In accordance with the changes in the law, it will now be possible to re-use names of companies which have been dissolved or struck off, or where the name has been changed. In the case of bearer shares, in the future registered agents which will have to keep records which show not only the name of the possessor of the shares, but also the beneficial owner. The possessor of the shares can not be considered as the owner, as he is merely holding the shares which have been entrusted to him, although he can also practice shareholder rights. There has also been an important change regarding winding-up and liquidation, as a result of which the directors or officers of the company can no longer act as liquidator. The period during which a struck off company can be restored has also been reduced from 10 to 7 years from the date on which the company was struck off, as according to the statistics of the court of registration, restoration usually takes place within the first 7 years.

Both companies and individuals in Slovakia will have to pay more tax from January 1st 2013. Corporation tax will be raised from the current 19% to 23%. For individuals, the single tier tax system will come to an end. Personal income tax will remain at 19% for amounts up to 3310 euros per year, while above that the rate will be 25%. The legislators also approved a number of super taxes. One of the newest of these is the high public office super tax, which will impose an additional 5% tax on the incomes of MPs, members of the government and the head of state.

In a statement issued on October 31st 2012, the Russian Ministry of Finance confirmed that Cyprus had been removed from its blacklist of tax-haven jurisdictions. This step by the Russians came about as a result of the protocol signed by the two countries on October 7th 2010 on the signing of an agreement for the avoidance of double taxation between them. This is an extremely important decision for companies registered in Cyprus. From now on Cyprus can more freely advertise the tax benefits enjoyed by companies registered there. As we have mentioned several times in earlier editions of the LAVECO Newsletter, the Cypriot tax system offers very favourable possibilities for the arrangement of international investment and holding companies. Cyprus was already popular among both Russian and other foreign businessmen, as even now it is the number one investor in Russia. The amount invested in Russia through Cypriot companies is more than 70 billion euros.

The Hellenic Bank’s internet banking system already offered excellent possibilities for the performance of everyday transactions. The fast, secure and easy to use e-banking system was available 24 hours a day in 3 languages, Greek, English and Russian. The bank’s latest product is a multi-currency account which offers the possibility for the simultaneous management of an account in two or more currencies, while also showing the combined amount actually in the account. Also new to the Hellenic Bank system is the possibility to make payments in roubles, which was introduced on August 1st 2012. Very few banks within the EU are able to offer such competitive services and at such competitive rates. The charge for a wire transfer is a fixed 600 roubles + handling fees. There is a 0.05% supplement for same day transfers, with a minimum fee of 600 roubles and a maximum of 2000 roubles.

In July 2012 Tax Justice Network (www.taxjustice.net), a portal advocating the fight against corruption and tax evasion, published a report on the amount of money deposited offshore in tax havens. The report (The Price of Offshore Revisited), written by James Henry, alleges that even modest estimations at the amount deposited in the various “secret tax havens” put the figure at around 21 trillion dollars. At the same time, a former chief economist of the McKinsey company says that the figure could be as high as 32 trillion dollars. The author also raises the point that this amount, and the majority of wealth, can be linked to the world elite, which comprises less than 1% of the population. And it is primarily large countries like the USA and China who lose out as a result.
The report also gives a country by country breakdown of who has how much hidden in the “secret tax havens.” This list caused quite a stir internationally as no exact sources are given for the figures quoted, and, for example, in the case of Hungary, it is claimed that 242 billion dollars have been transferred over the last 22 years, while the amounts deposited in offshore accounts by the likes of Poland, Ukraine and even Kazakhstan are lower. The report also fails to mention the fact that even in these “secret tax havens” it has been compulsory since the early 2000s to reveal the identity of the true beneficiaries when opening a new bank account, so it is no longer possible to guarantee secrecy anywhere.

