Corporate Economic Substance in Cyprus

Several jurisdictions, including Cyprus, have adopted legislation which defines 'corporate economic substance'. In general all these regulations required that companies can prove that they have a physical presence and control in the jurisdiction that they claim to have tax residency.

It is generally accepted that a company resides, for tax purposes, where its real business is carried out and the 'real business' of a company is carried out, not where the trading operations are taking place, but where the central management and control of its business actually takes place. The Cyprus Law No.118(I)/2002 in Section 2 identifies the meaning of a tax resident company and, in effect, implements the above rule that a company is tax resident of Cyprus only if its management and control is exercised in or from Cyprus. Note that according to this rule, the place of incorporation of a company is therefore irrelevant.

Corporate economic substance consists of two main criteria. One is to have employees in Cyprus and the second is to have a physical office in Cyprus. In addition, it is recommended for a company to have telephone line, email address and website etc to strengthen its position and to strengthen the application to open a bank account.

Relikor offers add-on services to ensure that the company’s fiscal residency is robust, properly established, and managed. 
 
Our Substance services include following (but not limited to):
> Recruitment and appointing of Cyprus resident directors and employees;
> Dedicated fully furnished office space with workstations;
> Land-line telephone and fax with bills in company's name;
> Payroll services including monthly submissions to social insurance;
> Preparation and submission of annual employer's tax return to social insurance;
> Arranging obligatory annual employer's liability insurance;
> Payment of obligatory annual municipality professional fees;
> Bank account opening with local banks;
> Execution of documents and payments instructed from local substance office;
> Bookkeeping / accounting and tax compliance services;
> IT services including setting up a website and email addresses;  
> Content writing for website based on the information provided by the client;