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A Cyprus company can be used tax efficiently as an employment company. It can employ staff on overseas assignments and charge operating companies at a cost plus basis. The profits will be taxable in Cyprus at the rate of 10% and the taxable profits of the operating companies will be reduced accordingly. In addition, the salary costs for the operating companies will be significantly reduced as social security and other employer contributions are much lower in Cyprus than most other EU countries. The employees will not be subject to tax in Cyprus. Cyprus companies do not pay employer contributions in relation to staff who are non-residents of Cyprus.
The use of a Cyprus IBC can be tax advantageous to Individuals who are not tax residents in Cyprus and who receive substantial amounts of income and benefits in kind in respect of employment exercised outside Cyprus.
The right to receive their income and benefits in kind can be assigned to a Cyrus IBC. In other words, the Cyprus IBC would contract with the Employer for the performance of a relevant work and would invoice and receive payment accordingly. The Individual will be and employee of the Cyprus IBC.