NAV, the Hungarian tax authority, recently carried out an almost unheard of procedure against a Hungarian pensioner, who was a member and the managing director of several companies. During the period under investigation, the individual purchased real estate and a car. He renovated the property and also took out a high value life insurance policy. When the tax authority initiated an investigation into his finances and the fact that he had made loans of more than 150 million forints (700 000 US dollars) to his companies, he was unable to prove the source of the funds. The taxman also requested information from the banks concerning the man’s accounts. Based on the report from one of the banks, they found a safe rented in the man’s name, in which they found 400 000 euros and 20 000 000 forints in cash, which cover the 100 000 000 forints in missing taxes and a significant part of the 70 000 000 forint fine.

The US tax authority (IRS) paid a reward of 104 million dollars to Bradley Birkenfeld, the banker who provided information on the UBS bank’s American clients. Birkenfeld provided the American authorities with internal banking information which would have been impossible to discover from outside. Following the “whistle-blower’s” actions, UBS paid the USA a fine of 780 million dollars. He revealed the foreign banking relations and details of bank accounts opened in offshore jurisdictions of 35 000 American taxpayers. As a result so far the USA has collected 5 billion dollars in additional taxes. The Americans put considerable pressure on the Swiss government, and consequently the Swiss handed over the details of a further 4 900 American taxpayers. The two countries are also renegotiating the terms of their existing agreement for the avoidance of double taxation.

Bearer shares have been extremely popular in the jurisdictions where the legislation allowed for the issue of such shares. Although in the past it really was possible to own a company anonymously with this type of shares, this possibility has no longer been available for at least 10 years. The majority of the world’s banks, for example, require from their clients a declaration regarding the true beneficiary, possessor or owner of bearer shares. If, that is, they will talk to such companies in the first place. As I mentioned in my leading article, numerous banks even close the door on companies which theoretically have the possibility of issuing bearer shares. It is worth thinking very carefully before opting to use this type of share, as it may lead to many complications in the future operation of the company, and in the face of meeting anti-money laundering laws, anonymity can no longer be maintained. The operability of a share company is another practical question. The most important decision-making forum of a share company is the shareholders’ meeting, which all authorised shareholders are entitled to attend and where they can exercise their rights. In the case of bearer shares, though, where does the director send the invitation to the shareholders’ meeting? Generally, they are sent out to the last address of the shareholder recorded in the share register, though other means may also be used. And although in today’s world the possibility is there to vote via the Internet, the lack of a postal address may lead to serious obstacles in the lawful operation of the company.

In accordance with the amendments to the International Business Companies Act of 1994 published on December 27th 2011, every company registered in the Seychelles should have made arrangements regarding the place where the company keeps its documents and records relating to its operations and business transactions within 3 months of the date of publication. Every company should have defined that place within the islands, or elsewhere in the world, where the documents can be found. As interpretation of the law also proved difficult for the service providers, it was unrealistic to expect clients to respond in time, and the 3-month deadline was clearly too short. Therefore, the registrar of companies (Seychelles International Business Authority) issued guidelines in which it allowed a period of grace until December 31st 2012 for companies to meet the requirements, agreeing not to make inspections before then.

In accordance with the amendments to the tax laws, income of companies registered in Cyprus arising from royalties will be subject to a tax discount of 80%. According to the earlier laws, such income was subject to the standard 10% rate of profit tax. In line with the new law, however, taking into account the 80% discount, the maximum amount of tax will be 2%. 2% really will be the maximum, as the amended law also states that for the first 5 years, 20% of the amount used for the acquisition of royalties can be deducted as an expense each year. Taking this into account, for the first 5 years the tax rate will not even reach 2%. The amendments will be introduced retroactively, coming into force on January 1st 2012. The intention of the Cypriot Parliament was to make companies registered in Cyprus even more competitive in the international market, providing even more scope for businessmen wishing to establish their international holding centres in Cyprus, or transfer existing ones to the island. This is made possible not only by the attractive tax rates, with local enterprises generally paying the standard rate of 10%, but also by the extremely wide range of expenses which can be deducted.

