Setting up your business in Cyprus

Cyprus is one of the most popular locations in Europe for registering companies.

Cyprus has an effective and developed legal system and, as a former British colony, it is a common law country with business legislation similar to that of the UK. As Cyprus is a European Union member, a company registered in Cyprus enjoys all the advantages of operating in an E.U. country. Furthermore, the island has well educated, well trained and professional staff who speak English fluently, while Russian is another popular language for business.

Cyprus Advantages

Favourable Corporate Tax Legislation

The main reason why Cyprus has become a great attraction as a business location is the business-friendly tax system that offers many advantages to companies that are based in the country. The key benefit of a resident corporation is the uniform 12.5% corporate tax rate which is one of lowest in Europe. However, the country does not carry the disadvantages that the tax haven countries have, as Cyprus complies completely with the E.U. legislation. Furthermore, it is included on the OECD white list.

Creating a holding company or any other type of company in Cyprus is a quick and straightforward procedure. A company is considered to be taxed resident in Cyprus if its business is managed and controlled in Cyprus. However, there is no restriction in relation to the residence and the nationality of the owner, meaning that the owner of the company does not have to be a resident of Cyprus, while the company does not have to limit its operations to Cyprus.

Apart from the low corporate tax rate (12.5%) the Cypriot tax law provides multiple tax benefits compared to other European countries. There is 0% tax on interest income, dividend income, and profits from disposal of shares, bonds, debentures or other securities. No tax is paid for corporate re-organisations, such as divisions, transfer of assets and exchanges of shares with the exception of capital gains related to immovable property in Cyprus. The same applies for profits earned from subsidiaries abroad, subject to certain restrictions.

There are more tax incentives of the Cypriot legislation. For example, royalties paid from Cyprus to non-resident companies are not taxed (with minor exceptions about intellectual property used in Cyprus). The same applies for capital gains and income from the liquidation of a Cypriot holding company. Furthermore, as for all EU members, imports from and exports to other EU countries are completed without VAT.

Double Tax Treaties

International Trusts

Highly developed and efficient system

Conclusion

Cyprus is also well known for the high level of corporate services offered by professionals, such as lawyers and accountants who are very experienced and highly skilled. In addition, Cyprus provides a modern banking system and financial sector which can support the operation of international firms, offering a secure environment for business.