Defining company redomiciliation
Simply put, the redomiciliation of companies, refers to the process by which companies transfer their legal corporate seat, to one in a different jurisdiction, therefore changing your company’s country of choice.
In most cases, redomiciliation is carried out by a company looking to benefit from the more favorable tax regulations offered by the new jurisdiction or gain greater regulatory flexibility when compared to that found at the company's old address.
Keep in mind that, when you undergo this process, your company's overall structure, as well as its legal and organizational status, remain unchanged.
The many benefits of company redomiciliation
There's a laundry list of reasons (and benefits) why you might consider redomiciling your company to a different jurisdiction.
Some of the main reasons that might drive you to redomicile include:
- The regulatory framework in your current jurisdiction has been changed and now does not favor your business.
- The fees you have to pay on an annual basis to maintain your company in the jurisdiction suddenly increase.
- Your jurisdiction of choice has been blacklisted by international organizations and potential trading partners.
- Political, economic and/or social turmoil or unrest have made it difficult for you to carry out your business operations.
- Your company is on the lookout for more favorable and profitable tax rules.
- Your business is ready to enter or gain access to new markets and cannot do so from its current location.
Alongside resolving some of these driving factors, you will also benefit in other ways from the redomiciliation move.
- Despite redomiciling, your company's date of incorporation will remain the same, easing any concerns from potential partners, investors, or clients who might think your business is new and inexperienced.
- Your running contracts, as well as your bank accounts, will remain valid. All you might be required to do is to let your business associates and financial institutions know about the change in your company's legal corporate jurisdiction.
- Your company will benefit from an ample range of tax breaks and exemptions and access to a larger and wealthier market (i.e., the European Union), that is your company redomiciles in an EU jurisdiction, like Cyprus.
What to consider when redomiciling your company
So, you've decided it's time to pack your company's suitcase and move its headquarters far away from its current jurisdiction. What sort of characteristics should you keep your eye peeled for when picking your company's new home?
- Favorable tax conditions, plus a large number of double tax treaties that will work to your benefit.
- Solid infrastructure when it comes to housing, healthcare, telecommunications, utilities, education, and transportation, to list a few.
- A skilled and knowledgeable workforce that will contribute to your company's growth.
- The availability of qualified professional and financial service providers ready to support your company.
- Easy access to new and larger markets such as the EU, United States, MENA, Latin America, etc.
- A high quality of life, a safe environment, and plenty of recreational activities for both you and your family.
- A thriving business environment for both start-ups and established businesses in a wide array of industries or sectors.
- The reputation of a country as a business centre, within the global market
- A simple and affordable yet thorough application process to redomicile your company, especially if it includes a straightforward path that leads you to becoming a long term or even permanent resident or citizen of your new jurisdiction.
Why you should consider Cyprus for your company's redomiciliation
As a member of the European Union, Cyprus offers you plenty of advantages when it comes to the redomiciliation of your company. Some of the island's major highlights include:
- Establishing your company's tax residency on the island and making the most of a very flexible and lax tax framework.
- Profiting from one of the lowest corporate tax rates in Europe at 12.5% and the country's extensive network of double tax treaties.
- Not having to pay taxes on corporate income derived from interest, dividends, profits made via any permanent establishment not housed on the island, or royalties acquired via a sister company that is registered in an EU Member State.
- Deducting from your taxable income any expenses made to generate more income.
- Benefiting from the safeguards and multiple benefits offered by the EU's many Directives and regulations.
Redomiciling a company into Cyprus
Redomiciling a company into Cyprus, is an easy and straightforward process. It is an out of the court procedure and does not require liquidation of the company either. What is important to note, is that a company may redomicile into Cyprus, provided: a. the laws of the company’s country of incorporation, allow redomiciliation and b. it is not prohibited by the company’s Memorandum and Articles of Association.
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