“Real Substance” As A New Reality
Cyprus as a jurisdiction is well known for its favorable tax regime with a strong transparent legal system and its compliance with the standards set up by the European Union (EU) and the Organization for Economic Cooperation and Development (OECD).
Under OECD model convention a Cyprus Company will qualify for benefiting the Double Taxation Treaties if the following criteria are met:
Thus, adequate measures need to be taken proving that the company is managed and controlled in Cyprus and that substantive business operations are genuinely carried out in Cyprus.
Each company’s formal arrangements, its administrative and operational structure should be considered separately taking into account the individual features of each case.