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PKF Cyprus

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Structuring business activities in Cyprus


Why business people are structuring their activities in Cyprus? Structuring business activities  in Cyprus can be for many reasons like:

    1. For international or domestic groups investing outside Cyprus, that aim to dividend income.

    2. To hold subsidiaries that may be disposed of in the future.

    3. To utilize Cyprus Double tax treaties network and  thus avoid double taxation  amongst related countries

    4. To manage investment activities i.e. real estate especially in Eastern European countries. Structuring investments via Cyprus can be cost-effective and efficient.

    5. For exploitation of natural gas. Cyprus income tax rate  on profit is 12,5%

    6. To have a fairer treatment on a Company capital introduction through the  Notional Interest Deduction (NID) applicable in Cyprus. 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 where there is no such treatment.

    7. To trade (buy and sell) insecurities.  As in many jurisdictions, profit from securities is exempt from 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

    8. For adding commercial value to business activities due to EU business and taxation credibility. 

    9. For managing (IP) intellectual-property-rights. (“The Cyprus IP box”). Cyprus intellectual property regime competes with any other IP-box regime globally and inter-alia the EU. 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.

    10. Forex Cyprus Company and 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).

    11. Cyprus Company to relocate energy-consuming industry to Cyprus mostly to operate within the EU and possibly maximising the benefit on import duties.

    12. To set up  Cyprus funds – Collective Investment Schemes) Alternative Investment Funds (AIFs). In the year 2018, Cyprus has reformed its laws and a series of bills relating to the taxation and the operation of investment funds.  Cyprus is now fully aligned with EU regulations and EU Directives.

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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.