Structuring activities in Cyprus
Cyprus Holding Company
For international or domestic groups investing outside Cyprus, that aim to dividend income. Such dividends are usually not subject to Cyprus tax.
To hold subsidiaries that may be disposed off in the future. Such disposals are not subject to Cyprus tax.
To benefit from and utilise the favourable conditions of the Cyprus Double tax treaties network.
To have the ability to achieve a tax – free unwind of the Cyprus holding company at any point in the future.
To manage investment activities i.e. real estate especially in Eastern Europe countries. Structuring investments via Cyprus can be efficient.
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.
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%
To get the benefit of Notional Interest Deduction (NID) – Cyprus finance companies on new equity (share capital increase). Cyprus financing companies that are financed by own funds are granted notional Interest deduction (NID) – 80% deduction from Cyprus financing company taxable income. Structuring financing activities through Cyprus company can achieve an effective Cyprus tax rate of 2,5% as opposed to other jurisdictions in which the effective tax rate is much higher.
Cyprus Company to trade (buy and sell) in securities. Profit from securities is exempt from Cyprus tax. Cyprus Tax Department broadened the definition of “Securities”, so a significant number of financial instruments falling within this definition are not subject to Cyprus taxation
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
Cyprus Company to manage (IP) intellectual-property-rights. (“The Cyprus IP box”). Cyprus intellectual property regime 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.
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.
Cyprus Company to relocate energy consuming industry to Cyprus mostly to operate within the EU and to avoid paying import duties.
Cyprus Company (Cyprus funds – Collective Investment Schemes) Alternative Investment Funds (AIFs) to obtain the tax benefits from full exemption of tax on Capital gains and income tax in respect of redemption of units / shares of Cyprus funds irrespective of the provisions of a double tax treaty.
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