Located in the Eastern Mediterranean, the island of Cyprus is conveniently situated at the hub of three continents; Europe, Asia and Africa. The population of the Republic of Cyprus currently stands at approximately 850,000 with the majority residing in the four main towns of Nicosia (the capital), Limassol, Larnaca and Paphos.
As a former British Colony, English is widely spoken throughout the island with 80% of the population being relatively fluent. The legal system is structured on its English counterpart and is based on common law with many Cypriot Lawyers being trained in the UK. The Republic of Cyprus is a free market economy providing vast opportunities for international business and efficient tax planning. With first class legal and accounting services, excellent air links with Europe, the Middle East and Asia, Cyprus is a great location to conduct business.
Cyprus is a leader amongst international tax planning jurisdictions and registration of a company in Cyprus is the ideal mechanism for protecting a business. In the last decade the role of Cyprus in international tax planning has increased dramatically. As a member of the EU Cyprus has quickly gained a reputation as a reliable, legitimate jurisdiction with some of the lowest taxes in Europe in addition to having over 40 double tax treaties to assist in international tax planning.
A combination of favourable factors have led to Cyprus becoming a popular jurisdiction to form a company and in the last decade the role of Cyprus in international tax planning has increased dramatically.
The admittance of Cyprus to the European Union in May 2004 has ensured advantages in terms of increased legitimacy and compliancy; Cyprus is now included in the Organisation for Economic Cooperation and Development (OECD) White List.
One of the major benefits of Cyprus is the Corporation Tax Rate; Cyprus has one of the lowest tax rates in the EU with only 12.5% Corporation Tax.
Additional benefits are as listed below:
- The incorporation process for a Cyprus company is simple and straightforward. A Cyprus company can be incorporated with only one Director and Shareholder in addition and there are no restrictions on foreigners acting as Director or Shareholder. Prior to incorporating the name must be approved by the Registrar of Companies. Providing there are no companies with similar name approval will be granted quickly. Filing in English is permitted.
- Lowest corporation tax in Europe of 12.5%.
- Favourable tax regime for Cyprus holding companies, including no tax on consolidation, no controlled foreign company (CFC) rules, etc.
- No taxation on inward or outward dividends and no Capital Gain Tax (CGT) on sales of securities. Due to this many security traders have trading offices in Cyprus.
- There are more than 40 double tax treaties (DTT) concluded with other countries.
- A bank account for a Cyprus company can be open quickly and efficiently without the directors of the company being present. To open a bank account remotely notarisation and legalisation of documents of directors and shareholders of Cyprus company is required.
- Cyprus has adopted International Financial Reporting Standards (IFRS).