Cyprus offers one of the world's most globally-oriented and business friendly settings for establishing corporate structures.
Easy to set up, having the lowest tax rate in the European Union, operating in a stable and secure environment, backed by an impressive network of Double Taxation Treaties and providing access to key investments markets.
Cyprus international reputation has increased significantly in recent years and the island has become one of the most attractive international finance and business centre in the region. Investor activities include international business structures such as holding companies, finance companies, investment funds and other.
The island’s business infrastructure is well-developed and sophisticated, and the regulatory environment is transparent and welcoming towards investment from overseas.
Cyprus has a strong legal system based on English common law and amended over the last few years to ensure it is in line with European Union regulations.
The Cypriot professional services sector is able to support all aspects of business from accounting, banking, international business and financial services, business consulting, computing and information technology, legal services, marine and shipping management, tourism and real estate.
It is very important that the Cypriot professionals offer quality of service charging fees that are extremely competitive.
Incentives & reasons for incorporating a Cyprus company
- Member state of the EU.
- Modern tax regime acceptable by the EU.
- One of the lowest corporation tax rates in Europe (12.5%).
- Dividend income is exempt from corporation tax.
- Effective tax on royalty income of 2.5%.
- No capital gains tax on profit from sale of securities*.
- No withholding tax on payments to non-residents (dividends, interest and royalties).
- Non-resident entities are only taxed on their Cyprus-sourced income.
- Profits from overseas permanent establishments are exempt from corporation tax.
- Wide treaty network and use of EU Directives.
- Restructuring legislation in line with the EU Merger Directive extending to companies in non-EU countries.
- New Scheme for granting a Cyprus passport.
- Added commercial value and monetary benefits due to ability to register for VAT.
- International business centre with efficient legal, accounting and banking services.
- Advanced Telecommunications network and infrastructure.
Cyprus, officially the Republic of Cyprus, is an island in the Eastern Mediterranean, east of Greece, south of Turkey, west of Syria and north of Egypt. It is the third largest island in the Mediterranean Sea and one of its most popular tourist destinations.
Taking into consideration and acknowledging the competition targeting Cyprus from other low tax or no tax jurisdictions, we remain confident that Cyprus continues to provide a complete value proposition for foreign investors as a financial and business centre.
Double Tax Treaties
- Any withholding tax paid abroad, on income which is subject to tax in Cyprus will be credited against tax paid in Cyprus.
- Any dividend income received by a Cyprus company from abroad will not be taxed in Cyprus, if the tax imposed abroad is not substantially lower from the tax imposed in Cyprus.
- A company that is a tax resident in Cyprus is taxed with a corporate tax at the rate of 12,5%.
- A company to be considered a tax resident shall be managed and controlled in Cyprus.
- Where a company is tax resident in Cyprus, tax is imposed on income accruing or arising both from sources in and outside Cyprus.
- In the case where a company is not tax resident in Cyprus, tax is imposed on income accruing or arising only from sources in Cyprus.
Exemptions to corporate tax are the following:
- Interest income (Interest income arising in the ordinary course of business including interest connected with the carrying on of the business is not considered interest but trading profit and it is not exempt. )
- Profit from the disposal of securities
- Dividend income
How to incorporate a Cyprus company
Capital Gains Tax
Gains from the disposal of immovable property situated in Cyprus including gains from the disposal of shares in companies which hold such immovable property in Cyprus will incur a capital gains tax at the rate of 20%.