Cyprus

The Republic of Cyprus is an island tax haven located in the eastern part of the Mediterranean Sea. Cyprus is a member of the European Union and the Eurozone. Cyprus has the lowest income tax in the entire EU. The third largest island in the Mediterranean unites two different cultures – Greek and Turkish. Cyprus is very good at attracting the attention of businessmen from all over the world. Set up a company in Cyprus.

Basic information about Cyprus

• For European companies, it is the second most popular tax haven (after the Netherlands).
• The lowest tax rate on the income of legal entities within the European Union – Cyprus offers a tax of 12.5 %.
• Cyprus has concluded 34 double taxation treaties.
• According to special provisions in the Cyprus Income Tax Laws, the net profit of International Business Companies (IBCs) in Cyprus is taxed at a rate of 12.5 %. Income from abroad, when the income was generated by activities outside Cyprus, is taxed at 0 %.

Why consider setting up a company in Cyprus?

Important changes in the tax haven of Cyprus

As we all know, 2013 was a difficult year for Cyprus. The country ran into financial problems and was forced to ask the European Union and the International Monetary Fund for rescue packages of 17 billion Euros. In this context, Cyprus' reputation as a tax haven and place for money laundering was not ideal. Cyprus eventually received financial aid in the amount of 10 billion Euros, but pledged to increase the corporate income tax from 10 to 12.5 %. At the same time, a one-time tax of 9.9 % was introduced on all deposits exceeding 100,000 Euro, and then a tax of 6.7 5% on lower deposits. This retroactively damaged the reputation of Cyprus as a tax haven and caused an outflow of investors.

What is the situation in Cyprus now?

Currently, Cyprus – despite the increase in corporate income tax – attracts companies, which still offers wide possibilities for tax optimization, international investment protection and, compared to a number of other countries in the EU, even more reliable legal stability. Despite all the problems that Cyprus has, it still remains the easiest and most stable European option that allows you to enjoy all the benefits of a foreign company. The biggest disadvantage of the Cypriot jurisdiction is the impossibility of remaining anonymous. One of the conditions of financial assistance from the EU was the fulfillment of the requirement for closer cooperation of Cyprus in the exchange of tax information.

However, Cyprus still offers many advantages and the country thus attracts more and more entrepreneurs every year:

• Companies in Cyprus are subject to a low corporate tax rate of 12.5 %, which still remains one of the lowest in Europe.
• Unlike many other countries, there is no excessive bureaucracy in Cyprus.
• A legal system that meets European standards, so you don't have to adapt to a new legal system.
• If you have foreign clients or partners, you will surely appreciate the fact that Cyprus has signed a number of international treaties on the avoidance of double taxation.

Cyprus, one of Europe's smallest low-tax jurisdictions, is a suitable location for an intermediary company, given the island's combi­nation of tax treaties and low taxes. Dividends are completely tax-free for Cypriot companies and the company can benefit from an extensive network of double taxation treaties.

You are just one step away from establishing a company in Cyprus.

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