Located in the Eastern Mediterranean, at the crossroads of three continents, namely Europe, Asia and Africa, and having one of the lowest tax rates in Europe, Cyprus is nowadays one of the most popular countries for registering companies. The number of new companies set up with the Cyprus Registrar of Companies is increasing every year, turning the island into a significant international financial centre.
There is a combination of factors which contributes to this continuous increase of entrepreneurs’ interest to register a company in Cyprus. The following are only some of those factors:
- Low corporate tax rate & double tax treaties
Primarily, the main advantage of registering a company in Cyprus is the corporate tax rate of 12,5% which is the one of the lowest rates in the European Union. Furthermore, Cyprus has double taxation treaties with more than 60 countries all over the world, covering among others all central and eastern European countries.
- Exemption of dividends from tax
In addition, dividends paid to a Cyprus resident company are exempt from corporation tax, whether they are received from a foreign company (provided that certain conditions are met) or a Cyprus resident company.
- No withholding tax on dividends paid out
There is no withholding tax on dividends that are repatriated to a non-Cyprus tax resident shareholder or to a Cyprus tax resident shareholder who is non domiciled
- No capital gains tax on profits from the sale of securities
If securities are sold which were held either for participation purposes or for trading purposes, then any capital gains risen are fully tax exempt. This is a unique characteristic of Cyprus tax system which cannot be found in other European tax systems and make the Cyprus company ideal for holding company in combination with the tax exemption of dividends and the zero withholding taxes on dividends paid out. Additionally the capital gains exemption makes the cyprus company popular for trading in securities.
- Suitable legal system for businesses
Moreover, Cyprus is a member of the European Union since 2004 and it complies with European Union legislation. The legal framework of Cyprus is based on the principles of the English common law and provides an effective and developed legal system.
- Professional corporate services
Additionally, Cyprus offers corporate and legal services of high quality. The English language is widely spoken all over the island.
- Preferred environment to set up office and substance
Under the current circumstances and in the light of CFC rules and management and control issues, it is very important for an international business to choose a jurisdiction in which substance can be easily set up at reasonable costs. Cyprus offers more reasonable prices for rents and salaries than other European business centers and qualified personnel can be easily recruited while the living conditions and quality of life are very attractive
- Simple incorporation procedure
An important advantage of registering a Cyprus company is that the incorporation procedure is very simple and easy. There is no minimum capital in registering a company. A Cyprus private company can be registered with only one shareholder and only one director. Shareholders and directors can be of any nationality.
Company registration can be completed within 3 working days from the date that the application was duly submitted under accelerated procedure. Upon completion of the registration, the company is incorporated and the “Certificate of Incorporation” is issued.
All the above mentioned benefits make Cyprus an ideal location for investors to set up their business and that’s why Cyprus has become, during the last years, one of the most attractive places for company establishment and investment worldwide.