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”

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
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

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