, all income from abroad must be taxed in Germany. This also applies to money held in a foreign bank account. In addition, the offshore company must be properly entered in the commercial register.
Frequently asked questions
What are the benefits of an offshore company?
An offshore company offers several advantages. It makes it possible to minimize the tax burden, as many offshore jurisdictions levy little or no tax. It can also contribute to asset protection by shielding assets from creditors. Last but not least, an offshore company also often ensures increased business privacy and confidentiality.
Is an offshore company legal?
Yes, such companies are generally legal. They are often used for legitimate purposes such as business flexibility, tax optimization and asset protection. However, it is important that they are operated in accordance with international and national laws and regulations.
What are offshore companies?
Offshore companies are companies that are registered and incorporated in a country other than the owner’s country of residence. These countries are often regarded as tax havens, attracting businesses with low taxation and unique local tax laws.
How does an offshore company work?
It works by being registered in a country that levies little or no corporate tax and often offers strict data protection laws. The owners or shareholders of these companies are often not resident in the country of registration.