In Cyprus as in all European countries the principle of publicity applies.
This means that we have a registry at the Registrar of Companies that anyone can go and make a search and find out about the registered owners shareholders, directors of the company.
As from March 2021 there is an obligation to register with Registrar of Companies the real owners of a Cyprus company and it is no longer possible use nominee shareholders.
Nominees are persons – natural or legal – that appear as directors or shareholders of a company in order to protect the anonymity the real shareholder or director. As between the nominee and the beneficiary there is a private agreement that regulates their relationship and secures the rights of the beneficiary (client).
For more on anonymity see my article here:
The end of anonymity. Cyprus transposes into Law the Fifth Anti-money laundering Directive. (Directive 2018/843)
Despite the obligation to register the real shareholders of a Company it is still possilbe to use nominee directors for purposes of tax planning.
A key factor for successful tax planning using a Cyprus company is to show that the company is tax resident in Cyprus.
According to Cyprus tax law, a Cyprus company must be managed and controlled from Cyprus in order to be considered as tax resident in Cyprus and enjoy the advantages of our tax system (12.5 % corporation tax). Thus it is necessary that the majority of the Board of Directors to stay and work in Cyprus. For foreign clients this is achieved by appointing 2 nominee directors in the Board of Directors and management and control is fully evidenced by supporting minutes and other documentation depending on the facts of each case.
Another important consideration is the opening a bank account in Cyprus. It is strongly advised to open a company’s bank account with a Cyprus bank.
As soon as the company is registered the company’s accountant files an application to register the company with the Inland Revenue (Tax Office) so that the company gets a tax identification number. In addition, the accountant and the lawyer of the company confirm to the Inland Revenue that the company is managed and controlled from Cyprus so that the Inland Revenue issues what is called “tax residence certificate”. From then on the company has to file every year accounts with the Inland Revenue and pay tax in Cyprus if it makes taxable profits.
As far as the bank accounts are concerned, the client must indicate the signatories of the bank account and have in mind that the real beneficiaries must be disclosed to the bank. Therefore the bank and the service provider which can be either lawyer or accountant in case the client use nominees are the only persons that know the real owner or beneficiary of the company.