Why Cyprus?

Dividends received by Cypriot tax resident companies are exempt from Cyprus tax subject to some minor exceptions. The extensive network of double tax treaties allows beneficial treatment in respect of withholding taxes in the source country;

Dividends paid by a Cyprus tax resident company to its non-Cyprus resident shareholders are in most cases not subject to any withholding tax in Cyprus;

The trading in securities is tax exempt. The definition “securities” include, but not limited to, shares, bonds, debentures and similar titles as well as rights thereon (options, futures, forwards etc.);

0% Capital Gains Tax is paid in Cyprus on the transfer of foreign immovable property owned directly or indirectly by a Cyprus tax resident company;

Companies receiving Income on Intellectual Property. Cyprus tax legislation provides that 80% of the net income received by a Cyprus tax resident company on Intellectual Property (“IP”) it owns is exempt from taxation, thus having the effective corporate tax rate for IP companies as at 2.5%;

The Notional Interest Deduction (“NID”) is a new powerful tool provided to local and international businesses which enables them to deleverage and realise a tax efficient return on new (qualifying) equity. This return is achieved through the deduction of a “notional” interest expense from their taxable income;

0% Estate Duty is payable on the inheritance of shares in case of the death of a shareholder

The lowest tax rate in the EU – 12.5%;

Cyprus International Trusts may be established with the aim of holding the shares or to be used as a vehicle in a tax structure. Amendments to the Cyprus’ Trust Law have proved this instrument as one of the most effective and available today;

Unilateral Tax Credit Relief. Unilateral tax credits can be granted on any tax paid abroad to any foreign country, irrespective of whether Cyprus has a double tax treaty or not. In such a case, the income is taxed only once;

Extensive network of Double Tax Treaties, application of EU directives. Cyprus has an impressive and continually growing network of DTTs amounting today to more than 70. A Cyprus company can benefit from the EU Parent-Subsidiary and Interests and Royalties Directives to eliminate withholding taxes when collecting income from the EU member states;

Losses can be carried forward and set off against future profits for the next five years;

Thin Capitalisation Rules. Cyprus tax legislation does not contain Thin Capitalisation provisions, there are no provisions in the Law requiring companies to maintain a particular debt to equity ratio;

No Tax on Liquidation. A Cypriot holding company held by non-resident shareholders can cease operations in Cyprus and distribute assets to its shareholders in any form without any tax cost to the shareholders.