Migrate a Company to Cyprus: Re-domiciliation

By Caitlyn Buchanan, 22.02.18

In existing practice, it’s permittable for a company to move its domicile (or place of incorporation) to another jurisdiction, in this case, Cyprus. Similar to a company changing its registered office or registered agent within a jurisdiction, a company can also move to a new country. This migration is commonly known as re-domiciliation.


It may seem like an easier solution to close the existing company and incorporate a new company in Cyprus and in some cases, it is. But this isn’t always possible with established businesses that don’t want to risk losing its name, existing contracts, or the reputation it has earned. In Cyprus law, the existing company doesn’t need to be liquidated but instead can transfer its portfolio of assets to the new jurisdiction. Thereby the company is still the same legal entity and maintains its existing business history, but it would now be operating under Cyprus law.

Why Migrate to Cyprus?

For companies operating in a costly, high taxed or heavily regulated environment, re-domiciliation is a viable option. In some extreme cases, a company’s activities could be deemed ‘high-risk’ and their assets could be seized, causing irreparable damage to the business and its reputation. With re-domiciliation to a jurisdiction such as Cyprus, the company’s existing legal status, goodwill and operational history can be preserved.

A Company may choose to re-domicile for many reasons, such as:

Access specialist markets

  • Cyprus is a member of European Union (EEA) offering access to the European market
  • Cyprus is an international financial centre with one of the most attractive holding regimes worldwide

Enter a more favourable tax environment

  • Cyprus has one of the lowest corporate tax rates in EEA 12.5% (on Cyprus profits)
  • A Cyprus Holding Company only needs to hold 1% of a foreign subsidiary’s share capital to receive the tax benefits

Less stringent regulation and scrutiny

  • There is no tax on consolidation and there are no controlled foreign company (CFC) rules
  • A foreign company that becomes a tax resident of Cyprus and can benefit from the simplified domestic taxation system
  • Dividends received from another Cyprus tax resident company or from abroad or from an overseas permanent establishment of a Cyprus holding company is exempt from tax.
  • No withholding taxes on payments of dividends, interest and royalties irrespective the recipient

Please Note: Cyprus is not an offshore tax haven. Companies must ensure compliance with EU and OECD requirements.

Process

In 2006 a law was enacted in Cyprus, which amended the Companies’ Law Cap. 113, allowing:

  • Foreign companies to re-domiciled in Cyprus
  • Cyprus registered companies to be re-domiciled abroad

In recent years the ability for foreign companies to re-domicile in Cyprus has been streamlined. The foreign company must be registered in a jurisdiction that allows re-domiciliation and the company’s Constitution or Memorandum and Articles of Association must allow re-domiciliation. If these criteria are met a company can apply to be registered with the Registrar of Companies in Cyprus as a continuing company under the provisions of the Companies Law Cap 113.

For companies that require a license to perform activities in their jurisdiction and where similar licenses are required in Cyprus, they must gain relevant consent for re-domiciliation by the relevant business authority of their country.

Temporary Registration

The Registrar in Cyprus will issue a temporary certificate of continuation, from this date a company will:

  • Be considered a legal entity duly domiciled and incorporated according to the laws of Cyprus
  • Have the same liabilities and is eligible to exercise all powers that registered companies have according to the laws of Cyprus
  • Have a constituent document of amendment, which is now considered the Memorandum of the company and its Articles of Association (where applicable)

The foreign company has six months from the temporary registration certificate issue date to present evidence to the Registrar of Companies in Cyprus that it has been struck off the public register in the country of initial incorporation. The company will then receive a certificate of permanent domiciliation.

The registration of the foreign company is not lawful and is void if it is done for the purpose of avoiding debt or liabilities against the company or its officials or shareholders.

We always recommend that you consult a licenced formation agent before taking steps to re-domicile a company. The experts at Euro Company Formations can assist you to re-domicile a company smoothly and correctly. If you would like to learn more, please contact us today on +353 (0) 16461627 or contact us here.

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