Cyprus

Cyprus an International Financial Center

Cyprus, a full member of the EU since 2004, is one of the prominent Financial Services centre in Europe. It offers one of the most competitive corporate income tax environment of the 28 European Member States. It has a 12.5% corporate income tax, tax exempt system for holding companies and a vast network of about 50 double tax treaties. English is extensively used as business language, there is excellent infrastructure, a reliable banking sector making Cyprus an attractive destination for tax planning. Cyprus maintains its banking secrecy

Overview of Tax System

The Tax system in Cyprus is Fully OECD and EU compliant. There is no or low tax on dividends, interest, royalties. The authorities encourage foreign investors giving Tax and Vat rulings to ensure that structures proposed are effective. This boosts confidence as it eliminates uncertainty on correctness of structure to be used.

Overview of tax system (2)

  • 12.5% Corporation Tax
  • Ship management companies pay tax at 4.25%
  • Deductibility of expenses on a wholly and exclusively basis
  • No transfer pricing rules, principle of Arm’s Length
  • No with-holding taxes, on most cases
  • Interest deduction for borrowing costs provided
  • Unilateral tax relief for foreign tax suffered
  • Tax losses can be carried forward indefinitely
  • Tax losses can be surrendered as group relief
  • No Tax on Foreign Permanent Establishments
  • Mergers, Takeovers and re-organizations can take place within groups with no tax consequences

Overview of tax system (3)

Choice of resident or non-resident companies
Either:

  • A tax resident Company taxed with 10% on its worldwide income, taking advantage of double tax treaties
Or
  • A Non – Tax Resident Company paying NO tax in Cyprus, no use of double tax treaty. This company can be used to hold bank deposits

Overview of tax system (4)

  • Simple tax System
  • Company Law based on UK Company Law
  • No need for complex tax structures that take up valuable time
  • Election by Client of functional currency
  • Tax exit Strategies available
  • Profits from sale of shares, are tax free if company has no real estate