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PKF Cyprus

A member of PKF International. A global family of legally independent firms.

Structuring activities in Cyprus

Structuring activities in Cyprus

  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 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.

  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. 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.

  3.  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

  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”). 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.

  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) 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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Email contact: [email protected]

January 2018


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Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances.

PKF / ATCO Limited is a member firm of the PKF International Limited network of legally independent firms and does not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms. This publication is for information purposes only and should not be considered as professional advice.