Cyprus is an attractive international jurisdiction with a very good holding company regime. Dixcart has an office in Limassol and can therefore efficiently organise the formation and management of companies in Cyprus.
Approximately 13,000 new companies were registered in Cyprus during 2017, bringing the total number of active companies to approximately 217,000.
A number of the benefits available to companies established in Cyprus, are detailed below:
Investment Holding Company Regime
Cyprus is an attractive location for holding companies as there is:
- NO withholding tax on dividends, interest and royalties.
- NO tax on dividend income.
- NO tax on income or gains derived from the disposal of securities.
Cyprus offers a number of tax incentives for royalty structures.
- The IP regime, subject to certain conditions, exempts 80% of income derived from intellectual property from taxation, resulting in an effective tax rate of less than 2.5% on such income. This is the lowest in Europe.
Corporate Tax Rate
- Resident companies are generally taxed at 12.5% of their business profit. This makes Cyprus a good location for trading entities, with a corporate tax rate amongst the lowest in Europe.
Double Tax Treaties
- Cyprus has an extensive network of Double Taxation Treaties (DTTs), with over sixty treaties in force. These include treaties with Portugal, Russia, and the Ukraine.
- In May 2017, Cyprus and Luxembourg signed a DTT for the first time and this came into force on 1st January 2018. Under the treaty, NO withholding tax is payable on interest and royalties. In addition, NO withholding tax is payable on dividends, if the beneficial owner is a company directly holding at least 10% of the capital of the paying company. In all other cases 5% withholding tax applies to dividends.
- In 2017 Cyprus also signed a DTT with Barbados, new protocols with Mauritius and San Marino, and previously signed treaties with Ethiopia, Iran and Jersey, came into force.
- The DTA with South Africa is also particularly attractive with NO withholding tax payable on interest and royalties.
International firms with employees working on overseas assignments can be employed through a Cyprus company.
Social security as well as other employer contributions are much lower in Cyprus than in most other EU countries, which is an obvious benefit. In some situations employees are fully exempt from social security in Cyprus. In addition, providing that the employees are not resident in Cyprus, they will not be subject to individual taxation in Cyprus on their salaries.
Other Benefits that the Jurisdiction of Cyprus Offers
- Shipping – Cyprus has an attractive Tonnage Tax System (TTS) which was approved by the European Commission in March 2010. The TTS is in accordance with the relevant guidelines on State Aid to Maritime Transport and will remain in force until 31st December 2019. This period may be extended, subject to approval by the European Commission.
- Cyprus Citizenship by Investment – This programme was amended in 2016 and offers non-Cypriot nationals a ‘fast-track’ route to obtain a Cypriot passport, with freedom to travel, work and reside in the EU. One of five economic criteria must be met, each of which specifies an investment of at least €2 million in Cyprus. The application process takes six months.
- Cyprus Residence Permit - An alternative to Cyprus Citizenship by Investment is a Cypriot Residence Permit. This does not entitle the applicant to a passport but it does allow the applicant to live in Cyprus. To apply for the residence permit the applicant must own a property in Cyprus with a minimum value of €300,000.
If you require any additional information about establishing a company in Cyprus, please contact Robert Homem at the Dixcart Office in Cyprus.
Updated January 2018