The Republic of Cyprus is an island in the Eastern Mediterranean on the crossroads of Europe, Asia and Africa; it is a sovereign state with a presidential democracy system of government.
Since gaining independence in 1960, Cyprus has developed into a stable and democratic country, and became a full member of the United Nations, the Council of Europe, the British Commonwealth and other international organizations. In 2004 it became a member of European Union and adopted the euro as a national currency on 1 January 2008.
The Cypriot economy has diversified in recent years. The island has witnessed significant rise in tourism over the years and the property rental market in Cyprus has grown as well. Added to this is the capital growth in property that has been created from the demand of incoming investors and property buyers to the island.
The tax reform of 2002 has eliminated the “offshore” status of Cyprus international companies and has raised the corporate tax rate on profits from 4,25% to 10% which is one of the lowest rates of corporation tax in the European Union. Foreign companies which are registered in EU countries and have established a branch in Cyprus may elect that their profits arising from the branch, to be taxed in Cyprus at the rate of 10% instead of the higher rate in their respective country.
There are a number of tax as well as non-tax advantages to doing business through Cyprus which have become well-known in the business community over the years. We have listed some of them below.
– Advantageous geographical location and time zone
– English as a business language
– Pleasant climate & European standard of living
– Comparatively low set-up and maintenance costs of international business entities
– Highly developed and efficient accounting, legal and banking sectors
– Strict confidentiality with the local authorities and the banks
– Excellent transport and telecommunication facilities
– Exemption from foreign exchange control
– An extensive network of double tax treaties
– Tax free income from dividends in Cyprus & lower withholding tax rates in other countries on remittances of dividends
– No capital gains tax on disposal of capital assets apart from the disposal of immovable property situated in the Republic of Cyprus
– No tax on profits on disposal of securities
– No tax on profits from a permanent establishment abroad
– Tax free distributions by Cyprus Holding companies to their non resident shareholders
– Availability of Group losses relief without any time restrictions, under certain conditions
If you are considering incorporating a company in Cyprus or restructuring your business to utilize the above benefits and require a professional advice please feel free to Contact us.