Attention All EU Transport Companies!
Recent Legislation enacted by the Republic of Cyprus in conjunction with the EU regulations in force makes it possible for European Union Transport Companies to operate their business in Europe from Cyprus thus considerably reducing administrative costs. To this end a Cyprus company must be established which will then obtain an EU Transport Licence issued by the Ministry of Transport in Cyprus and which is valid for the whole of the EU territory.
The Cyprus company may then adopt any of the following methods to operate:
a) Lease vehicles from an already existing transport company in Europe
b) Purchase new vehicles and register them in Cyprus.
In both cases the Cyrus company needs to establish a subsidiary or a place of business on the European continent, but it is vital that the effective management of the business is in Cyprus.
1. Issue of an EU Transport License
The following are the basic conditions for the issue of an EU Transport License:
- The Company must have the appropriate capital according to the number of trucks it will be owning and managing; as an indicative example for 2-24 trucks EURO 150,000 capitalization might be needed in order to qualify
- At least one of the proposed Company's Directors must be possessing necessary qualifications: police good conduct certificate; relevant university degree and/or at least five (5) years previous experience in this business
- The Company must prepare and submit a feasibility study
2. Registration of Trucks
Once the EU license is obtained the company must register its trucks with the Department of Transport. The trucks may not be physically present in Cyprus and the necessary inspections may be carried out at approved stations in Europe (e.g. TUV in Germany)
The drivers must be registered as employees of the Cyprus Company. They must also register with the Department of Social Insurance. This will entitle them to free medical care in all EU Countries.
As employees of the Cyprus Company they are not subject to any salary restrictions imposed by the trade unions of other countries.
4. Costs and time involved
The cost for registering the Company and obtaining the EU License is approximately EURO 22,000 (cost may vary according to the capital as this dictates the necessary capital/stamp duty to be paid).
The time required is approximately up to three (3) months.
Registration expenses for trucks are estimated at approximately EURO 1,000 per truck and EURO 500 per trailer (not including insurance costs).
The advantages of this structure are multiple, thus allowing the enterprise to be more competitive:
Lower taxation (the corporate tax rate in Cyprus is currently set at 10% on the net profits)
Lower operating costs (Licence Fees, Registration fees, annual fees etc).
No restrictions to employ drivers of any nationality from within the EU.
We shall be more than happy to examine each individual case and advise on a proper setup and tax planning.