On March 8th 2012, the Cypriot Parliament (House of Representatives) passed the International Trusts (Amending) Law of 2012, amending the earlier International Trust Law of 1992 and clarifying many questions, as well as modernising the whole law in accordance with 21st century asset management relations. Among other things, the amendments allow for Trusts established outside Cyprus to be re-domiciled to Cyprus, provided that the Trust Settlor and beneficiaries were not resident in Cyprus for tax purposes in the year before the establishment of the Trust. From now on, unborn children can be included among the beneficiaries, an important question from the point of view of family asset planning and protection. The time restriction on Trusts has been abolished, so now Trusts can not only be established for a maximum of 99 years, but for an indefinite period of time. The new law increases the powers of the Settlor, particularly in the management and handling of the Trust assets. In future, ownership of real estate in Cyprus will also be able to be included among the assets, which previously was not possible for Cyprus International Trusts. The regulations will be introduced with retroactive effect, meaning that they will also apply to existing Trusts.

USA – LLCs

It was no coincidence that American companies were so popular. Simplicity and competitive prices coupled with high prestige proved irresistible, with no other jurisdiction able to take them on in this respect. Based on the amendment to the Foreign Bank Account Reporting (FBAR) regulations in February 2011 non-resident limited liability companies (LLCs) are also required to report to the US federal tax authority, the Internal Revenue Service (IRS), by June 30th each year any bank accounts opened outside the USA in which the annual turnover exceeded 10 000 USD. Although the change in the reporting requirement did not entail a tax obligation, the general opinion in the business world reacted acutely to the amendment. Nobody knows what the next move of the notoriously strict IRS will be, so already in 2011 the majority of people making decisions on where to establish a company decided against the USA, minimising any possible risk in the future. The number of companies being formed in the USA fell drastically in the second half of 2011. The most significant states when it comes to company formation, such as Delaware, Wyoming, Washington D.C. and New York, are clearly feeling the effect. The situation will be no better this year either, as further changes in the regulations are likely to bring the complete withdrawal from the US in 2012. At the same time, the banks have also started to show signs of isolating American clients. If the IRS imposes exchange of information obligations on the banks, then, particularly at the beginning, the banks will treat American companies and tax-resident private individuals as “undesirables”. Liechtenstein is expected to “boot out” American clients from its banks in the first half of the year, closing existing accounts opened by Americans.

BVI

The “star jurisdiction” of the offshore world is heading in the direction of over-regulation. International bodies such as the OECD and EU are putting more and more pressure on the islands, which may lead to serious changes. The regulation, in time, will mean that companies registered here will have to keep full accounts as part of the requirements for transparency. However, the BVI will probably retain its position, as it has been the most well established offshore brand worldwide since 1984. Numerous countries have copied the legal model created by the BVI. Their “crime” may be that they have grown too big and become rather conspicuous, with real economic power concentrated in the companies registered here.

Panama

Although in many places they don’t even like the sound of the country’s name, Panama is extremely popular in the majority of neighbouring Latin America. The transparency requirements have also led to changes in the regulations in Panama, with local lawyers and company formation agents requesting more and more details from company shareholders, directors and beneficial owners, however, the issuing of bearer shares still remains an attractive factor. The large number of companies being incorporated slows the work of the company registrar which in turn can hinder the operation of Panamanian companies. As in the case of the BVI, the momentum of earlier years will carry Panama forward in 2012.

Hong Kong

Success will continue unbroken in 2012. Although it is part of the People’s Republic of China, Hong Kong resolutely retains its English traditions in the financial system, while also integrating the requirements of the modern business world. Due to the principle of territorial taxation, this is not even a true “offshore” company form. Income from outside the territory continues to be exempt from tax, which is still a huge draw, even if formally companies registered here have to keep accounts. The recession has served to increase the need for security and stability. The financial system in Hong Kong more than meets this requirement, and there are very few similar jurisdictions where this claim can be made in the world of 2012.

