Cyprus: International Tax-Planning Structures

Last Updated: 19 April 2000

The details and complexity of a structure depend on the objectives of an overall International tax-planning strategy.

The International tax-planning structure depends further on whether such a structure is set up for a private individual or a corporation.

We have prepared some examples of commonly used structures for both of the two main categories of users.

  • International tax-planning structures for private individuals
  • International tax-planning structures for corporations

More complex structures are developed and utilised on an ongoing basis. To discuss more complex structures or your specific circumstances please Aspen Consultants® directly.

International tax-planning Structures for Private Individuals

How Individuals can take advantage of Offshore Financial Centres

  1. Individuals with inherited wealth
  2. Individuals who inherit wealth can use offshore structures to reduce their inheritance taxes by converting the inheritance into money in low – or non-tax jurisdictions instead of high-tax jurisdictions. They can also restructure the income that their inherited portfolio generates so as to protect their assets and so that the income compounds tax free. If you structure your pre-inheritance wealth, it will simplify the succession process.

  3. Entrepreneurs
  4. Entrepreneurs who start off with an offshore structure can receive strategic benefits. Offshore offers entrepreneurs enhanced investment returns, access to global markets, better after-tax profits, and improved risk mitigation. An offshore vehicle can own corporate assets without exposing the entrepreneur’s personal assets – this also reduces business risk. As well, if an entrepreneur structures his or her new venture offshore, it will survive the life of the original entrepreneur and simplify the succession process.

  5. Executives
  6. Executives can use offshore for various aspects of their corporate agendas. Offshore can also help them restructure their compensation and stock programs so as to take advantage of reduced tax, asset protection, and access to global markets.

  7. Entertainers and Authors
  8. If entertainers and authors properly structure an offshore corporation to receive their contracts, they can reduce the tax they would otherwise owe. The offshore corporation earns income, and the entertainer or author is compensated for services rendered to that company.

  9. Athletes
  10. Athletes can use offshore benefits in the same way entertainers and authors can. By properly arranging personal compensation contracts with an offshore corporation, athletes can reduce the amount of tax they would otherwise owe onshore. Since the offshore corporation earns the income, the athlete is compensated for services rendered to that company.

  11. Owners of Intellectual Property
  12. By assigning intellectual property rights and innovation rights to an offshore corporation, inventors, engineers, and designers can ensure revenue and royalties are received through an offshore corporation, as the owner of such rights, rather than have these revenues come to them personally. This reduces their personal tax obligation and protects their assets. Also, the intellectual property can remain offshore indefinitely, surviving the life of the original inventor. The inventor can easily specify the succession of what would otherwise have been his or her intellectual property rights.

    The offshore company can arrange contracts to supply the invention or innovation outside the home country of the intellectual property owner. The offshore company earns the income the contracts generate, and this income can accumulate and compound, free from taxation, in the offshore centre.

  13. Medical Practitioners and other Professionals
  14. Contracts for professional services often use offshore vehicles. Medical practitioners and other professionals use this technique to effectively restructure how their income is generated and realised, which reduces the personal tax they owe. Offshore vehicles also protect personal assets from professional business risks and malpractice claims.

  15. International Investors
  16. Offshore companies can act as holding areas for investments made in a number of different markets and countries. You can collect all your investments together and have one offshore company hold legal ownership of them all. Personal holding companies can provide privacy and may save you the professional fees and other costs associated with setting up and maintaining a number of different offshore structures. Offshore entities allow your portfolio access to a variety of quality investment options that improve diversification and reduce risk. Investors regularly use offshore companies in personal portfolios for inheritance planning and to reduce the costs and time delays of probate.

International tax-planning structures for Corporations

How Corporations can take advantage of offshore financial centres

Most modern corporations find it increasingly difficult to create and sustain their competitive advantage for survival and growth. This applies to both small and medium sized enterprises pursuing international expansion as well as established multinationals and financial institutions.

Many have been able to establish and maintain their competitive edge by structuring some aspects of their operations through offshore centres. Operations that could be structured offshore include:

  • Intellectual property reassignment
  • International Trade and Provision of Services
  • Financing
  • Property ownership
  • Investment Holding
  • Leasing
  • Administration and Treasury Management
  • Executive recruitment and Employment
  • Insurance and Re-insurance
  • Ship registration and management

The list of such activities is not conclusive. To discuss more complex and specialised operations please contact Aspen Consultants® directly.

