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.
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