ADVANTAGES OF CYPRUS
Cyprus is a reputable international financial centre by virtue of its generous tax incentives and is the preferred choice for International Business Companies.
Being an EU member since 2004 and in full compliance with OECD requirements, Cyprus represents an ideal gateway for investments between the EU and Eastern Europe / Asia.
The growth in utilising Cyprus in international tax planning structures strengthens the existence of the island’s tax advantageous system, attracting both corporations and individuals.
Cyprus entities can be utilised in international tax planning structures in a number of ways to exploit the local tax legislation, an extensive double tax treaty network and EU Directives mitigating or even eliminating any tax liability arising from activities.
The Cyprus tax legislation offers numerous incentives including:
- Taxation of trading income at lowest EU rate of 12,5% on net profits
- Tax exempt gains on securities trading including disposal of shares in subsidiaries
- Tax exempt dividend income (subject to easily met criteria)
- No withholding tax on payments of dividends/interest/royalties (arising from sources outside Cyprus)
- Tax exempt profits received from overseas permanent establishments (subject to easily met conditions)
- Utilisation of a beneficial and extensive Double Tax Treaty network
- Utilisation of EU Directives (Parent-Subsidiary Directive, Mergers Directive, Royalty and Interest Directive, Mutual Assistance and Cooperation Directive)
- Unilateral tax credit relief for foreign tax paid on income received abroad
- Favourable provisions on the taxation of interest and royalties
- Group relief of losses
- Carry forward of losses indefinitely
- Investor friendly tax authorities
Non Tax Incentives
Cyprus is at the crossroads of Europe, Asia and Africa; it is situated in the north-eastern corner of the Mediterranean Sea. Further to its advantageous geographic location, time zone and climate Cyprus offers an excellent infrastructure for doing business internationally.
The non-tax incentives include:
- English is the most widely used language for business in Cyprus
- Establishment and maintenance of companies at substantially lower set-up and annual operational costs in comparison with other jurisdictions
- Possibility of re-domiciliation from / to other jurisdictions
- The existence of flexible re-organisation rules (for mergers, takeovers, etc) without tax consequences
- First class service providers (accountants, auditors, lawyers, bankers) and an excellent and mature professional services infrastructure
- Possibility as to the listing in international Stock Exchanges
- No Controlled Foreign Company (CFC) rules
- No thin capitalisation provisions
- No foreign exchange controls