Our focus on clients from India
Shanda Consult advises and assists its Indian clients to take advantage of Cyprus as an entry gate into the EU, particular after the Brexit has become reality, and thus to benefit from the EU economic freedoms and from the advantages of Cyprus as a business-friendly jurisdiction for headquarters, regional headquarters, software development, research and development, shipping business, financial services, alternative investment funds (AIM) and many more.
Strong historical ties between India and Cyprus
Both India and Cyprus share the common destiny of being former colonies of the past British Empire, and the common destiny of the two countries in their struggle for independency. While India became independent in 1947, Cyprus gained independence in 1960.
India always supported Cyprus substantially, which is reflected by the many political visits of Indian representatives of the highest level. The Indian President V.V. Giri visited Cyprus in July 1972, and the Indian President R. Venkataraman visited Cyprus in September 1988. The last visit of an Indian President was the visit paid by President Pratibha Devisingh Patil in October 2009.
The Indian Prime Minister Indira Ghandi made a state visit to Cyprus in September 1983, during which the avenue on which the Cyprus Parliament is located was named after Jawaharlal Nehru.
The list of high-level political visits of Indian Ministers, parliamentarian speakers and MPs to Cyprus comprises of a large number of Indian personalities. Just recently, the Minister of State for External Affairs of India, Mobashar Jawed Akbar, visited Cyprus at the end of March 2017, meeting Cyprus Ministers, the Board of the Cyprus Chamber of Commerce, the Cyprus India Business Association and Cyprus business people, university rectors and many other people.
Interesting information: The former First Lady of Cyprus, Lila Erulkar, wife of the President Glafcos Clerides, was of Indian Jewish descent and born in Ahmedabad. Her father, Dr. Abraham Erulkar, was the personal physician of Mahatma Ghandi in London in September 1947.
The President of Cyprus, Nicos Anastasiades, will pay a state visit to India end of April 2017. He will be accompanied by the Minister of Finance, Charis Georgiades, and the Minister of Transport, Communication and Works, Marios Demetriades. The President of Cyprus will also be accompanied by a large business delegation of Cyprus business people. Business forums and B2B meetings will be held in Mumbai and Delhi, with the participation of the President of Cyprus and the named ministers. The managing director of Shanda Consult, Stefan Nolte, will join the business delegation as well. The Minister of State for External Affairs of India, Mobashar Jawed Akbar, promised during his recent visit to Cyprus to turn this visit into a “landmark visit”.
India and Cyprus enjoyed excellent economic ties since decades. The accumulated FDI (foreign direct investment) from Cyprus into India during the period from 2000 to 2015 almost reached USD 9 billion.
The legislation of both India and Cyprus is based on Common Law, a fact that provides substantial legal similarities and legal comfort for both countries. After the Brexit, the exit of the United Kingdom from the European Union, Cyprus is one of the few countries in the EU with a legal system based on Common Law.
Recent developments of economic relations between India and Cyprus
India and Cyprus signed a reviewed Double Taxation Avoidance and Prevention of Fiscal Evasion Agreement (DTAA) on 18 November 2016, which has meanwhile been ratified by the parliaments of the two countries. The signing of the new DTAA contains enhanced rules for the exchange of tax-related information between the two countries as per the OECD standards. This was a condition of India to release Cyprus from the list of “Notified Jurisdictions” (India’s “black list”).
India subsequently announced the rescission of its notification dated 1 November 2013. The decision of rescission was published in the Indian Government Gazette on 14 December 2016.
The new Double Taxation Avoidance and Prevention of Fiscal Evasion Agreement entered into force on 01 April 2017.
It is expected that the current developments will have a strong impact on the economic relations between the two countries and that they will further foster business and investment activities between India and Cyprus.
The main changes in the new DTAA compared with the previous one are:
- Taxation of capital gains arising from alienation of shares is now source-based, instead of the residence-based taxation of capital gains in the previous DTAA.
- The Indian withholding tax on dividends paid from India to Cyprus is 10%, this is a clear advantage of Cyprus, compared with Singapore and Mauritius.
