• 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.

Cyprus became an independent sovereign republic in 1960 after 82 years of British Rule on the island and under its Constitution it has a presidential system of government. The economy of Cyprus is based on the free market system with the private sector forming the backbone.

Cyprus offers a high standard of living, it has a well developed and highly organized banking system and a well trained and highly skilled workforce as it has a large number of university graduates and persons with professional qualifications.

In the last 30 years Cyprus has developed into a reputable international business and financial centre due to the very favourable tax regime that the island offers. The admission of Cyprus to the European Union (EU) as full member in May 2004, established Cyprus as a prestigious, stable, and attractive jurisdiction. The EURO replaced the Cyprus Pound, thus becoming the island's currency, on January 1, 2008, further integrating the island's economy to that of the EU's core economies.

Though the offshore company status was abolished as from January 1, 2003, the favourable tax regime for the international investor has been maintained. In addition, the liberalization of investments coming from non-EU countries and the abolition of maximum and minimum participation percentages in investments in all the sectors of the economy in October, 2004 (with some exceptions), has transformed Cyprus into a major destination for the location of international holding companies and worldwide investments.

The tax advantages Cyprus offers may be enhanced when, under certain circumstances, are combined with those of other jurisdictions' in appropriate legal structures. Contact us to provide you with a free consultation regarding your individual circumstances.

Advantages of International (Offshore) Legal Entities:

In simple terms, an International Business Company ('IBC', also known as Offshore company) is a Standard Limited Liability company which is used as a tool, by corporations and individuals through out the world to direct profits out of high tax countries and into specific jurisdictions or international financial centres, thus taking advantage of their low or zero tax regimes and their double tax treaties. The beneficial ownership and business activities of the international (Offshore) enterprise are usually outside the country of its registration.

Usefulness of International Business Companies:

There are many business activities which are best suited to be operated through an international entity. Below are some examples of such activities. In this case, a Cyprus registered IBC is assumed:

(a) Exports: If you export products to a third country, you may issue invoices via Cyprus. Therefore, you can pay less tax to your home country because the Cyprus Company buys at a lower cost and sells at a higher price. In Cyprus, you only have to pay 10% tax on your profits. You do not have to send the products via Cyprus – instead, you can deliver them directly;

(b) Imports: If you import products from third countries, you may issue invoices via Cyprus: In doing so, you pay less tax to your home country because the Cypriot company sells at a high price. Thus the profit which must be taxed in your home country is reduced. The profit in Cyprus is only taxed at 10%. You do not even have to send goods via Cyprus – your supplier can deliver directly to you;

(c) International trading (an international company can be used as intermediary to re-invoice exports and imports such as consulting to be provided by the Cyprus entity to a company in another country for a fee thus reducing the taxable profit of the paying company;

(d) International services companies (re-invoice services through an international company);

(e) International construction and/engineering companies;

(f) International transport/distribution companies;

(g) Royalty companies;

(h) Real estate companies;

(i) Shipping and ship management companies;

(j) Commission agents;

(k) E-business;

(l) Holding companies (receiving dividends from foreign subsidiaries);

And many other uses. Please go to Question 1 of our FAQ section for additional information.