Why Cyprus?

Cyprus is an European island country in the Eastern Mediterranean Sea. It is the third largest island in Mediterranean Sea and one of the most popular tourist, business, education and retirement destination. The island lies between Europe, Africa and Asia which makes it a natural hub for business and trade.

General advantages:

  • Advantageous geographical location crossroads of three continents – Europe, Africa, Asia;
  • English as a business language;
  • Pleasant climate;
  • European standard of living;
  • Comparatively lower set-up and maintenance costs of international business entities;
  • Highly developed and efficient accounting, legal and banking sectors;
  • Strict confidentiality with the local authorities and the banks;
  • Excellent transport and telecommunication facilities;
  • Exemption from foreign exchange control;
  • Possibility for acquisition of immovable property.

 Legal entities that can be established in Cyprus:

  • Companies (private or public);
  • General or limited partnerships;
  • Business/trade name;
  • European Company (SE);
  • Branch of overseas companies.

Tax Advantages:

  • One of the lowest corporate tax rate in Europe at 12.5%;
  • Tax-exempt business profits of non-resident companies;
  • Tax-exempt gains on the trading and disposal of securities;
  • Tax-exempt gains on the disposal of subsidiaries;
  • Tax-exempt dividend income (subject to applicable criteria);
  • Tax-neutral group reorganizations;
  • Tax-relief for group losses;
  • Full adoption of the EU Parent-Subsidiary Directive;
  • Full adoption of the EU Mergers Directive;
  • Full adoption of the EU Directive on Mutual Assistance and Cooperation;
  • Full adoption of EU Royalty and Interest Directive;
  • More than 60 Avoidance of Double Tax Treaty.

VAT: Cyprus introduced VAT in 1992 by Law 246/90, which is based on the British VAT Legislation of 1983, adjusted to be consistent with the characteristics of the Cypriot economy.

VAT is imposed in any:

  • transaction that takes place in Cyprus (the place where the goods are located when there are delivered to the client;
  • when it is taxable transaction that is made by a person in the context of promoting /continuing its business;
  • VAT returns must be submitted quarterly and the payment of the VAT must be made by the 10th day of the second month that follows the month in which the tax period ends.

VAT rates:

  • Standard rate of 19%;
  • Reduces rate 9% e.g. food and alcoholic drinks;
  • Zero rate 0% e.g. selected medicines, shipping and ship management services.

Exemptions:

  • Rental income from immovable Cyprus property;
  • Transaction within Europe 0%;
  • Financial services;
  • Hospital and medical care;
  • Disposal of immovable Cyprus property where the application of building permission has been submitted prior to the 1st of May 2004;
  • Postal and insurance services;
  • Management services provided to Cyprus funds.