The Seychelles

Expected to be the big loser in 2012. In recent years the number of companies being incorporated  in the islands had been growing nicely. The administrative simplicity of the International Business Company (IBC) corporate form introduced by the BVI in 1984 coupled with “cheapness” made the Seychelles very attractive to international investors. However, from March 27th 2012 every IBC registered in the islands is required to indicate in writing the place where the documents and records related to the company’s operation are stored. The records which must be kept – to all intents and purposes accounts - must enable the financial position of the IBC to be determined at any time. The Seychelles International Business Authority (SIBA), the authority responsible for the registration of companies in the Seychelles, clearly as a result of external pressure, primarily from the OECD, put the proposed amendments to the law before parliament last year. Back in 1999 the Seychelles undertook to put the OECD’s transparency principles into practice. So the 10-12 year delay can’t be considered that bad. At the same time, we have to bear in mind that until competitors such as Belize, Panama, the Marshall Islands and the other IBC jurisdictions issue and enforce similar requirements, investors will inevitably move on to places where they encounter the least “resistance”. All the while it is possible to operate a company without having to keep accounts, then very few people will be willing to struggle with the keeping of records. All the more since certain types of expense are difficult to justify as company expenses with official invoices or receipts. This was always one of the major advantages and attractions of offshore companies with no account-keeping obligation. Basically, if there are still jurisdictions which don’t strictly enforce this, then investors will flock to those jurisdictions. Even if it is clear that this is only a temporary solution and the OECD will be no more tolerant with the other jurisdictions. In time, they will force the accounting requirement on everybody, with none of the jurisdictions escaping the net. The best they can hope for is to drag things out with clever tactics. This could be extremely important, as here gaining a bit of time could mean the difference between life and death for a jurisdiction. If, for example, Belize doesn’t introduce the account keeping requirement in the next three years, then a significant number of companies will migrate there, while the Seychelles slowly bleed to death. Then even if the same requirements are introduced three years from now, no-one will want to go back to the Seychelles. It seems that SIBA has chosen bad tactics and bad advisors. Just as their idea of the Seychelles becoming an Offshore Financial Centre (OFC) would appear to be nothing more than a pipe-dream. They have neither the basic local conditions, nor the full infrastructure, nor the commitment of the government. With one and a half banks and eight accountancy firms in the islands and a government lacking commitment it is impossible to work miracles.

Belize

Could be the big winner in 2012. Belize has a good chance of gaining anything lost by the BVI and Seychelles. Currently no amendments have been made to the IBC laws. It is still possible to issue bearer shares, the annual tax is generally 100 USD, irrespective of turnover, and there is no book-keeping requirement. Very few jurisdictions are able to offer more attractive conditions. What is uncertain is how long this small country in Central America will be able to do this. Whatever happens, a shift from the Seychelles to Belize is already noticeable at this early stage in the year. This trend will continue all the time that the requirement to keep books is not introduced in Belize.

Cyprus

A “strong bastion” in the offshore world. The tax system introduced on January 1st 2003 has now been in place, unchanged, for almost 10 years. There have been minor modifications, but the basic model remains the same. Despite the fact that Cyprus and Greece are often tarred with the same brush, the country’s stability remains unaffected. It is true that in addition to the common language and culture, there are banks in Cyprus who helped to finance the Greek state through the purchase of bonds, but a Greek-type recession in Cyprus is inconceivable. That is why investors from 3 continents find the island attractive not only for company formation, but also as a banking paradise. Cyprus is now in the enviable position of being difficult to discriminate against thanks to its agreements for the avoidance of double taxation, as well as its completely transparent company structures and EU membership. The former “offshore smell” is also wearing off, as this is not a zero tax jurisdiction, with a basic rate of profit tax of 10%, both private individuals and companies subject to tax on their worldwide income and companies required to submit annual audited accounts in accordance with international accounting standards to the Cypriot tax authorities. Cyprus is a place where the international bodies would have trouble finding any objection. In addition to stability, there are two important characteristics which can be attributed to the Cypriot system: commitment and liberalism. Just about everybody in the country is committed when it comes to the provision of financial services. This is equally true of the taxi driver, the banker, the accountant and the member of parliament. The majority of the latter are also practicing lawyers, for whom the company industry and the financial services built around it are literally their bread and butter. At the same time, they are also able to exert enough pressure on the system to ensure that clients’ interests are observed and that the island is able to offer more beneficial conditions than its international competitors. This is one of the major guarantees of long-term stability.