- The Indian withholding tax on interest paid from India to Cyprus is 10%.
- The Indian withholding tax on royalties paid from India to Cyprus has been reduced from 15% to 10%.
Please note that Cyprus might, under certain conditions, issue tax credits for withholding tax paid in India.
Please note furthermore that Cyprus does not impose withholding tax, with the sole exception of Cyprus-sourced royalties.
Cyprus as a gateway to the EU for Indian companies
(Regional EU headquarters of Indian companies in Cyprus)
The aforementioned recent developments will definitely increase business and investment activities between India and Cyprus.
Additionally, Cyprus provides Indian companies with sound advantages as a gateway to the EU markets by overseeing, managing and conduction business (sales, purchases, services) on the EU markets through regional headquarters set up in Cyprus.
Advantages of Cyprus
One of the substantial advantages of Cyprus is the fact that Cyprus implemented all economic EU directives directly into national law, in contrast to some EU countries like, for example, France or Germany, which are clipping some of the EU freedoms or discriminating those who want to make use of their EU freedoms, for the sake of national concerns such as mainly tax revenues.
While Cyprus is fully compliant with all EU directives related to tax matters and financial matters, it provides tax advantages such as a business-friendly corporate tax rate of 12,5 % on taxable income. Cyprus also offers certain tax exemptions on income from the utilisation of intellectual property. Income from the disposal of securities in its widest sense, including company shares, is exempted from tax.
Licensable business such as insurance business, tourism agencies, financial services, investment consultancy and many more do benefit from the EU freedom of services. This basically means that such a licence obtained in one EU country allows conducting the licenced business activities in all and any EU country, without the need of additional permits in the other EU country.
It is often substantially less costly to obtain a specific licence in Cyprus than in other EU countries. Often it is also easier to obtain such a licence in Cyprus, because Cyprus implemented the respective EU law as it is, without creating additional hurdles.
Cyprus offers a highly educated labour market with very moderate salaries, compared with many other EU countries.
The laws of Cyprus are based on Common Law.
Basics of the economic freedoms of the European Union
The EU Community acquis (the accumulated legislation, legal acts, and court decisions which constitute the body of European Union law) provides for four economic freedoms, which are established both in the Treaty of Maastricht from 1994 and in the Lisbon Treaty from 2007 (Treaty on the Functioning of the European Union (TFEU)) and which constitute fundamental rights of all EU citizens and EU entities.
Those four EU economic freedoms are:
- the free movement of goods,
- the freedom of establishment and the freedom of services,
- the free movement of labour, and
- the free movement of capital.
Although all four freedoms were guaranteed by the Treaty of Maastricht and the Lisbon Treaty, further clarifications and clear and legally binding EU provisions became necessary in order to ensure equal implementation and treatment in all EU member states, and in order to ensure the avoidance of discrimination in the EU member states. Thus, the EU successively implemented the first three rights mentioned above into its law, basically through EU directives. The realisation of the legal implementation of the fourth freedom, the freedom of movement of capital, is currently (beginning 2017) an undergoing project named CMU (Capital Markets Union). While the free movement of capital and its subordinated rights already became part of our daily life, the EU plans to build a true single market for capital in the EU by 2019.
How Shanda Consult can help you
German-managed Shanda Consult is a well-established business consulting firm and corporate and fiduciary service provider, licenced by CySEC, the Cyprus Security and Exchange Commission. Shanda Consult can advise you how to structure your business in order to benefit from the many advantages of Cyprus, including tax advantages. Shanda Consult can set up your Cyprus Company, assist with the setup of an operating establishment or your regional EU headquarters in Cyprus, provide various fiduciary services as well as interim management, keep up with the statutory obligations of your Cyprus Company, provide accountancy and tax services, arrange for auditing, and advise on business development. Shanda Consult can also provide assistance related to target markets of the EU, with a strong focus on Germany.
Regarding Germany, Shanda Consult may advise and support you in respect of
company acquisition (share deals and asset deals, mergers),
investment in commercial real estate,
obtainment of banking licences.
Please do not hesitate to contact us for an initial evaluation of your situation and expectations.