  1. Intellectual Property
  2. Royalties and licensing fees for intellectual property can be owned by or assigned to an offshore company. Intellectual property may include computer software, technical knowledge, patents, trademarks, trade secrets, and copyrights. When the offshore company acquires the rights, it can then enter into license or franchise agreements with other companies interested in exploiting those rights around the world. The income arising from this arrangement can accumulate offshore in a tax-beneficial environment or repatriated at a preferred timescale. The right selection of an international jurisdiction for the use of double tax treaties can reduce or eliminate withholding taxes on royalty payments. (For example see

  3. Financing
  4. The use of offshore entities for finance is extremely attractive. Offshore finance companies can fulfil intra-company and inter-company financial management functions, such as granting of loans for project finance or working capital requirements. Interest payments to the offshore financing company is tax deductible in the country of the borrower reducing the overall corporation tax liability. The right selection of an international jurisdiction for the use of double tax treaties can reduce or eliminate withholding taxes on interest payments. (For example see

  5. Investment Holding
  6. The ownership of most movable and immovable investment assets including stocks, shares, securities, bonds, mutual funds, and other can be consolidated in an offshore investment holding company. Such a structure allows for confidentiality of ownership and significant tax advantages. The right selection of an international jurisdiction for the use of double tax treaties can reduce or eliminate withholding taxes on dividend income.

    The return on these investments is significantly higher given that the income is received and accumulated in a no tax or tax beneficial environment. Furthermore, the tax on the profit from a potential disposal of such investments can be reduced or eliminated. (For example see

  7. Administration and Treasury Management
  8. Companies operating in regions where the local banking and administration infrastructure is not reliable can gain significant advantages from outsourcing this function offshore. Further to the efficient banking system and tax beneficial regime of most of the offshore centres, there is an abundance of qualified personnel within most of the professional disciplines to support even the most complex operations. The centralised administration and treasury management function can take the advantage of a convenient time zone ensuring uninterrupted service to global operations. (For example see

  9. Insurance and Re-Insurance
  10. Insurance companies are attracted by the tax beneficial regimes of offshore centres that can assist in earning higher returns on their invested funds. The higher returns on investment and the reduced operating costs of insurance companies in an offshore centre leads to lower premiums on insurable risks as compared to onshore insurance competitors. The potential lower cost for insurance attracts a lot of companies to either insure directly with an offshore company or set up their own captive insurance. Onshore insurance companies can seek lower re-insurance costs with offshore insurance companies. (For example see

  11. International Trade and Provision of Services
  12. The purchase and sale of products in international markets opens up limitless opportunities of structuring such activities through offshore centres. The resulting profit can be accumulated in a tax beneficial regime offshore. The subsequent repatriation of this profit can be planned to increase onshore equity base or be invested in other activities. International trade may include re-exporting and transhipment trade.

    Services may be provided to third parties, in the form of consulting and specialised management expertise or to the group, in the form of international marketing and promotion. (For example see

  13. Property Ownership
  14. An offshore company in many cases can own real estate property both in the international jurisdiction of incorporation and other countries including the country of residence of the beneficial shareholders. The structuring of ownership through an offshore company can reduce capital gains and inheritance taxes and simplify a variety of other complex onshore issues. (For example see

  15. Leasing
  16. An offshore company can own equipment and lease it to an onshore entity. Such an arrangement allows the onshore entity to take advantage on the leasing payments. The equipment may come into the ownership of the offshore company under a sale and lease back agreement with the onshore entity. (For example see

  17. Executive recruitment and Employment

An onshore entity can set up an offshore company to employ all its executives that work internationally. In this way the tax payable by the executives and the contributions payable by the employing company are reduced. Such an arrangement benefits both the company by reducing its executive employment costs and the executive by increasing the amount of the net remuneration.

The concept of the Payroll Company can be extended to cover the hiring of workers for international contracts. (For example see

The content of this article is intended only to provide general guidelines related to this particular matter. For your specific circumstances, full specialist advice is recommended.

To receive more information on offshore services or to discuss the particulars of your international tax planning needs please contact the authors.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions