Choose Cyprus

Cyprus, a full member of the EU since 2004, is one of the prominent Financial Services centre in Europe. It offers one of the most competitive corporate income tax environments of the 28 European Member States. It has a 12.5 % corporate income tax, tax exempt system for holding companies and a vast network of about 50 double tax treaties. English is extensively used as business language, there is excellent infrastructure supported by stable political system.

Cyprus holding companies

A Cyprus holding company can be used for international tax planning.

The main advantage of a Cyprus holding company is that there is no withholding tax on dividend income received from subsidiary companies abroad, provided the direct holding is at least 1% of the share capital of the overseas company; the exemption does not apply if the subsidiary company engages in more than 50% of its activities in producing investment income and the foreign tax burden on its income is substantially lower than that in Cyprus. Outward dividends by the Cyprus Holding company to its non-resident shareholders are exempt from any withholding taxes.

Some other advantages are:

Cyprus being an EU Member State, holding companies registered in Cyprus may also enjoy no withholding tax on dividends received from EU subsidiaries as a result of the utilization of the EU Parent Subsidiary Directive.

A diversified group of Cyprus companies belonging to a Cyprus holding company can set off Group relief for the utilization of tax losses.

No withholding tax on capital gains and income on the disposal of neither the shares of the subsidiary’s share capital nor the shares of the Cyprus holding company.

Double tax treaties with over 40 countries, enabling lower withholding tax rates on dividend or other income received from the subsidiaries abroad.

No Minimum Holding period.

No tax on capital gains or income on the liquidation of the Cyprus holding company.

Trusts

Cyprus International trusts are governed by the International Trusts Law of Cyprus. International Trusts are not taxed in Cyprus. In fact, Cyprus International Trusts enjoy important tax advantages, providing significant tax planning possibilities. For a trust to be classified as an International trust its property is located and income is derived from outside Cyprus.

Trusts are usually used by wealthy individuals for the purpose of protecting their estate from inheritance or capital gains taxes in their home country. They can also be used by expatriates settling into a trust before repatriating assets acquired while working abroad, to protect such assets from the tax net of their home country.

The following are the main advantages of Cyprus International Trusts:

1) All income, whether trading or otherwise, of an International trust is not taxable in Cyprus.
2) Dividends, interest or other income received by a Trust from a Cyprus international business company are neither taxable nor subject to withholding tax.
3) Gains on the disposal of the assets of an International Trust are not subject to capital gains tax in Cyprus.
A non Tax resident of Cyprus who creates an International Trust in Cyprus and retires in Cyprus is still exempt from tax if all the property settled and the income earned is abroad, even if he is a beneficiary.
The assets of an International Trust are not subject to estate duty in Cyprus.