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Cyprus Company Structures

Cyprus company common uses

  1. Cyprus Holding Company

    1. For international or domestic groups investing outside Cyprus, that aim to dividend income.  Such dividends are usually not subject to Cyprus tax.

    2. To hold subsidiaries that may be disposed off in the future.  Such disposals are not subject to Cyprus tax.

    3. To benefit from and utilise the favourable conditions of the Cyprus Double tax treaties network.

    4. To have the ability to achieve a tax – free unwind of the Cyprus holding company at any point in the future.

    5. To manage investment activities i.e. real estate especially in Eastern Europe countries. Structuring investments via Cyprus can be extremely efficient as in most cases tax on the sale of real estate is completely eliminated.

Dividends received by a Cyprus Holding company from overseas participations is exempt from Cyprus tax; no Cyprus withholding tax on distribution of Cyprus Holding Company profits irrespective of the country of residence and the existence of a double tax treaty; and full exemption from Cyprus income tax and capital gains tax on the disposal of shares of a Cyprus Holding Company.

  1. Cyprus Company (trading activity) i.e. exploitation of natural gas. Cyprus income tax rate is one of the lowest tax rates in Europe 12,5%

  2. Cyprus Company (financing) for reducing profits in operating country. Cyprus company tax rate is 12,5%. No debt-equity restrictions in Cyprus and a Cyprus company may therefore be financed in any proportion of debt-to-equity. Interest deduction is provided for borrowing costs. Intercompany loans receivable financed out of loans are acceptable under very low margins subject to easily met conditions. Margins are 0.35% for loan receivable less than € 50 million, 0.25% for loan receivable of € 50 million – € 200 million, 0.125% for loan receivable more than € 200 million

  3. Cyprus Company to trade (buy and sell) in securities. Profit from securities is exempt from Cyprus tax. Cyprus Inland Revenue broadened the definition of “Securities”, so a significant number of financial instruments falling within this definition are not subject to Cyprus taxation

  4. Cyprus Company for adding commercial value to business activities due to the ability to register for EU VAT in Cyprus. I.e. VAT on E-Commerce etc., concluding EU contracts, issuance of invoices, pass porting of various licenses etc

  5. Cyprus Company to manage (IP) intellectual-property-rights. (“The Cyprus IP box”). The new regime, which is effective from January 1, 2012, competes with any other IP-box regime globally. Structuring intellectual-property rights through Cyprus company can achieve an effective Cyprus tax rate of less than 2, 5% as opposed to other jurisdictions in which the effective tax rate is much higher.

  6. Forex Cyprus Company thus creating an over the counter market for foreign exchange transactions especially to operate in EU. The Cyprus company should obtain a licence (valid throughout EU). The company should create adequate substance on the island. The company is also subject to minimum capital requirements.

  7. Cyprus Company to relocate energy consuming industry to Cyprus mostly to operate within the EU and to avoid paying import duties.

  8. Cyprus Company (Cyprus funds – Collective Investment Schemes) reformed into Alternative Investment Funds (AIFs) to obtain the tax benefits from full exemption of tax on Capital gains and income tax in respect of a redemption of a unit of Cyprus funds collective investment scheme irrespective of the provisions of a double tax treaty.

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