Why Choose Cyprus for Your Business
Cyprus as an EU member since 2004 is one of the most fast paced evolving international financial centers in the world which attracts thousands of new investors every year. Cyprus benefits also from its strategic geographical position and acts as a vital gateway to Europe, Middle East, Africa and Asia.
D. Marinou & Co Ltd is a well established firm based in the city of Larnaca. Our clients are public and private businesses operating across a wide range of markets both locally and internationally.
Some of the investment opportunities that will be mentioned below offer the option for investors to relocate to Cyprus and enjoy the high standard of living of the Island.
Cyprus is distinguished by its simple and straightforward tax system and its low rates. It is one of the preferred jurisdictions for the establishment of a business base for both individuals and corporations and enjoys a large treaty network with over 60 countries, with comparative cost advantages and favourable treatment for executive remuneration.
The above are reinforced due to the fact that Cyprus is also in alignment with international agreed tax standards through its association to the OECD having a first class reputation on the OECD ‘White List’ from its inception.
Low Tax Regime
Cyprus has a very competitive tax system that is fully aligned with EU and International regulations and Directives.
Excellent Geographical Position
Acting as a gateway to Europe, Middle East, Africa and Asia.
Low Tax Regime
Cyprus attributes its worldwide recognition to its current large network of double tax treaties with a total of over 60 countries.
Key tax incentives within Cyprus Tax System
- Legal system structured on the English counterpart largely following English case law and the statutes regulating business matters and procedures.
- Well regulated financial environment – international clients can incorporate Cyprus Companies and place the shares of such Companies into trusts.
- Corporation tax rate of 12.5% (flat rate) – one of the lowest mainstream rates of tax on Corporate profits within EU.
- Profits generated from sales in shares, bonds and other qualifying securities are exempt.
- Exemption from tax on profits of foreign permanent establishments (PE) provided that more than 50% of the income of the PE derives from trading activities or the foreign tax burden on the income of the PE is not substantially lower than the tax burden of the Cypriot resident Company.
- No withholding taxes on interest and royalty payments to non-residents (Company or Individual).
- Access to EU Parent/Subsidiary directive.
- Tax credit for taxes paid abroad is given unilaterally irrespective of the existence of a double tax treaty.
- Full member of the European Union.
- Exemption on foreign source dividends (in most cases) paid by a foreign subsidiary to a Cyprus Holding Company.
- Exemption on capital gains realised from sale of non-Cyprus assets (i.e. real estate, foreign share capital).
- No withholding taxes on dividend distribution to foreign non-resident shareholders (Company or Individual).
- Purely holding Companies outside scope of VAT in Cyprus.
- No Thin Capitalisation rules.
- Flexible reorganisation rules and group relief provisions.
- A Cyprus tax resident individual who is considered to be domiciled in Cyprus will be exempt from Special Defence Contribution (SDC). Therefore dividend income, from foreign as well as local investments will not be subject to SDC in the amount of 17%. In addition, dividend income is unconditionally exempt from Income Tax. Therefore the tax payable by a Cyprus resident non-dom on dividend income is only a 2.65% concerning the General Health System contribution capped to EUR4,770 per year per individual.
- Flexible re-domiciliation laws in and out of Cyprus without disturbing the overall structure.
- Notional Interest Deduction (NID) on new equity introduced as from 2015 onwards effectively replacing the back to back financing arrangements which were taxed at the minimum acceptable margin of 0.35%.
- Distribution of assets without taxation to non-resident shareholders on Liquidation.
- Cyprus has signed double tax treaties with over 60 countries most of them being based on the OECD Model Convention.
- The new Cyprus IP regime allows for 80% of qualifying profits generated from qualifying assets to be deemed as tax deductible expenses. In calculating this, the level of qualifying profits is positively correlated to the extent the claimant performs R&D activities to develop the relevant asset. Qualifying assets include amongst others patents and copyrighted software programs but do not include trademarks and copyrights.
- Tax losses are carried forward for a period of five years.