Taking into consideration and acknowledging the competition targeting Cyprus from other low tax or no tax jurisdictions, Cyprus continues to provide a complete value proposition for foreign investors as a financial and business centre.
Cyprus is a popular destination for registering a company due to several factors, including:
- Tax Benefits: Cyprus offers a competitive tax regime, including a low corporate tax rate of 12.5%, which is one of the lowest in Europe. This makes it an attractive destination for companies looking to minimise their tax liabilities. Additionally, Cyprus has a comprehensive network of double taxation treaties with over 60 countries, which helps to avoid double taxation of income earned in those countries.
- Strategic Location: Cyprus is located at the crossroads of Europe, Asia, and Africa, making it an ideal hub for businesses looking to access the EU market as well as the Middle East and North Africa. The island is a key entry point for trade and investment into the region, offering a strategic location for businesses looking to establish a presence in the wider region.
- EU Membership: Cyprus is a member of the European Union, offering companies the benefits of access to the single market, including the ability to trade freely with other EU member states. This provides companies with a platform to expand their operations and reach new markets within the EU.
- Highly Skilled Workforce: Cyprus has a highly educated and multilingual workforce, with many employees fluent in English, Greek, and Russian. This makes it an attractive destination for companies looking to establish a presence in the region and recruit employees with the skills and language proficiency necessary for business success.
- Attractive Legal System: Cyprus has a modern and stable legal system based on English common law, which provides a favourable environment for businesses and investment. The legal system is transparent, predictable, and business-friendly, offering companies a stable and secure environment in which to operate.
- Stable Political Environment: Cyprus has a stable political environment and a transparent, predictable, and business-friendly regulatory regime. The country has a long-standing reputation for stability and reliability, making it an attractive destination for businesses looking to establish a presence in the region.
- Quality Infrastructure: Cyprus has a modern infrastructure, including a well-developed telecommunications network, a robust energy sector, and good transport links. The island also has a highly developed financial sector, including a well-regarded stock exchange and a growing alternative investment sector.
Other incentives for registering a company in Cyprus include:
- Dividend income is exempt from corporation tax.
- Effective tax on royalty income of 2.5%.
- No capital gains tax on profit from sale of securities*.
- No withholding tax on payments to non-residents (dividends, interest and royalties).
- Only 20% of profits generated from IP rights (royalties) are subject to tax.
- Wide treaty network and use of EU Directives.
- Restructuring legislation in line with the EU Merger Directive extending to companies in non-EU countries.
- Added commercial value and monetary benefits due to ability to register for VAT.
In conclusion, registering a company in Cyprus can offer businesses a range of benefits, including a favourable tax regime, a strategic location, access to the EU market, a highly skilled workforce, a favourable legal system, a stable political environment, and quality infrastructure. These factors make Cyprus an attractive destination for companies looking to establish a presence in the region and access new markets.