The lovely Mediterranean island enjoys the benefit of full European Union membership. For many years now it has also managed to successfully develop strong links with central and eastern european countries, particularly Russia and other CIS countries. Cyprus enjoys a wide network of Double Tax Treaties and is, therefore, a dominant player for tax planning structures. It is a prosperous financial centre with an open free market economy. The government of Cyprus has implemented significant corporate tax incentives. Indeed it boasts the lowest corporate tax rate in Europe. Cyprus has the advantage of about 40 Double Tax Treaties. This is quite unusual for a low tax jurisdiction. In mid 2002, as part of the Income Tax Act, the House of Representatives approved a uniform 10% corporate tax rate to apply to all legal entities registered on the island, thereby eliminating any distinction between onshore and offshore companies (owned by non resident persons). Furthermore, Cyprus is renowned for its efficient, stable, and reliable banking system and effective professional sector, both audit and legal.
- 12.5% corporate tax rate for business profits;
- No withholding taxes imposed on dividends, interest, and royalties for non-residents (whether a company or an individual);
- Income from dividends is exempted from income or corporation tax;
- Exemption from income or corporation tax of gains made by an individual or company resident of Cyprus from the sale of securities;
- The attractive platform and tax regime that Cyprus provides for a holding company (subject to certain conditions, full exemption from local taxation in respect of dividends received by a holding company from its local and foreign subsidiaries);
- The attractive platform and tax regime that Cyprus provides for International Trusts;
- The network of favourable Double Taxation Treaties (DTT) that Cyprus maintains with about 40 countries;
- Tax advantages available to non-residents including non - E.U. residents;
- Cyprus does not have any rules stating that holding companies cannot perform operating activities;
- Cypriot tax regime permits losses to be carried forward indefinitely;
- The highly developed and secure banking system;
- Availability of high quality accounting and consulting services;
- The U.K. Company Law heritage/common law tradition;
- The geographic location of Cyprus, located at the crossroads of Europe, Asia, and Africa;
- The English language being widely known and used in Cyprus.
For any additional information or consultation relating to Cyprus please contact us at our Nicosia office.