Luxembourg, Belgium, the Netherlands

These are primarily international holding centres. Have risen gradually over many years, and specialised primarily in serving the multi-nationals. This trend will continue in 2012. No significant “boom” is expected, or indeed targeted by the jurisdictions, whose goals instead are discrete continuation and slow, but stable growth.

Isle of Man, Guernsey, Jersey, Gibraltar

British protectorate territories, and once the “pearls” of the offshore world. These days, however, their influence has waned considerably. This is the result of a process lasting some 15 years. The British take the know-your-client (KYC) requirements more seriously than most, and they bombard new clients – and often even foreign partners they have been working with for decades – with numerous questions. They ask clients to provide incomprehensible and sometimes even impossible certificates and documents, as if they want to scare them off and don’t want to serve new clients at all: thank you very much, but they can live off the old ones, whom they know (?) and aren’t (all that) afraid of. Paranoid fear in connection with money laundering and other crimes is characteristic of these jurisdictions. Service providers, lawyers and bankers are obliged to file extremely strict reports if they suspect anything. On July 1st 2011, the Bribery Act came into force, introducing the category of “passive corruption”, on the basis of which a lawyer can be guilty if all he did was register a company which was then used for corruption. The fact of cooperating is sufficient for a case to be brought and guilt to be established. Although as yet there have been no specific cases, this is a time-bomb which will probably explode in 2-3 years, making the British protectorate territories even less attractive.

The Caribbean and Oceania

If we touched on the British territories above, then it is also worth mentioning the British territories in the Caribbean (Anguilla, Antigua and Barbuda, Barbados), as well as independent countries (Saint Vincent and Grenadine, Grenada, Saint Lucia) and small island nations in Oceania (Vanuatu, Nauru, Palau) which, although they are part of the game, play a relatively insignificant role internationally, and this is unlikely to change. The couple of thousand companies registered in these jurisdictions is too insignificant to increase their share of the market. This tendency is likely to remain unchanged this year, as these tiny countries are unable to offer anything extra, which would make them really attractive, or at least more attractive than the rest of the competition. Those who have achieved something don’t give up their positions lightly.

The Cayman Islands, Bermuda

Speaking of not giving up positions! These two jurisdictions stubbornly hold on to the positions they have achieved in the international financial world. They can be described as international financial centres in the true sense of the word. They rose primarily due to their proximity to the USA and thanks in no small part to the earlier economic growth in the United States. It was not only the companies industry which flourished, but also the financial services, banks, investment funds and insurance companies which are built on it. Today the situation is much worse than it was, though “inertia” carries both jurisdictions forward, even if the Cayman Islands experienced serious financial problems at the start of the worldwide financial recession. It is also unavoidable that capital which earlier was deposited as savings in such countries and jurisdictions is recalled to cover the financial deficiencies caused by the recession.

Switzerland

A difficult jurisdiction. As we stated at the beginning, this analysis, like any other, will be subjective. In the international business world Switzerland receives “double classification”. On the one hand it is considered as a banking paradise, and on the other hand a company paradise. Despite the continuous flow of scandals which just won’t go away, Switzerland is still very sellable thanks to its centuries old history and well-established brand name. Today, Swiss banking secrecy is one of the world’s great false illusions – we need look no further than the UBS scandal, where client details were handed over to the US tax authorities. We can not speak about offshore companies here, as the incredibly complicated corporate tax regulations mean that every company registered in Switzerland is required to pay tax, and the rates of dividend tax are particularly high by international standards. In reality, Switzerland is a true status symbol, which will continue to be in demand in certain business segments because of its name, even if the operating costs and bureaucracy are very high.

