Situated in the north eastern Mediterranean Sea at the crossroads of Europe, Asia and Africa, Cyprus is the third largest and third most populous island in the Mediterranean with a population of over 1.1 million. The capital city is Nicosia, which has a population of about 200,000 people.
Formerly a British crown colony, Cyprus gained independence in 1960 and is an independent democratic republic, and a member of the Commonwealth. It adopted a presidential system of government with elections for the president taking place every five years. There is a multi-party system and members of the House of Representatives are elected for a five-year term by proportional representation.
Turkey invaded Cyprus in 1974 and has since occupied the northern 40% of the island. The southern part of Cyprus is known as the Republic of Cyprus and the official language is Greek but English is widely spoken and is the language generally used for business, government and the courts. The legal system is based on English common law and provides for various types of trust. Cyprus company law is modeled on the UK Companies Act 1948.
Alongside the domestic economy, the Cyprus government created a beneficial offshore tax regime under which tens of thousands of offshore companies were registered in Cyprus. This dual system tax regime had to be restructured in 2003 in advance of Cyprus becoming a full member of the European Union the following year. Domestic and offshore companies alike now pay 12.5% tax.
Cyprus is an attractive jurisdiction to establish structures and conduct international business because of its wide network of double tax treaties and low corporate tax rate. Subject to conditions, dividend income received, profits of foreign branches of Cypriot companies, profits from the disposal of securities (including shares, bonds and debentures) are all tax exempt. There is no withholding tax on dividends, interest and most royalties paid from Cyprus to non-resident shareholders. Profits from the exploitation and/or disposal of intellectual property rights are 80% tax exempt and there is no tax on capital gains from sale of property located outside Cyprus.
Cyprus has double tax treaties with over 50 countries, including most leading developed nations as well as most Central and Eastern European states. As a result Cyprus has long been a very effective location for holding and investment companies aimed at emerging markets. It also has the most attractive tax regime in the EU and is often used as a conduit to and from the EU. Cyprus adopted the Euro as its currency in 2008.
Cyprus has a highly developed infrastructure and excellent communications. It is readily accessible by air and sea. The major port facilities are those of Limassol and Larnaca, both situated on the south coast. Sovereign’s Cyprus office is located in Cyprus’ second largest city, Limassol, which now rivals the capital Nicosia as an international business hub.
Cyprus is located within the Eastern European Time Zone (EET), which is GMT+2.
Useful Links
Central Bank of Cyprus – www.centralbank.gov.cy
Ministry of Finance – www.mof.gov.cy
Cyprus Securities and Exchange Commission (CySEC) – www.cysec.gov.cy
