The Cyprus corporate structuring remains one of the areas of specialization in Cyprus. Corporate and tax advisors continue to set up Cyprus companies such as Cyprus holding companies, Cyprus investment companies, and Cyprus headquartering Companies to channel investments into key markets worldwide. The stable financial environment of Cyprus together with Cyprus favorable tax system has made Cyprus a primary destination for structuring investments in Europe, the Middle East, and Africa.
The Cyprus tax regime is one of the most attractive and transparent tax systems in Europe, which fully complies with EU laws and regulations,
Opportunity is provided for foreign companies to use Cyprus as a point for headquartering. As part of the European Single Market, Cyprus enjoys the free movement of goods, services, and capital with the other EU Member States and the European Free Trade Association members. This comes without tariffs, complicated bureaucracy, or regulatory barriers
Apart from Cyprus headquartering, Cyprus is also used as a gateway to and from the EU for various corporate services, such as sales and marketing, project management, software development, systems integration, testing services, training and development, disaster recovery, and business continuity, and joint R&D between countries in the region. International giants such as Microsoft, Oracle, SAP, and IBM have had their headquarters in Cyprus for many years, supporting the technological development of the country.
More specifically, why Cyprus headquartering, why moving to Cyprus, and why to register a company in Cyprus
Cyprus company taxation
Cyprus offers one of the most attractive tax regimes in Europe. The Cyprus tax regime fully complies with the requirements of the EU and the OECD. Cyprus has one of the lowest corporate tax rates in the EU at 12.5%. The low Cyprus tax rate regarding Cyprus companies in combination with an extensive list of double taxation treaties with the rest of the world places Cyprus high on the list of preferred jurisdictions on the scene of international tax planning.
Cyprus tax advantages that Cyprus tax regime offers to Cyprus companies and to those companies choosing Cyprus as a place of headquartering
Cyprus, for those choosing Cyprus as their point of headquartering offers various tax advantages due to its tax system.
- Cyprus Company enjoys a simple, transparent, and harmonized EU tax system in line with OECD practices
- Cyprus Company enjoys the tax benefits of EU directives (EU Parent-Subsidiary Directive, EU Merger Directive, and Interest and Royalties Directive)
- Cyprus companies enjoy an extensive Cyprus double tax treaty network with the rest of the world
- Availability of Cyprus Notional Interest Deduction – NID for Cyprus companies receiving new equity financing. The Cyprus tax deduction for Cyprus Companies can reach up to 80% of the Cyprus Company’s taxable income generated by the new equity
- Cyprus IP Box – Cyprus Intellectual property regime for Cyprus Company based on the Nexus approach that allows an 80% imputed deduction on qualifying profits from the business use of qualifying intellectual property – IPs. The exemption from four-fifths of profits means only 20% of the IP revenues are taxed at a corporate tax rate of 12.5%. Following the calculations, Cyprus companies can enjoy an effective Cyprus tax rate as low as 2.5% – the lowest in Europe. Cyprus offers substantial intellectual property (IP) protection through domestic law and a network of EU and international agreements.
- Attractive Cyprus tonnage tax (TT) scheme for shipowners, managers, and charterers
- The attractive tax regime for Cyprus funds and an attractive tax regime for Cyprus fund managers
- Capital gains are exempt from Cyprus taxation (excluding capital gains arising from the sale of immovable property located in Cyprus)
- Profits of a foreign Permanent Establishment are exempt from tax
- Securities trading proceeds (stocks, bonds, and certain other financial instruments) are exempt from Cyprus tax
- Unilateral credit relief is granted to Cyprus companies for foreign taxes in Cyprus
- No withholding tax on dividends paid by a Cyprus company, interest, or royalty payments (for use of royalties outside Cyprus) made abroad
- There are no taxes on entry into qualifying reorganisations
- There is no inheritance tax in Cyprus
- There is no immovable property tax in Cyprus
Energy opportunities
Energy is one of the most promising sectors of Cyprus, with many investment opportunities in new and existing projects, both in the oil and gas industry and in the production of renewable energy sources and electricity.
Cyprus film industry
The official launch of the long-awaited incentive framework in 2018 made Cyprus a new destination for the production of films movies
Cyprus International trusts
Cyprus’s international trust regime is a unique combination of English and Cypriot law. Although some of the tax benefits associated with trusts have eroded in recent years, they still offer great benefits – especially for people who are changing or planning to change their country of residence, people with families living abroad, those seeking asset protection; and those wishing to dispose of their property on death freely and without lengthy procedures.
Cyprus investment funds
The Cyprus Investment Fund industry surprised the global asset management community with its rapid growth. An area that was almost nonexistent a few years ago, Cyprus came to recognition by reviewing and modernizing its Investment Fund regulatory framework. Assets under management (AuM) have tripled recently proving that Cyprus is able to compete with the most traditional investment fund destinations in Europe.
