Introduction
Cyprus is situated in the eastern part of the Mediterranean sea, at the cross-roads of Europe, Africa and Asia.  It enjoys a healthy and pleasant climate with dry summers and mild winters.  Cyprus governmental structure is modeled on Western Democratic systems.  It follows closely the United Kingdom legal system.

Cyprus is a full member of the EEC as from 1 May 2004.

One of the Government’s primary objectives of its policy is to attract foreign investment.  To achieve this, it has offered incentives to non-residents encouraging them to establish legal entities for the purpose of managing their overseas affairs or offering services abroad from Cyprus.

Definition of International Business Company
An International Business Company (IBC) in Cyprus is essentially a Cyprus registered business owned by aliens.
 
There are currently over 80.000 IBC’s registered in Cyprus.  This clearly indicates that Cyprus provides some important advantages for businesses wishing to operate from Cyprus.

Advantages
Tax on profits is paid at the rate of 10% for companies. There is a full exemption from capital gains tax, except on sale of immovable property situated in Cyprus, social insurance schemes for foreign employees, and estate duty on inheritance of shares in an IBC.

No exchange control is imposed on either the entity or its foreign personnel.

Residence and work permits for foreign employees and residence permits for their families can be readily obtained.

Double taxation treaties are in force with a number of countries.

Anonymity can be maintained, if required, of the company shareholders by the use of trustee companies in Cyprus who can hold the shares in trust for the beneficial owners. 

Types of IBC’s entities
Limited companies

Cyprus law requires all enterprises to register with the Registrar of Companies.
 
The conditions for the granting of the permission are as follows:-

• The ownership shall at all times be held beneficially by non residents.
• Annual audited accounts and other required information shall be submitted regularly to the Cyprus authorities.

• The paid up share capital of the company shall be at least C£1.000, or C£10.000 if the company is to maintained an office in Cyprus.

The information which all companies must file with the Registrar of Companies for incorporations is listed below:-

• Printed Memorandum and Articles of Association.

• Notarised declaration of compliance with the laws.

• Address of the company’s registered office.

• Names, addresses and occupation of company directors and secretary.

• Annual accounts for income tax purposes shall be certified by accountants practicing in the Republic and who are duly authorised to do so by the Minister of Finance.

There are many types of IBCS that have already been registered in Cyprus.  The most important types relate to finance, holding and investment companies, offshore banks, offshore captive insurance, shipping, publishing, construction and engineering, trading, recruitment, trust and fund management companies and consultancy agencies.

Branches
The registration procedure is the same as that followed for the companies.  Within one month of the establishment of the branch, documents must be filed with the Registrar of Companies showing the name and address of at least one authorised person resident in Cyprus, particulars of the secretary and directors and a certified copy of the charter, Memorandum and Articles of Association (in Greek).

This type of IB entity is favoured by the international companies as a base for directing their activities in the region.  They are also exempt from taxation if their management and control is outside Cyprus.  If this is exercised from Cyprus, then tax is payable at the rate of 10%.