Cyprus is becoming increasingly popular as a country of choice by many international groups looking to relocate their headquarters. The country has drawn international attention and is becoming a top destination for doing business, investing and living. The benefits are multifaceted and attributed to the country’s status as a European Union and Eurozone member state with progressive legislation, regulatory regime, a stable financial environment with its advantageous tax system, and highly experienced professional service providers.
Corporate structuring is one of the country’s areas of expertise. Headquartering companies are established to channel investments into key global markets for many international companies that do business in Cyprus, the Eastern Mediterranean and even globally. With headquarters in Cyprus, companies enjoy free movement of goods, services, and capital.
As a leading jurisdiction for relocation and set up of regional headquarters, Cyprus offers an ideal location, with natural beauty, and strong history and culture, attracting human capital required to control and manage business activities.
Cyprus Tax system: tax advantages offered
- Simple, transparent, and harmonized EU tax system
- Tax benefits of EU directives
- Cyprus double tax treaties with more than 60 countries
- Notional Interest Deduction for companies receiving new equity financing which reduces significantly their taxable income
- An Intellectual Property regime based on the Nexus approach and allowing an 80% imputed deduction on qualifying profits from the business use of qualifying intellectual property. Exemption of 4/5 of profits means that only about 20% of IP revenues are taxed at a corporate tax rate of 12.5%.
- Attractive Cyprus tonnage tax (TT) scheme for shipowners, managers, and charterers
- Attractive tax regime for Cyprus funds and for Cyprus fund managers
- Capital gains are exempt from Cyprus taxation (excluding capital gains arising from the sale of immovable property located in Cyprus)
- Profits of a foreign Permanent Establishment are exempt from tax
- Securities trading proceeds (stocks, bonds, and certain other financial instruments) are exempt from Cyprus tax
- Unilateral credit relief is granted to Cyprus companies for foreign taxes in Cyprus
- No withholding tax on dividends paid by a Cyprus company, interest, or royalty payments (for use of royalties outside Cyprus) to its shareholders
- There is no inheritance tax in Cyprus
- There are multiple tax incentives and relieves for expatriates and individuals who seek to become tax resident in Cyprus
- There is a friendly investor scheme for work-permits granted to non-EU employees of the employer company
Cyprus Foreign Investments
The traditional key driving forces of the country’s economy include traditional sectors of shipping, real estate, tourism and professional services. Over the last few years there is an increasing trend towards industries including energy, education, healthcare, and technology.
This latter industry is supporting the country in its transition from a global business centre to a growing technology and innovation hub. ICT companies can establish an IP holding and development company in Cyprus. The benefits include lower effective tax rates while having the legal protection applicable as per EU legislations, protocols and treaties.