such as a limited liability company (spółka z ograniczoną

A LEGAL AND TAX GUIDE
TO
CYPRIOT LIMITED LIABILITY COMPANIES
(Private Company Limited by Shares)
For many years now, entrepreneurs and investors from all around the world have conducted their
business activities through companies located and registered in the Republic of Cyprus. The reason for
such popularity of Cyprus lies first and foremost in its legal climate, which is highly favorable to
business ventures of different kinds. Low taxation, foreign investor-friendly tax administration and high
level of confidentiality of business transactions are but a few reasons for the ever-growing popularity of
Cyprus. Therefore, it is not in the least surprising that Polish entities, on an increasing basis, enjoy the
economic structures comprising of Cypriot companies.
Cyprus, despite possessing features of the so-called ‘tax haven’ (i.e. a country, state or territory where
very favorable tax laws are in force, such as the Cayman Islands, Belize or Panama), is not officially
recognized by Poland as a country engaging in harmful tax competition - both for tax on corporate
income and individual income tax purposes. The consequence of this is lack of restrictions introduced
by the Polish legislator for trading with tax haven countries.
The primary division of the legal organizational structures which grant one the permit to conduct
business activities within the territory of the Republic of Cyprus, is a division into partnerships, which
correspond to the Polish term of spółki osobowe, such as, for example, a general partnership (spółka
jawna) and a limited company (spółka kapitałowa) which are similar to Polish joint stock companies,
such as a limited liability company (spółka z ograniczoną odpowiedzialnością) or public limited liability
company (spółka akcyjna).
The most commonly used legal organizational structure of the companies established in Cyprus by
foreign entrepreneurs for tax optimization purposes is a private company limited by shares, functioning
simultaneously as a holding company.
Due to the high count of private companies limited by shares within Cyprus-based trading, the guide is
designed to familiarize the reader with all the issues relating to this particular type of company. The
guide is divided into parts corresponding to different investment stages of the company’s life cycle,
from its establishment all the way to its operation. It also presents the main principles of cash-flow
taxation between Cyprus and Poland, which were primarily specified in the agreement on avoidance of
double taxation concluded between the two countries.
Please contact us should you be interested in obtaining a complete version of the guide.
Patrycja Pawlusińska
New Business Manager
T: +48 22 314 90 37
M: +48 604 070 368
F: +48 22 314 90 99
E: [email protected]
Krawczyk i Wspólnicy Spółka Komandytowa / Krawczyk & Partners Ltd. Partnership
Focus Building, 26 Armii Ludowej Ave, 00-609 Warsaw, Poland | T: +48 22 314 9 000 | F: +48 22 314 9 099