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Cyprus: An Asset To International Business Companies
Cyprus is considered as a leading jurisdiction for international business companies, as well as one of Europe’s most significant business and financial centres, thanks to its trustworthy legal system, favourable tax laws, stable tax policies and straightforward business legislation.
As a member state of the European Union, Cyprus enjoys plenty of benefits for international companies establishing base on the island. And with highly developed corporate services, the country registers thousands of international companies every year, making it a highly attractive hotspot for the corporate traveller.
In addition, the profound use of the English language across Cyprus, whose recent history placed the island under British colony, has worked largely in its favour as has its strict policies of common law with business legislation similar to that of the United Kingdom.Meanwhile, and even more recently, parts of the country’s economy has seen a rapid boom due to the large influx of high net worth individuals (HNWIs) arriving in Cyprus for corporate as well as leisure purposes. As a result, the number of HNWIs moving to the island in search of permanent residency continues to accelerate paving the way for further development in Cyprus’ financial and professional industries.
Listed below are 5 main reasons as to why Cyprus certainly secures a spot in the list of one of Europe’s most desired business locations, providing efficient financial and legal support to kick-start the operations of international firms.
1) Cyprus: One of the Lowest Tax Rates in Europe
Beginning, of course, at its business-friendly tax system; the primary key benefit of a resident corporation in Cyprus is the uniform 12.5 per cent corporate tax rate which is one of the lowest in Europe.
2) Cyprus is a member of the Organisation for Economic Cooperation and Development (OECD)
Secondly, Cyprus complies completely with EU legislation and it is also included on the Organisation for Economic Cooperation and Development (OECD)’s white list; an intergovernmental economic organisation list of 35 member countries.
3) Cyprus has Multiple Tax Benefits
Aside fromthe low corporate tax rate, Cypriot tax laws allow companies on the island multiple tax benefits compared to other European business destinations, which include zero per cent tax on interest income, dividend income, and profits from disposal of shares, bonds, debentures or other securities. In addition, no tax is paid for corporate re-organisations such as divisions, transfer of assets and exchanges of shares with the exception of capital gains related to immovable property in Cyprus. The same applies for profits earned from subsidiaries abroad (subject to certain restrictions).
Furthermore, more tax incentives of the Cypriot legislation to non-resident companies include untaxed royalties (with a few minor exceptions regarding intellectual property used in the country). The same legislation applies for capital gains and income from the liquidation of a Cypriot holding company. And, as for all EU member states, imports from and exports to other EU countries are completed without VAT.
4) Cyprus is a party to a large number of InternationalDouble Tax Treaties
Cyprus and around 60 other countries (in and outside the EU including those in the Middle East) have established the double taxation avoidance treaties, a majority of which follow the OECD model and which, as a whole, has proven highly beneficial for foreign companies registered on the island. As a result, foreign investors do not have to pay additional tax in their home country.
5) Creating a Cyprus Company is Straightforward
The procedure to create a holding company or any other type of company on the island is quick and straightforward. To begin with, a company is considered to be a taxed resident in Cyprus if its business is managed and controlled in Cyprus. There is no restriction in relation to the residence and the nationality of the owner meaning that the owner of the company does not have to be a resident of Cyprus. Meanwhile, the company does not have to limit its operations to Cyprus.
The procedure for registering a company in Cyprus is as follows: The first step of the process is the approval of the name of the company by the Companies Registrar, which requires two to three working days. After the approval, the required documentation must be filed the Registrar of Companies, and from that date, it takes around five working days for the procedure to be completed. Thus bureaucracy is kept to a minimum.
The content of this article is intended to provide a general guide to the subject matter. Specific advice for your specific circumstances can be sought from our firm’s experts.For further information or clarifications, please contact Soulla Dionysiou at DP Law