With its ideal geographical position at the crossroads of three continents – Europe, Africa and Asia – Cyprus is an ideal investment gateway to the European Union, as well as a portal for investment outside the EU, particularly into the Middle East, India and China. It has been a full EU Member since 2004 and a euro zone member since 2008.
Cyprus is a modern, cosmopolitan, transparent business centre offering opportunities for investment across a wide range of sectors with a number of key advantages:
- Access to markets
- Attractive tax system
- Low cost of doing business
- Excellent regulatory structure
- Advanced infrastructure
- Access to talent
- Strong business support services
- High quality of life
Cyprus’s competitive advantages are significantly enhanced by an effective legal system and an attractive tax regime, which offers a wide range of incentives and advantages both for companies and individuals.
As a former British colony, Cyprus’ legal system is based on English Common Law principles and is widely recognised as providing transparency and reliability in business practices. Cyprus business legislation is also similar to that of the UK and, as a full EU member state, companies in Cyprus enjoy full access to European markets and EU trade agreements.
The key benefit of a Cyprus company is the uniform 12.5% corporate tax rate, which is one of lowest in the EU. Cyprus is also fully compliant with EU and international standards and provides access to an extensive network of more than 60 double tax treaties worldwide, including South Africa, Luxembourg, Mauritius, Singapore, the UK and the US.
In addition, Cyprus offers a dividend participation exemption, levies no tax on profits from disposal of securities, no withholding taxes, no tax on capital gains under certain conditions and no succession taxes. It also provides a Notional Interest Deduction (NID) on investment in Cypriot companies and an attractive intellectual property (IP) regime.
A company is considered to be tax resident in Cyprus if its business is managed and controlled in Cyprus. It does not have to limit its operations to Cyprus. There is also no restriction in relation to the residence or the nationality of the owner.
Attracting foreign direct investment is at the heart of Cyprus’ development strategy. In line with this policy, the Cyprus government has introduced two schemes to enable foreign nationals to invest in the Cyprus economy – the Permanent Resident Permits (PRP) scheme and the Cyprus Citizenship by Investment programme. There is no tax on dividends, interest and rental income of non-domiciled individuals and no succession taxes.
CYPRUS COMPANY FORMATION AND COMPANY MANAGEMENT SERVICES
Cyprus’ legal system is widely recognised as a business-friendly and effective system that ensures transparency and reliability in business practices. It is also fully compliant with all relevant European Union directives and OECD standards, and the Financial Action Task Force on Money Laundering (FATF).
The core of the Cyprus Companies Law (Cap. 113) is a replica of the UK Companies Law, as amended to implement any reforms necessary to remain competitive. The Companies Law, as all other legislation in the Republic of Cyprus, is fully EU and OECD compliant. Any individual – from the EU or a third country – that registers a company in Cyprus can therefore engage in business activities without restrictions. Read more..
Cyprus also has a simple and transparent tax system with a low corporate income tax rate of 12.5% and multiple exemptions at both the corporate and individual level. The advantages of the Cyprus tax system are as follows:
- Access to EU directives
- Extensive double tax treaty network with over 60 countries
- Dividend participation exemption (subject to conditions)
- Exemption from tax on gains from the disposal of securities
- Notional Interest Deduction on equity applies to all taxpayers and all business activities
- No withholding taxes on interest and dividends
- No taxation of capital gains (except for disposal of real estate in Cyprus or shares of company holding real estate in Cyprus)
- No succession taxes
- No Controlled Foreign Company (CFC) rules
- Tax neutrality on foreign exchange differences unless they arise from trading in currencies or currency derivatives
- Foreign tax relief on income subject to both Cypriot and overseas tax
- Exemption on profits of foreign permanent establishments (subject to conditions)
- Company reorganisation rules based on the EU Mergers Directive allow for tax-neutral group restructuring
- Attractive Intellectual Property regime in line with ‘modified nexus approach’
- No exit tax rules
- 50% exemption on employment income exceeding €100,000 per annum for non-residents taking up employment in Cyprus
- No tax on dividends, interest and rental income of non-domiciled individuals.