Most Russian Companies Are Still Using Cyprus

Russian Companies and Cyprus

On the 18th of September, 2014 at Hilton Hotel in Nicosia, a conference was organized by the Cyprus-Russia Business Association, Withers LLP and Chryssafinis & Polyviou LLC entitled “The future of Cyprus for Russian Business”. To quote an extract from the recent conference:

Russian Controlled Foreign Companies (CFC) rules and the de-offshorisation strategy that are affecting Cypriot structures -The implications of these rules will be more apparent in the long – term as in the present most Russian companies are still using Cyprus as their base of operations.

I think that statement hits the nail firmly on the head, ‘in the PRESENT, most Russian companies are STILL using Cyprus as their base’. It doesn’t make any mention of the situation after the CFC rules are implemented.I believe that this year we have already seen a few Russian companies dissolved in Cyprus, however, there still appears to be a ‘let’s wait and see what happens ‘ attitude prevailing here in Cyprus, and this can only add to the detrimental impact of the CFC legislation.

Unfortunately for Cyprus, the rest of Europe are not prepared to sit and wait, they are not only offering advice on mitigating the effects of the Russian CFC rules, they are actively promoting it in an attempt to lure business away from Cyprus. It can be looked upon that CFC poses a challenge for Cyprus and a huge opportunity for those countries that have always envied the strength of Russian and Cypriot co-operation. Opportunities really don’t come to those who wait, they are seized by those who dare to attack, and we are already under attack!

The fact is that CFC will have a big impact if left as a weapon in the hands of our competitors, who are already presenting themselves as the saviours of Russian businessmen, and demonstrating that Cyprus does not appear to have any suitable solution to De-offshorisation! The only written advice I have seen so far in Cyprus is that a Private Listing on the ‘Emerging Companies Market’ would be an easy route to take to alleviate the potential problems for Russian residents as well as safeguarding business here in Cyprus. However, the ECM is generally seen as a “non-regulated market” as it does not come under the obligations imposed to regulated markets by the Cyprus Securities and Exchange Commission (CySec).

This may or may not be why the UK’s HMRC say this about the Cyprus ECM: ‘The Cyprus Stock Exchange have opened a new market called the Emerging Companies Market. This market will be a Multi-lateral trading facility (MTF) and securities admitted to trading on this market will not meet the HMRC definition of ‘listed’.

I would assume that if Mr. Putin is looking to collect more tax, then he will follow the British and refuse to accept a listing on the ECM as satisfying the requirements.

No matter what is being said by the media and other governments, the banking world outside of Cyprus is not in the healthy position that the rest of Europe would have us believe. Cyprus is ahead of the field in correcting past banking errors and should combine this strength with some practical steps to re-assure the business world that measures are already in place to maintain the security and tax efficiency that Cyprus has always afforded them in the past.

There is a fully compliant way of dealing with CFC legislation that is tried and tested throughout Europe and is now available in Cyprus. Private Placement Life insurance has certain advantages over a trust but can be used to add substance to an existing trust if necessary.

Some of the more astute Corporate Service providers here in Cyprus are now taking active steps to at least let their clients know they have a fully compliant solution available to them in Cyprus and that they are ready to take action as soon as it is needed. This not only strengthens their existing client relationships but it also acts as a strong proposition in bringing new business to Cyprus.

CFC legislation is a threat to Cyprus and the time to do take some action is now. Please let’s not sit back and let the rest of Europe ‘support’ our businesses here in the same way as it did our banking sector!

Next Post

Ultra Violet Rays - Business Women's Guide to Fashion

The Color Purple is a famous literary work, movie and Broadway play. Professional women are using this dynamic color to set the stage for a captivating and elegant entry in to the business arena. Fashion has rules and limits but modern professional women are finding ways to enhance their professional […]

You May Like