Cyprus is an island state, member of European Union and Eurozone, situated at the north-eastern end of the Mediterranean Sea, at the crossroads of Europe, Asia and Africa.
Why Cyprus? Advantages offered to international business companies.
- Its strategic location in Europe; Its accessibility to the big East European markets, its proximity to the promising new emerging markets of Africa, its closeness to the Middle East and Gulf countries coupled with
- Its attractive taxation system and extensive network of almost 50 double tax treaties have developed it into one of the most important international business hubs of Europe, constituting it the gate to the ex CIS countries and the Middle East.
- Cyprus has one of the best double tax treaties with Russia, Ukraine and India and as member of the European Union can enjoy the zero withholding taxes on dividends/ royalties/ interests with the other European countries, ideal for the setting up efficient tax structures for international businesses engaged in these markets.
- Its business oriented environment and excellent business infrastructure with English being widely spoken.
- Its common law system, high level of accounting and legal services and well educated labor force.
- Reasonable costs of professional services for the set up and maintenance of companies.
- Its experienced and efficient commercial banking system.
- The new business opportunities that Cyprus currently offers are connected to the significant quantities of Hydrocarbon in the exclusive economic zone of Cyprus, which are attracting into Cyprus the most important players of the international oil and gas industry.
- Its excellent quality of life and marvelous weather, coupled with the high standard of health services and education constitute Cyprus an excellent location for living and working.
Tax system key features:
- Corporate income tax rate at 12,5% one of the lowest in Europe, but still acceptable (Note that anything below 11,5% is considered black listed)
- Dividend received is tax exempt.
- Capital Gains from the sale of securities is tax exempt.
- 80% tax exemption on income and capital gains from royalties is granted; hence effective tax rate is at 2,5%.
- No withholding taxes on interest/ Dividends/ Royalties paid out of Cyprus to non Cyprus tax resident physical persons or to any legal entities even classical offshore companies.
- Corporate tax for ship owning companies under Cyprus flag is zero. For the vessels under other flags tonnage tax is paid.
- For ship management companies, no corporate tax applies but only tonnage tax, which is very low.
- The extensive network of Double Tax Treaties lowers the withholding taxes on incoming dividend/ interest/ royalties.
- Tax is levied on net profit which is the result of generous tax deductibility rules.
- Losses are carried forward for 5 years.
- Group tax reliefs are available.
- Unilateral credits are granted for taxes paid abroad.
- Income earned from permanent establishment abroad is tax exempt.
- It is an attractive jurisdiction for Trusts, Funds and Forex as well as binary options, due to the tax benefits.
- There is no inheritance or wealth, taxation and nothing capitalization rules, no transfer pricing rules or CFC rules.