Cyprus provides great opportunities for business structuring and effective asset protection.
First class legal and financial services make Cyprus an ideal place to do business, regardless of the residence country of business owners.
Historically, Cyprus has been at the crossroads between Europe and Asia, with lengthy periods of mainly Greek and British influences.
Cyprus has become a full member of the European Union since May 1, 2004 and joined the Economic and Monetary Union on January 1, 2008.
Both membership significantly influenced the success of the Cyprus economy, making it one of the most successful international financial center in the European Union.
Cyprus is in the "white" list of the countries that have implemented the tax system standards of the Organization for Economic Cooperation and Development (OECD). Therefore, Cyprus is not a classic "tax haven", and together with the other OECD "white" list countries (UK, Netherlands, Germany, etc.) is a reputable jurisdiction for business, offering a range of effective tools for the international asset protection.
Doing Business in Cyprus
Cyprus infrastructure with its legal system based on Common (English) law, a high level of professional services in conjunction with the security of investments, significant tax advantages, creates the ideal conditions for doing business and to build an effective structure designed to protect assets.
As a full member of the EU, Cyprus has a reputation of a favorable jurisdiction with one of the lowest corporate tax rate in Europe, in addition to 50+ double tax treaties, which is very helpful in international tax planning.
Creating your own business structure in Cyprus - the perfect solution for control over the business assets in the countries with inadequate or dangerously low quality of judicial and law enforcement systems. This prevents any possibility of illegal weaning or business capture, as any disputes will be resolved in the Courts of Cyprus based on Common (English) Law.
The main advantages of creating your own business structure in Cyprus:
- The standard corporate tax rate of 12,5% is one of the lowest within the European Union. Cyprus is now a premier holding, finance and trading company jurisdiction
- Dividend income received in Cyprus from a foreign company is exempt from taxation in most cases
- No withholding tax on dividends, interest and royalties paid to non-residents of Cyprus
- Extensive double tax treaty network through which withholding tax rates are minimized
Economic Substance in Cyprus
The global tax initiatives like BEPS (Base Erosion and Profit Shifting) along with many other national initiatives - like CFC (Controlled Foreign Company) rules or General Anti Avoidance Rules (GAAR) - makes a negative impact for international business structures.
Considering international tax environment, it is vital to demonstrate to the foreign tax authorities that the legal entity is performing as real business i.e. the company has economic substance in Cyprus.
In general, the company considered to have economic substance in case the company has an economic purpose and relevant infrastructure besides being created ‘just on paper’ for the purpose of reducing tax liability i.e. at least to have a real physical presence in Cyprus:
rented or owned office premises,
independent qualified directors and managers who are located and employed in Cyprus,
substantial involvement of local staff for day-to-day business activities, etc.
Cyprus is becoming an attractive destination for individuals to consider relocating to and enjoy benefits of Cypriot tax residency for those who are not domiciled in Cyprus.
An individual is tax resident in Cyprus if he or she spends more than 183 days in any one calendar year in Cyprus. Previously income received by all Cyprus tax residents from dividends, rent and interest was subject to the Special Contribution to Defence Tax (SDC). This was a major disadvantage for high net worth individuals to relocate and become a tax resident in Cyprus.
The new legislation introduced the non-domicile status with the following general rule: if the person has not acquired and maintain a domicile of choice in Cyprus and not been a tax-resident in Cyprus for 17 of the last 20 years, in this case the individual will not be considered to be domiciled in Cyprus.
The new non-domicile tax status exempts all non-Cypriot domiciled individuals from SDC, irrespective of where the income is generated from or remitted to. As a result non-domiciled individuals do not pay tax on dividends, rent or interest, capital gains (other than on the sale of immoveable property in Cyprus), capital sums received from pension and insurance funds. Zero tax is applied even if the income has a Cyprus source and is remitted to Cyprus.
Citizenship by Investment
The Cypriot Government has established a citizenship by investment program that grants full Cypriot citizenship to those that invest at least EUR 2 million and who meet some other certain requirements.
The following options of investment may be used in order to qualify for citizenship program:
- invest an amount of at least EUR 2 million in immovable property, developments and infrastructure projects in Cyprus
- invest an amount of at least EUR 2 million in acquiring, incorporating or participating in Cyprus businesses or companies which are based and activate in Cyprus
- invest an amount of at least EUR 2 million in alternative investment funds or financial assets of Cypriot businesses or Cypriot organizations which are established in Cyprus and licensed by the CySEC
- invest an amount of at least EUR 2 million in a combination of the above mentioned options. In such a combination the investor may also invest in government bonds for a maximum amount of EUR 500,000 and provided it hold the bonds for at least 3 years
The applicant must own a private residence in Cyprus, the net price of which must be at least of EUR 500,000.
The applicant may own several residential properties in Cyprus of a cumulative net value of EUR 500,000.
Parents of an investor may also qualify to apply for Cypriot citizenship when they own a residential property in Cyprus of value at least EUR 500,000. In such case investor's parents will not need to make the investment of the EUR 2 million.
The general benefits of the Cypriot Citizenship by Investment program:
- investments instead of donation
- several combined options of investment
- fast track and easy process
We will assist you to setup the appropriate level of economic substance required for your goals and purposes, relocate to Cyprus and enjoy non-domicile status or acquire a citizenship.