Corporate Economic Substance in Cyprus
Corporate Economic substance legislation has come into force in several jurisdictions that offer advantageous tax regimes. These jurisdictions are required to have demonstrable operations that support their presence in the jurisdiction.
Exsus offers add-on services ensuring that the company’s fiscal residency is robust, properly established, and managed.
Our Substance services include fundamentally (but not limited to):
- Local resident directors
- Rent of dedicated office space, workstations with own phone/internet line (effectively used and generating charges)
- Payroll services
- Bank account opening with local based bank
- Execution of documents and abroad payments instructed from local substance office
- Bookkeeping / accounting and tax compliance services
“The leading case on company residency is De Beers Consolidated Mines Ltd v Howe  AC 455, 5 TC 198. In this case it was established that a company resides, for tax purposes, where its real business is carried out. In the same case it was decided that 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 income tax law No. 118(I)/2002 in Section 2 identifies the meaning of a tax resident company and, in effect, implements the above old court decision, i.e., that a company is tax resident of Cyprus only if its management and control is exercised in/from Cyprus.
In conclusion, the tax residency of a company is identified by determining where the management and control is exercised. If the management and control is exercised in/from Cyprus then the company is a tax resident of Cyprus; if it is not, then it is not a tax resident of Cyprus. The place of incorporation of a company is therefore irrelevant.
Substance consists of two main criteria – having employees and having an office in Cyprus. In addition, it is highly recommended for a company to have a website as it strengthens its position in Cyprus and strengthens the bank’s application for approval.
Exsus can arrange for your staff to be employed. Any person can be employed by the company; it does not have to be the Director or Secretary themselves. The Director or Secretary can hold the position and the company can enter an employment contract with another person through our offices in Cyprus.
The salary for one suitably qualified part time employee is at company cost – EUR 600 per month, including all social insurance contributions and other government contributions, which is paid by the employee and employer.
Our fees for the preparation and submission of the Employer’s Tax return (TD 7) are EUR 250 given that the Company employs up to 7 employees.
Attached you will find our payroll price list for the case that we will provide payroll services for employees who are not related with Exsus (representation services, employees, etc.). In the case that we are assigned to provide monthly payroll services for related persons with Exsus (representation services, employees, etc.), then no payroll fees apply.
Employees of a Cypriot Company must be insured (Employer’s Liability Insurance). Insurance fees are
EUR 200 – 250 per annum, based on a separate quotation from the insurance company.
Preparing the arrangement for the Employer’s Liability Insurance – Complimentary.
Preparing the arrangements for the Social Insurance registration – Complimentary.
OFFICE WORKSTATION – RENTAL
Rental of one workstation from our office (all-inclusive: rent, high speed internet, water, electricity, common expenses, xerox machine and other office facilities)
– EUR 375 per month, (plus one month’s deposit in advance)
OFFICE RENTAL FOR 1-2 PERSONS
Rental of one office (all inclusive: rent, high speed internet, water, electricity, common expenses, xerox machine and other office facilities)
– EUR 495 per month, (plus one month’s deposit in advance)
Arrangements for the office sign – Complimentary
Municipality Fees – Cyprus Companies
All Cyprus Companies will have to pay a license fee for keeping and operating an office, and this government fee is imposed by the municipality of the areas in Cyprus. The annual Municipality fees, depending on the areas range from EUR 200 – 475 per annum (subject to periodic revision by the authorities).
Telephone Landline in name of your Cyprus Company
Arrangements for the telephone installation is fully recommended and is required as proof of the Company address, whilst opening a bank account in Cyprus or abroad.
Setup Fee – EUR 250 plus disbursements (cost of wireless phone, installation charge from the providers in Cyprus.
Deposit to be paid to the Cyprus Telecommunications Authority EUR 250.
Fixed line charge + charge for the calls made (if any), paid by direct debit from the Cypriot Company’s bank account.
Arrangements for setting up a website (it is recommended as it strengthens the position of the company):
Creation of Word Press Website – Option 1 – Development of 3 pages
Creation of Word Press Website – Option 2 – Development of 5 pages
Website Hosting annually
Content Writing based on the information provided by the client per page
Email Hosting per annum –
Office 365 mail with 50GB storage, One Drive, Skype for business