Cyprus is an island located in the South – East Mediterranean, at the crossroads of Europe, Middle East and Africa. Cyprus is the third largest island in the Mediterranean covering an area of 9,251 Km2 and a population of approximately 838,000. The islands strategic location played an important factor in establishing Cyprus as one of the most favorable tourist destination and an ideal location for foreign direct investment destination for international (through bound) business, trade and investments activities as a result of several key business drivers, tax and legal advantages. Cyprus is ranked 1 as foreign direct investment country into Russia and Ukraine in 2010 and ranked 6 as foreign direct investment country into India in 2010. Cyprus is member of the European Union since 2004 and part of the Euro zone as from 2008 – A base for EU operations.
Cyprus is accompanied with a high standard of living with 180,000 approximately foreign nationals live and work in the island which is equals to the 22% of the county’s population making it a multicultural and cosmopolitan place to live. It is very important to mention that in general terms the crime is very low.
The island is the sunniest country in Europe with over 330 days of sun every year. From April to September the average daily sunshine exceeds 10 hours.
Cyprus has the highest percentage of university graduates per capital in Europe and is the second top spender in education relative to GDP in the EU.
An excellent healthcare service exists in public hospitals as well as in the private own clinics with cost lower than most of the other EU countries.
A range of private own and public schools are available to Cyprus residence providing state of the art education levels in Greek, the native language of the island, and English which is used in the majority of private schools. Cyprus also offers a plethora of local colleges and universities which are recognized internationally for the level of education offered.
Cyprus native language is Greek but English is the main business language.
Nicosia is located in the center of Cyprus and is the capital and the government and business center of the country. Limassol is located in the right on the southern coast and is the country’s main trade center as well as one of the biggest ports in the Mediterranean. The main international airport is located in Larnaca which is approximately 30 minutes from each of the two main cities mentioned above.
Personal Tax System
Cyprus favorable personal tax system attracts many highly paid employees to live and work in Cyprus. The Cyprus income tax rates are progressive and reach a competitive top marginal tax rate of 35% on taxable income in excess of €60,000.
An individual is considered resident in Cyprus if in a year stays in the republic for a period more than 183 days.
Resident persons are liable to income tax in respect of their world - wide income, while non-residents are subject to tax only in respect of certain Cyprus source income
Tax rates for Individuals
Non-Cypriots working in Cyprus
EU citizens who wish to reside and work in Cyprus need to apply for an EU Registration Certificate which is an one-off procedure and does not need renewal.
Non-EU nationals need to apply for a Temporary Employment and Residence Permit at the Civil Registry and Migration Department and need to be renewed usually every year.
Cyprus Government has recently announced that non – EU citizens making a minimum investment of €300.000 in property on the island, subject to certain requirements, will be granted permanent residency through a special immigration visa.
Quite simply, this means he will be able to enjoy the same advantages as everyone else in Cyprus without having to apply for any permits or renewals.
Non-Cypriot investors can apply for Cyprus citizenship if they fulfill specific financial criteria and other conditions such a clean criminal record. For more information please contact us at your convenience.
Why do Business in Cyprus?
Corporate Tax System in Cyprus
A very competitive tax system that is fully alighted with EU and international regulations exists in Cyprus. Companies in Cyprus benefit from an extensive double taxation treaties network which includes over 43 countries worldwide as well as access to EU directives.
Business activities Ideal for Cyprus
- Investment Funds
- Finance Companies
- IP Companies
- Holding Companies
Taxation of companies
A company is considered resident in Cyprus if the central management and control is exercised from Cyprus. Although there is not a definition in the law, this means that:
- The majority of directors should reside in Cyprus
- The key management and decisions should be taken by the board of directors in
Taxes applicable for companies
- Tax resident companies are subject to 12,5% corporation tax on their world – wide income from business activities
- Expenses are tax deductible as far as they incurred wholly and exclusively for the production of (taxable) income
- Tax losses are carried forward indefinitely. No carry back losses is allowed
- Dividends paid from one resident company to another resident company are exempted.
- Dividends received by a resident company from abroad are exempted under conditions.
- Profit from the sale of securities / title is exempt (unconditional)
- Profit attributable to a foreign permanent establishment (PE) is exempt (conditional)
- Non business interest is exempt (a special contribution at 30% is levied on such interest)
- Special tonnage tax system for ship owning and ship management activities
- No withholding tax on the payments of dividends, interest and royalties paid for intellectual property economically utilized abroad.
- Capital Gains Tax (CGT) only on gains from sale of immovable property situated in Cyprus or sale of shares owning immovable property situated in Cyprus (unless shares are listed on recognized stock exchange)
- New law regarding patents rights and intellectual properties provides 80% exemption on the net profit from the exploitation of such intangibles. This means that only the 20% is taxed at the rate of 12,5% giving an effective tax rate of 2,5%
- Special Contribution for Defense is levied on certain types of income (only to resident individuals and companies)
- 3% on 75% of gross rental income
- 30% of gross interest income not arising from the ordinary course of the business activities
- 17% on dividend income received from an individual resident in the republic
Cyprus Legal System
Cyprus is an independent, sovereign Republic with a presidential system of government and a written constitution which safeguards the rule of law, political stability, human rights and the ownership of property. Cyprus is a member of the British Commonwealth,Council of Europe, IMF, UN, World Bank and WTO and is signatory to many international conventions and treaties. Cyprus was a Crown colony of the British Empire until its independence in 1960 its legal and judicial system is aligned with that of the United Kingdom. Cyprus corporate statutes are based on and derived from the English company legislation and its legal system is modeled on the English common law system. Cyprus legislation is fully compliant with the European Union Legislation.
Set up business in Cyprus
A registration of a Cyprus company can be completed in approximately 2-3 days. The process can be expedited by using an already existing company. Our professionals can insure the timely set up of your business structure.
Reporting framework for Cyprus entities
International Financial Reporting Standards as adopted by the European Union (‘EU IFRS”) constitutes local Generally Accepted Accounting Principles (‘GAAP”) in Cyprus and also forms the basis for the computation of taxable income for all Cyprus tax resident entities. For this reason Cyprus registered entities need only maintain one set of financial information for financial reporting and tax purposes, under a reporting framework accepted by investors, financiers and analyst all over the globe.