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Cyprus - A Place for Investors |
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From 1 January 2003 Cyprus amended it’s tax legislation in anticipation of EU accession. Cyprus has set up a tax system which is ideally suited to both inbound and outbound EU investors. It resulted in aligning Cyprus with EU directives, abolishing all distinctions between international business (formerly “offshore”) and local companies from 1 January 2003, whilst maintaining a favorable tax regime for the international investor that includes some of the following features:
- Corporate profits are taxed at 10 %
- Investment income from dividends is tax free (0 %)* Conditions Apply
- Profit on sale of shares and securities is tax free (0 %)
- Repatriation of profits from Cyprus companies (dividends and interest)
to non residents is tax free (0 %). Royalties are also tax free under certain conditions - No time restriction on carrying forward tax losses
- Group relief provisions
- No CFC rules apply
Tax costs play a significant role in investment decisions. Investors aim to maximise return after tax on investment. Therefore, investment structures which have the least tax leakage are preferred by investors and are recommended by professional advisers. As such, a Cyprus investment vehicle can collect income which is a charge against high tax income. Withholding tax is eliminated or reduced under double tax treaties or under EU directives. The rate of tax in Cyprus is low compared to other EU countries. The income can then be repatriated in any form the investor wishes dispensing with the need to withhold tax. A Cyprus entity is suitable both for EU inbound and outbound investments. There are no investment activities which are inappropriate for the Cyprus tax environment. However, there are investment activities which are indeed ideally suited to the Cyprus tax environment such as:
- Holding companies
- Investment funds and companies
- Finance companies
- Royalty companies
- South Europe, Middle East, Russia, central and
eastern Europe headquarter business activities
European enlargement and the accession of Cyprus opens up a new opportunity to investors who wish to invest in and from the EU.
Subsequent to the tax reforms introduced in 2003, Cyprus offers significant benefits to international groups, entrepreneurs and high net worth individuals. With a low effective tax rate and the treatment of dividends, interest income and capital gains, Cyprus has become a highly attractive holding company jurisdiction. The use of the numerous double tax treaties as well as the Parent/Subsidiary Directive further strengthens the position of Cyprus against other jurisdictions.
Fine Life Financial Limited is connected and up to date with EU and other international developments that can affect your business.
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