A Cyprus International Business Company (IBC) is one of the most popular and effective methods of tax planning. Cyprus legislation contains the right of taxation on preferential terms for the companies belonging to non-residents.
An IBC can either be a resident in Cyprus (provided its management and control is in Cyprus) or it can be non-resident (provided its management and control is outside Cyprus).
The key condition of incorporating the IBC by a non-resident is the presence of the treaties for the avoidance of double taxation between the country of registration and the countries where the IBC or its subsidiaries will have activities. Cyprus is proud that it has entered into 43 double-tax treaties.
The existence of these treaties, combined with the low tax paid by a Cyprus Company offers many 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 contracting countries. The treaties also provide for reduced withholding taxes for dividends, interest and royalties.
Effective international tax planning is now more important than ever, due to the combined effect of assets, capital and businesses becoming more and more mobile and the effect of various different jurisdictional taxation requirements.