Not so long ago, Cyprus was considered one of the most attractive jurisdictions for foreign investors, especially citizens of the Russian Federation. In fact, a third of all incoming investments belonged to Russian investors, who liked the loyal tax system of the republic, a reliable protection of personal data, the presence of a wide network of agreements on the avoidance of double taxation and other important advantages. To register a company in Cyprus or open a corporate account for a Cyprus company was a great idea for those, who were interested in the most favorable conditions for conducting international business.
A crisis past
After many years of prosperity and economic stability of the state, unexpectedly for everyone, in 2012 there was a large-scale crisis in Cyprus, which virtually completely froze the banking system. Many of those, who were previously attracted by the tempting opportunity to register a company in Cyprus or open an account with a Cyprus bank were completely unsettled by this event.
Fortunately, the crisis lasted only a year, and the country managed to avoid the threat of default, however, the reputation of this jurisdiction in the eyes of potential investors was seriously undermined. In early 2013, banks resumed their work, paying a considerable price for this. In particular, they had to close the second largest bank in the country, withdraw deposits in the amount of more than 100 thousand euros and write off debts.
Cyprus has come a long way in rehabilitation, using about 10 billion euros from the IMF and the European Union, and has been able to restore a considerable share of ties with Russia. However, to date, registering a company in Cyprus still poses a number of risks.
As a result of active actions by the United States and the European Union, which launched a large-scale campaign to combat the financial chaos reigning in the territory of many zones in Europe and Asia, the island state is in no hurry to meet everyone, who wants to register a company in Cyprus or open a corporate account with a Cyprus bank.
Banks of Cyprus, like many other countries, are afraid of imposing sanctions and therefore prefer to refuse to cooperate with shell companies, freeze accounts of individuals and legal entities with a demand for documentary evidence of the legitimacy of cash deposits, and are extremely reluctant to open accounts for non-residents of Cyprus.
Starting in May 2018, after the visit of the US mission, Cyprus seriously took up the verification of accounts of Russian investors, which led to their massive closure, which continues to this day. This situation led to the fact, that many entrepreneurs began to look for a way to transfer the business to another jurisdiction.
In the event, that you previously registered a company in Cyprus or opened a corporate account in Cyprus, the best solution would be to re-domicile (a change of the legal address of the company), as well as transfer the available funds to more reliable banking institutions. An excellent alternative to risky doing business in Cyprus will be the registration of a company in Liechtenstein, opening a company in Hong Kong, the Czech Republic, as well as opening of accounts with banks in Singapore, Serbia, Hong Kong.
IQD Consulting lawyers will be able to competently organize the process of withdrawing funds. Our experts also will assist in choosing the most promising jurisdiction, based on the individual characteristics of your business. We will provide you with detailed advice on registering a company, provide professional legal support on opening an account with a bank in Europe or Asia, and also assist in resolving any sensitive business issues.