Cyprus is one of the smallest European Union states, both in terms of land size and population size. Although the whole country is under the de jure rule of the Cypriot government, the north of the island is under the de facto control of the Turkish Cypriots. This has led to a loss of control over 36% of the country’s land area and one-fifth of its Gross Domestic Product. Despite this, the country has been more than able to make up for this loss by leveraging its strategic position at the crossroads of Europe, Africa and Asia to establish itself as a strategic hub for both business and trade. This has been further enhanced with their ascension to the European Union in 2008. Being part of the Eurozone has allowed them to benefit from the high standards of regulations that are set by the European Union, thus setting up a company in Cyprus will be a good idea if you are looking to not only capitalize on the good business environment arising from these regulations, but also if you are looking for an entry point into the European Single Market. Tetra Consultants helps our international clients to register company in Cyprus, and aims to have your company operationally ready in 6 weeks. One popular reason for our clients’ Cyprus business set up is to establish a holding company in Cyprus. Cyprus holding company is used by our international clients mainly for separation of liability between the various subsidiary arms of a main business. This allows riskier ventures to be conducted without affected the core business activities, and also prevents creditors from having a claim on other assets of the business. Here are some of the other reasons why foreign investors are shifting towards a holding company in Cyprus.
Benefits of using a Cyprus limited liability company
The most common company structure used by our international clients when incorporating a holding company in Cyprus would be a Cyprus limited liability company. This company structure offers several benefits to foreign investors.
Not only would a Cyprus limited liability company offer the same liability protections as stated above, but it is also cheap and easy to incorporate since there is no minimum capital requirement, and the annual maintenance fee is only €300. The only requirements to incorporate this structure is to have a registered agent and office address, a local secretary, and a director and shareholder of any nationality. Tetra Consultants offers a full range of company incorporation services that will allow you to meet these requirements and easily incorporate your holding company within 6 weeks.
Tax benefits of a Cyprus holding company
In general, all Cypriot companies will be taxed at a rate of 12.5%. This is one of the lowest rates in the European Union. In addition, being a member of the European Union also allows Cyprus to enjoy Double Taxation Agreements with many countries. The current number is in excess of 60, with more being negotiated. Where such an agreement is not present, Cyprus will also offer a unilateral tax credit, up to the value of tax that would have been payable on the same income.
Dividend income and withholding tax
Having low levels of dividend and withholding tax is important because it allows profits to be distributed from your subsidiaries to your holding company with minimal tax implications, and without double taxation.
Dividend income derived from a Cyprus tax resident country will be tax exempt, as will dividend income derived from a foreign permanent establishment of a Cyprus holding company provided that the establishment does not engage in more than 50% passive income generating activities, or the foreign tax obligation of the dividend paying company is no lower than 6.25%. Dividend income received from abroad will also be tax exempt if they meet the same conditions as listed above, or if it is not allowed as a tax deduction in the foreign company’s tax paying jurisdiction.
Trading in securities
No tax will be levied on the sale or trade of securities. This refers to shares of a firm, options to purchase and repurchase such shares, or units in open-end or closed-end collective investment schemes.
Compliant with all European standards and regulations
Being part of the Eurozone also ensures that your Cypriot holding company will be compliant and held to all European standards and regulations. These standards usually serve as the international benchmarks in their respective areas, allowing your company to benefit from the protection and benefits of the EU regulatory framework, as well as the leading reputation it offers.
Intellectual property protections
The European standards for intellectual property protection are amongst the best in the world. Governed under the European Intellectual Property Law, this ensures that trademarks, copyrights, design rights and patents registered to your company will only be able to be used by your company and other authorized users. The European Patent Office is known as one of the most powerful patent offices in the world, and even deals in multiple languages. This is a bonus since it means your patent applications can be filed in English as opposed to Greek. It has the most thorough patent documentation process, and a wealth of experience in patent examination and legal research. This ensures both the speed and accuracy of your intellectual property applications, enabling your company to have a smooth application process and easy enforcement of your intellectual property rights.
In terms of tax on royalties earnt by such intellectual property, you will only be taxed if it is being used by a Cyprus company out of Cyprus. Corporate tax will only be due on the royalty income left undistributed within the Cyprus company. If it is within Cyprus but by a non-tax resident company will be liable for 10% tax on royalties. Lower rates might apply under double taxation agreements, or a rate of 5% if royalties are on movies.
You can also expect that your Cyprus company will be held to the strictest financial regulations as set out by the Financial Action Task Force (FATF), given that the European Commission is a member of the FATF. The European Union has also issued its own directive on Anti-Money Laundering known as the 5th AML Directive. With this, you can be assured that your company will be compliant by all international standards, giving it the reputation it needs to conduct business globally.
How can Tetra Consultants assist you?
Cyprus business set up can be hassle-free if you are familiar with the process. With Tetra Consultants at the wheel, you will be able to channel your time and energy into other more important aspects of your global business.
With our lean-and-mean mentality, you can rely on our team of experts to provide you a seamless experience throughout the whole process of Cyprus company registration. Our ultimate goal is for your Cyprus company to be operationally ready within the stipulated time frame of 6 weeks.
Our service package includes everything you will require for setting up a company in Cyprus:
- Cyprus company registration with the Department of Registrar of Companies and Official Receiver
- Local company secretary and registered address
- Nominee director services
- Opening Cyprus business bank account
- Financial license application (if required)
- Annual accounting and tax services
Contact us to find out more about how to register a business in Cyprus. Our team of experts will revert within the next 24 hours.