Consultancy Services Companies

How to Use a Cyprus Consultancy Services Company

If you thought being a consultant or a provider of professional services was tough before, then the last year has proved you right!
Today professionals are working for tighter margins, chasing smaller markets, and in a more tightly regulated market. However there are ways in which a professional can help him or herself; professionals who work internationally can benefit from forming an offshore company.

Such a company, actually more accurately described as an International Business Company (IBC), can be used to great effect as a tax planning tool by Accountants, lawyers, financial advisors and consultants etc, who conduct their business internationally either in or outside the European Union.  The Cyprus IBC may be used thus:
The professional closes a deal with a client.  The Client does not sign a contract directly with the Professional. Instead the contract is between the Client; and the Cyprus IBC.

The Client pays the Cyprus IBC.  Therefore profits will accrue in Cyprus which has one of the lowest rates of corporate tax in the World.  The Professional then might send an invoice to the Cyprus IBC for services rendered
The Cyprus IBC pays the invoice to the Professional wherever he chooses or resides, thereby the balance of profits sits in Cyprus and not in a higher taxed country
Costs:
• The cost of a Cyprus IBC starts from €700
• Nominee fees (optional) are €250 per year
What makes Cyprus so attractive is the fact it has concluded so many double taxation treaties.  The Russia-Cyprus treaty for example, is one of the most favourable for non-Russia resident that Russia has signed with any other country.
The advantages of a Cyprus IBC offering consultancy services are the following:
• Consultancy income:  The income from consultancy services will be subject to corporation tax at the rate of 12.5% after deducting all allowable expenses such as salaries and consultancy fees.
• Salaries:  The salaries paid by a Cyprus IBC to employees who are not resident in Cyprus are not subject to any taxation or social insurance contributions in Cyprus.
• Consultancy fees:  The fees paid by a Cyprus IBC to consultants who are not resident in Cyprus are not subject to any taxation in Cyprus
• Dividends distributed:  No withholding tax on dividends distributed to non resident shareholders of Cyprus Companies.

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