Tax Advantages in Cyprus your Company is Missing Out

Cyprus has been for many years a real magnet for international businesses: nowadays, more than 100,000 international companies have been registered their business in Cyprus.

A great number of these companies have fully fledged offices in the island.This growing importance of Cyprus in international tax planning denotes the existence of some significant tax advantages that draws international companies and foreign investors.

Cyprus’ Tax advantages

Using a Cyprus entity in International tax planning can reduce or even fully eliminate the overall tax liability associated with international activities. In particular, a nicely structured Cyprus entity in an international tax plan could:
• significantly reduce the taxation in the country where the income comes from;
• reduce the amount withheld on receiving money earned out of the country where the income is earned;
• reduce or defer the taxation of the ultimate shareholder of the tax planning structure;
• reduce the general taxation of an international business activity, thus increasing the total return on investment of the whole venture.

Cyprus’s economic legislation offers companies and businessmen with some rather persuading incentives, which actually generate these tax advantages.

These incentives are:

• taxation of international income for tax residents and Cyprus originating revenue for non – residents;
one of the most advantageous corporate tax rate in the European Union, of just 12. 5%. A recent infographic about tax will make it clear to you.

• exemption from taxation of business profits for non – resident companies;
• exemption from taxation of profits from trading and disposal of securities;
• exemption from taxation of profits from the disposal of subsidiaries;
• exempted from taxation of income earned from dividends (subject to applicable criteria);
• tax – neutral group reorganizations;
• reduced taxation for group losses;
• full adoption of the Parent – Subsidiary Directive of the European Union;
• full adoption of the Mergers Directive of the European Union;
• full adoption of the Directive on Mutual Assistance and Cooperation of the European Union;
• full adoption of the Royalty and Interest Directive of the European Union;
• the great network of double tax treaties that Cyprus has signed with other countries, which provides several prospects for sophisticated tax planning structures.

Advantages that are not related to Taxation

Cyprus also offers companies numerous advantages that are not tax related, but provide an excellent infrastructure for conducting business internationally, of the highest professional standards, characterized by considerably lower operating costs. Another equally important advantage is Cyprus’s time zone, which gives investors the opportunity to operate from Cyprus their subsidiaries in the East during the morning hours and be able to report back to head – offices in the West during the afternoon.
The most important advantages that are not directly associated with taxation are:
• Cyprus’ ideal location and corresponding time zone;
• the wide use of the English language;
• the excellent climate;
• the high standard of living;
• the relatively low expenses for setting – up and of maintaining of international business entities;
• the extremely well developed and proficient accounting, legal and financial sectors;
• the confidentiality and trust characterizing the relationship of the local authorities and the banks;
• impeccable transport infrastructure and communication systems;
• exemption from foreign exchange control;
• the opportunity of acquiring landed property;