Liechtenstein

If Switzerland is for the rich, then Liechtenstein is for the super-rich. This is true of both the company industry and the banking sector. The small alpine country has never wanted to go into “mass-production”, preferring to concentrate on a small section of the market, the world’s rich, who wanted to place part of their assets securely. Their position has also deteriorated considerably as a result of entering into tax agreements. The Anglo-Liechtenstein agreement is a particular example of this, but other agreements have also called the country’s discretion into question. In addition to the weakening of bank secrecy, companies are now subject to profit tax at the rate of 12.5%. This is 25% higher than the 10% payable in Hungary, Bulgaria and Cyprus. As in the case of Switzerland, the tightening of the rules is leading to a large number of bankers turning their attention to the Far East, and Singapore in particular.

Malaysia: Singapore, Labuan

Both Malaysian territories may be interesting in 2012, but for different reasons. Singapore can be analysed primarily as a banking paradise. Companies registered here are subject to 17.5% tax on their worldwide profits, so they can not be considered competitive, or rather there are better options available in the international market. The banks, on the other hand, represent the financial culture which is heading here from Switzerland. And that is exactly what they want, to become the mini Switzerland of the Asian area. It is true that in this field they will have to go head-to-head with Hong Kong, whose position is significantly more stable. Labuan may prove interesting as a company formation jurisdiction. The agreements for the avoidance of double taxation signed by Malaysia with numerous countries also cover Labuan, which may prove attractive to foreign investors. Companies registered here can choose between paying 3% profit tax or a fixed annual tax of 20 000 ringi (approx. 6 700 USD), and in the latter case it is not necessary to keep accounts.
There are also a number of company formation jurisdictions which are relatively insignificant at the moment, but which, bearing in mind the current trends, may increase their marketshare significantly in 2012 by attracting clients from other jurisdictions.

United Arab Emirates – Ras Al-Khaimah

The whole territory of the Emirates is tax-free, and orientated culturally towards tax exemption. At the same time, until now it was fairly difficult for foreigners to establish companies here. However, Ras Al-Khaimah, one of the smallest and poorest of the 7 Emirates, has visibly eased the pressure, allowing for 100% foreign ownership of offshore companies established in its two Free Trade Zones. Naturally, these companies can not carry out any activities within the Emirates. They can, however, open bank accounts in any of the Emirates, such as, for example, Abu Dhabi, which today is not only reliable, but also developing dynamically, with a stable business background.

Marshall Islands

It seems that this small country has been unaffected by the crisis hitting the IBC companies. The Marshall Islands have been in the top 3 jurisdictions when it comes to international ship registration for years, and are probably one of the most liberal jurisdictions in the world for company formation. It is still possible to issue bearer shares, there is a fixed annual tax, companies can be formed with a single director, it is not necessary to keep accounts, and generally there are not too many requirements when establishing a company. This liberalism will be attractive in 2012, as in 2011 we could already see that there was demand for this “category”.

In accordance with the amended Act, every company registered in the Seychelles must, by March 2nd 2012 at the latest, indicate the place where it keeps the documents related to its business transactions. This place can be in the Seychelles or anywhere else in the world. It is a further requirement that the directors must make arrangements for the keeping of such records as enable the financial position of the company to be determined with reasonable accuracy at any time. The law does not prescribe the keeping of accounts, the preparation of balance sheets or audited balance sheets. The documents related to transactions must be kept for 7 years.
The records produced, however, are not publicly available, and outsiders can only view them with the permission of the director(s). The local court of registration (Seychelles International Business Authority) has the right to request the documents at any time. The responsibility of the Corporate Service Providers is increased, as, if they do not check that the records are being kept correctly and this comes to light, they may be subjected to a fine of up to 300 000 SCR (approx. 25 000 – 26 000 USD) for just one such company.
It is likely that in the near future other Offshore Financial Centres offering the formation of IBCs will introduce similar changes, requiring companies registered there to indicate the place where records are kept or to prepare accounts. The transparency of transactions and company operations have long been a requirement of the OECD, and this is probably the reason behind the changes in the Seychelles.

