Introduction to Cyprus: A Global Business Hub While Cyprus is not officially recognized as a tax haven, its unique corporate tax structure and robust financial policies have made it an appealing destination for businesses and investors across the globe. Despite a corporate tax rate hike to 12.5% in 2019, bringing it in line with other European countries as per the Organization for Economic Co-operation and Development (OECD), Cyprus remains an attractive international offshore jurisdiction. Since joining the European Union (EU), Cyprus has undergone a substantial financial regulatory overhaul to comply with EU policies. The country’s Company Law was revised and from 2004 onwards, a new framework for resident and non-resident companies was introduced. These entities are in full compliance with the financial policies of the EU. The Appeal of Cyprus for Offshore Company Formation In the realm of offshore company formation, Cyprus stands out with its varied options including Cyprus LLCs. It offers the additional advantage of unrestricted access to the EU’s vast economic and trade treaties. With one of the lowest corporate tax rates in the EU, 12.5%, Cyprus upholds a traditional tax-based structure. Simultaneously, it provides the option for non-resident companies to operate free from all local taxation. Cyprus also facilitates international company operations, particularly suitable for holding or investment accounts, or for trading purposes. Companies can pair these entities with an offshore bank account, either local or overseas, facilitating a more streamlined financial operation. Moreover, Cyprus has implemented several dozen double taxation treaties. This structure enables offshore companies to pay a reduced tax rate of 12% on global trading income. Non-resident companies, on the other hand, can avail tax exemption on all foreign-sourced income. Advantages of Choosing Cyprus as a Tax Efficient Jurisdiction Working with PW, investors can enjoy an array of benefits by choosing Cyprus as their preferred offshore jurisdiction: Detailed Overview of Cyprus as a Tax Efficient Jurisdiction Geographical Location Cyprus is strategically positioned in the Eastern Mediterranean Sea, south of Turkey and east of Greece. Being the third-largest island in the Mediterranean, it covers an area of 9,251 square kilometers. Political Structure Since the Turkish invasion in 1974, Cyprus has been partitioned into two areas. The Republic of Cyprus controls the southern two-thirds of the island, and the Turkish Republic of Northern Cyprus, recognized only by Turkey, claims the northern one-third. Cyprus follows a unitary presidential representative system, with the President serving both as the head of state and the head of government. The political structure is divided into three branches: the Executive, the Legislative, and the Judiciary. The country’s constitution, enacted in 1960, aimed to harmonize Greek and Turkish differences. Economy and Infrastructure Since gaining independence from the UK in 1960, Cyprus has transitioned from a traditional agrarian economy to a high-income economy. Despite the Eurozone financial crisis, which heavily impacted the Cypriot economy, it has stabilized and seen steady economic growth. Cyprus boasts an open, free-market economy with a significant emphasis on services, contributing to 81.2% of the economy, followed by industry (16.4%) and agriculture (2.3%). The country’s robust infrastructure, transport system, and liberalized telecommunications sector further facilitate business operations. Population, Language, and Culture Cyprus is culturally diverse, split between Greek and Turkish identities. The two official languages are Greek and Turkish, but English is widely spoken, making it a favorable business environment for international entities. Exchange Control There are no exchange controls in Cyprus. Residents can freely hold foreign currency denominations in bank accounts, and non-resident and foreign investors are allowed to repatriate income generated in Cyprus. Type of Law and Principal Corporate Legislation Cyprus law is a blend of Civil and Common Law. However, Cyprus Company and Corporate law are primarily based on the English Common Law system. The main regulatory body for Cyprus corporate legislation is the Cypriot Companies Law, Cap. 113. In conclusion, while not officially recognized as a tax haven, Cyprus presents several attractive opportunities for international businesses and investors due to its tax-efficient structures, robust financial policies, and strategic geographical location. With PW as your trusted partner, navigating the business landscape in Cyprus becomes a simplified and rewarding journey.
