Cyprus Holding Companies
The Benefits of Establishing a Cyprus Holding Company
Are you looking for a way to maximize profits and minimize taxes? Establishing a Cyprus Holding Company can be the perfect solution for your business. With a favorable tax environment, EU membership, and special tax incentives, setting up a Cyprus Holding Company can provide you with a range of advantages.
The Favorable Tax Environment in Cyprus
The Republic of Cyprus has established itself as a premier jurisdiction for holding companies, and for good reason. Its investor-friendly environment, business-friendly and unique tax system, EU membership, and full compliance with OECD regulations make Cyprus a top choice for entrepreneurs. With its strategic location between Europe and the Middle East, Cyprus offers a bridge between the two regions, making it an ideal place to do business.
The favorable tax environment in Cyprus is a huge draw for entrepreneurs. With a general corporate tax rate of only 12.5%, Cyprus offers some of the most competitive rates in Europe. Certain industries may also be able to take advantage of specific tax incentives, which can further lower the applied tax rate. Cyprus also has double taxation treaties with more than 60 countries, and is in negotiations for even more.
Benefits of Establishing a Cyprus Holding Company
In addition to its attractive tax system, Cyprus is a full member of the European Single Market and participates in the EU Parent-Subsidiary Directive. This means that companies resident in Cyprus are entitled to the benefits of the EU market, with free movement of goods, capital, services, and labor.
One of the primary benefits of establishing a Cyprus Holding Company is that dividend payments to non-resident shareholders are not subject to withholding tax. This is the case regardless of whether the dividends are paid by a Cyprus resident company or a foreign permanent establishment of a Cyprus Holding Company. Additionally, dividend income received from abroad is exempt from Special Defense Contribution if one of the following conditions is met: the dividend paying company does not engage more than 50% directly or indirectly in activities which lead to passive income, or if the foreign tax burden of the dividend paying company is not lower than 6.25%.
Other advantages of setting up a Cyprus Holding Company include no withholding tax on interest paid from Cyprus, no tax on disposal or trading of securities, only 2.5% effective taxation on profits from qualifying intellectual property, and notional interest deduction upon the introduction of new equity.
Legal Requirements for Cyprus Holding Companies
Legally, the minimum paid capital of a Cyprus Holding Company is the smallest payable amount, which is one Euro cent. However, the usually authorized minimum capital is generally € 1.000,00. A company must have at least one director, and the location of the management and control of a company determines the tax residency of a company. A Cyprus Holding Company must also have a registered office in Cyprus and be subject to proper bookkeeping and auditing.
If you are considering setting up a Cyprus Holding Company, the advantages may be too good to pass up. With its attractive tax environment, EU membership, and special tax incentives, you can maximize profits and minimize taxes. For more information and advice on how a Cyprus Holding Company could help structure your business, contact us today.