Cyprus other various incentives to stimulate Companies to set up their headquarters in Cyprus
Cyprus has introduced incentives to attract foreign companies to set up their headquarters in Cyprus to boost economic growth. These incentives aim to encourage the development of new high-tech industries and high-intensity skills products. Some of them are:
- Free of customs and excise duties for activities in the industrial free zone area
- Subsidized Industrial training programs
- Subsidized industrial areas
- Grants and other financial assistance to investors, especially in the sectors of energy, environment, industrial development, technology, and research and innovation.
Cyprus as a former British colony and Cyprus legal framework
As a former British colony, Cyprus has also proven to be a convenient alternative for global companies in the post-Brexit world. The current and future legal and regulatory framework based on the principles of common law gives companies the advantage of continuing to operate under EU jurisdiction with a familiar legal framework
Cyprus banking sector
The Cyprus banking system is fully harmonized with EU legislation and directives. Commercial banking regulations and practices follow the British model and today there are over 30 Cypriot and international banks operating in Cyprus. All banks maintain respective networks around the world and are able to carry out traditional and specialized financial transactions.
Individual’s Cyprus taxation advantages moving to Cyprus
Individuals who were not Cyprus tax residents before they relocated to Cyprus, but become Cyprus tax residents afterward, are entitled to a 50% exemption from Cyprus income tax if all of the following conditions are met:
- Their remuneration from work performed in Cyprus exceeds 100,000 euros per year and
- Were not Cyprus tax residents for three of the last five years prior to the commencement of their employment and were not Cyprus tax residents in the year preceding their employment. The exemption is available from the first year of employment and can be enjoyed for a period of ten years. Individuals with an annual salary of fewer than 100,000 euros who were not Cyprus tax residents in the year preceding their employment, but become tax residents of Cyprus thereafter, are entitled to a 20% income tax exemption for each year until the end of 2020 (the maximum exempt amount is EUR 8,550 per year). The exemption is available from 1 January after the year of commencement of employment
- Dividend income and interest income are excluded from the Special Defence Contribution SDC for non-domiciled individuals taking up tax residency in Cyprus
- Possibility of obtaining a Cyrus tax residence by spending only 60 days in Cyprus – subject to conditions
Individuals moving to Cyprus and Cyprus work permits
Cyprus is an EU member, under EU law, EU nationals have the right to enter Cyprus with an identity card or a valid passport and to look for work in Cyprus. For third-country nationals, Cyprus work permits must be obtained before entering Cyprus. Citizens of many non-EU countries do not need a visa to enter Cyprus for a stay of less than three months.
Office space in Cyprus and relevant costs
Office space in Cyprus and in Nicosia, the capital and most important business center, is relatively inexpensive compared to other European capitals.
Telecommunications
Cyprus provides high-quality and innovative telecommunication services at great value. The Cypriot telecommunications industry has now focused on manufacturing high-quality fiber optics to provide a full range of services, for Cyprus businesses and everywhere.
A huge pool of talented corporate and financial services professionals
As a successful international business center for many decades, Cyprus has a huge pool of talented corporate and financial services professionals. Cyprus has around 10,000 registered professional accountants and lawyers.
Eurozone
As an EU Member State within the Eurozone, Cyprus offers direct access to the EU internal market of over 500 million people. Following the accession of Cyprus to the European Union in 2004, Cypriot companies were able to set up their businesses or provide their services in any of the other EEA countries
Cyprus time zones
Cyprus enjoys business-friendly time zones, allowing international Cyprus companies to trade with the East in the morning, Europe all day, and the West in the afternoon.
Climate and sunshine coasts are also good reasons for Cyprus headquartering
Cyprus enjoys about 340 days of intense sunshine coast lined with endless areas of golden sand. Cyprus is surrounded by the crystal-clear waters of the Mediterranean.
Cultural heritage
Cyprus is full of fascinating relics of history, from Neolithic settlements and ancient cities to exquisite Byzantine arts and magnificent Venetian architecture.
Hotel accommodation
For those visiting Cyprus, Cyprus offers every possible type of accommodation and for every budget, starting from two- and three-star hotels to a wide range of four and five stars luxury and boutique hotels
Health
Cyprus is ranked by the World Health Organization as one of the wealthiest countries in the Mediterranean, Cyprus has an excellent healthcare system provided by both the private and public sectors. Cyprus recently introduced an NHS – National Health System throughout Cyprus, which covers both inpatient and outpatient treatment and is available to all citizens and residents. EU citizens visiting Cyprus can receive free treatment of outpatients or inpatients with a European health card issued by the health authority in their country of origin.
Education
There are many private schools in Cyprus, most of which are English-speaking, but there are also French, Russian, and Greek private schools. The fees are generally lower than for the corresponding education in the UK. Public schools are free and teaching is conducted in Greek. Higher education is provided by the six universities in Cyprus as well as by many other colleges that offer a variety of professional and academic courses.
Cyprus crime
Cyprus, with one of the lowest crime rates in the EU, is ranked as one of the top five safest countries in the world.
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