*) Projected on the basis of incorporations January - April 2011

Nearly 250.000 companies benefit from the tax and other advantages of Cyprus!

Cyprus’ Tax Advantages

In the course of harmonisation, focusing on the then future EU-membership, Cyprus dismissed its “offshore” legislation in 2002 and 2003 step by step. Simultaneously, a new system of EU-conform tax incentives has been set up, and the refinement is still continued day by day. Today, Cyprus is even more attractive as place of companies’ registered offices than it ever had been during the “offshore-times”, particularly because of its EU-membership since 2004 and the consequent implementation of EU directives.

This new situation supported an “explosion” of company and trust incorporations. Currently, more than thousand companies and trusts are incorporated every month – a clear proof of the advantageousness of Cyprus’ legislation.

Some of the many tax incentives in Cyprus:

• differentiation between ‘tax residents’ and ‘non tax residents’
• corporate tax is only 10 %, 0 % for ship-owning companies and 4,25 % for ship management companies (lowest rates in the EU)
• no corporate tax for ‘non tax resident’ companies (with management residing abroad)
• no tax on disposal or trading of securities
• no withholding tax on dividends paid to shareholders outside of Cyprus
• no tax on dividend income
• no tax on interest income on account of nor-residents with banks in Cyprus
• no tax for International Trusts
• adoption of the EU-Parent-Subsidiary-Directive (dividend payments of the subsidiary to its parent are tax-exempted)
• full tax group relief (profits of one group company are offset against loses of another group company)
• offshore entities from other countries are allowed as shareholders
• consequent introduction of all relevant EU directives

 

Non-tax advantages of Cyprus

We always recommend evaluating a Cyprus company not only under the aspect of tax advantages.
Beside the direct tax advantages, a lot of indirect tax advantages apply, further increasing the over-all advantages. For instance, deductibility of operating expenses is much more extensive than in many other EU countries.

Furthermore, liability and the protection of property are of crucial importance, especially in the light of today’s economic climate. For instance, there is no legal ground for piercing the corporate veil in Cyprus’ legislation.

 

Main non-tax advantages of Cyprus

• absolute no piercing of corporate veil
• no professional qualifications needed
• low employee benefit costs
• advanced trustee legislation (nominee directors and shareholders)
• high legal certainty
• high legal security for founders (companies may only be incorporated in Cyprus by lawyers)
• high standards of data protection
• exchange of information with other EU countries only in rare and serious cases
• well established banking confidentiality
• effective banking services (all banks maintain ‘International Banking Units’ for foreign customers)
• wide network of Double Taxation Treaties
• professional financial services sector
• excellent communication infrastructure
• business language is English
• acceptance of invoices from offshore entities, no withholding tax on the payments of such invoices
• offshore entities accepted as shareholders