The amount of Foreign Direct Investment (FDI) placed in Russia through Cypriot companies and investment funds is expected to reach 70 billion dollars by the end of 2011. The more than  60 agreements for the avoidance of double taxation signed by Cyprus provide the island with an unprecedented possibility in the field of investment activities. And this makes Cyprus the ideal holding centre for the receiving and accruing of payments from interest, rights and dividends. Naturally the process is enhanced by the friendship dating back many decades which has traditionally existed between Russia and Cyprus. This is true in both the financial sphere and in tourism. Tens of thousands of people of Russian origin have permanent residency among the 800 000 strong population, and the number of tourists is also growing from year to year. Russian “support” of Cyprus can also be seen following the events of the summer when one of the power stations close to Larnaca exploded, and the Russian government came to their aid with a 4,5 billion-euro loan to get the economy back on its feet.

In contrast to the earlier noises coming out of Israel, the government is going to raise corporate tax, not lower it. Despite promises to the contrary, from January 1st 2012 the government will not be lowering the rate of profit tax to 23%, but raising it to 25%. Capital gains tax, currently 20%, will be increased to 25%, and the tax on principal shareholders will go up from 25% to 30%. A further supplementary tax will be payable in Israel by private individuals with a declared income in excess of 1 000 000 shekels.

Each year in the EU some 100 billion Euros is reclaimed unlawfully. The new EU directive aims, in part, to tackle this problem from July 1st 2011. In accordance with the terms of European Council directive 282/2011/EU, the EU company issuing the invoice is required to verify the legal tax status of the company being invoiced, as well as several other circumstances which it was previously not required to do. VAT-free invoices can only be issued, if the company ordering the service enjoys tax-payer status in the EU. At the same time, in the future the place of economic establishment test will also be required. The official seat and the place of central management, however, need not be the same. In this case, the actual place of management should be considered as the place of establishment. The picture becomes murkier still if the company being invoiced also has a place of business in the country in which the invoice is issued. The issuer is also required to investigate whether the place of business was involved in the given service. If it was, then again a VAT-free invoice can not be issued.

The Cyprus government is trying to ease the financial problems caused by the recession and the explosion in the power station with the introduction of some rather extravagant measures.
One of these is the 350 euro super-tax which the Cyprus Registrar of Companies is supposed to collect. According to the new law, existing companies must pay the tax for 2011 by December 31st 2011, then from 2012 must pay by June 30th each year. If the tax for 2011 is not paid, then fines will be imposed as follows: for payment made between January 1st and February 29th 2012, 10% (35 Euros); between March 1st and May 31st 2012, 30% (105 Euros). If the company does not pay by June 1st 2012, it will automatically be struck off the company register. For the next two years it will be possible to have the company reinstated upon payment of the outstanding tax and fines, as well as a 500-euro restoration fee. In order to have the company restored after 2 years, the fee will rise to 750 Euros. Owners of companies registered in Cyprus, therefore, should make sure they meet the deadlines for payment, as even a small delay can result in significant fines, which until now was not the case in Cyprus.

Under certain circumstances, it is no longer necessary for companies registered in Hungary and holding real estate to pay the stamp duty applicable on the sale of shares. In accordance with points (1) and (2) of paragraph 18 of Law XCIII of 1990 (the Hungarian law on stamp duties), it is only necessary to pay stamp duty if, in the company’s foundation documents, real estate development, construction, renting or buying and selling are listed as the main activities of the company.
This will certainly provide some relief in an already stagnating market for company owners in a position to sell.