Cyprus is a major offshore and onshore business centre, with a prosperous economy, excellent business facilities and thousands of offshore companies are registered here. There are 50 double tax treaties signed between Cyprus and other countries.
The existence of these treaties, combined with the low tax paid by a Cyprus company offer the possibilities for effective international tax planning. The main objective of the double tax treaties is to avoid the double taxation of income earned in any of the two contracting countries.
This is done through the tax sparing provisions whereby tax is credited against the tax that must be paid in the contracting state.
Book a Free ConsultationCommon law has established that a company resides where its business is carried out for tax purposes. More specifically in the case of De Beers Consolidated Mines Ltd v Howe [1906] AC 455, 5 TC 198 it was stated that "that a company resides for purposes of income tax where its real business is carried on.
That as the true rule, and the real business is carried on where the central control and management actually abides". This was interpreted by the Cyprus income tax laws. In conclusion, the tax residency of a company is identified by determining where the management and control is exercised.
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