Cyprus has been established as a reputable International Financial Centre and is one of the most attractive places for businessmen all over the world due, amongst other factors, to its excellent infrastructure, modern and flexible legislation, Favorable Tax Laws, extensive network of Double Tax Treaties, professionalism and efficiency of the local professionals as well as provision of services at much lower costs compared to other EU countries.
Its strategic position, being the meeting point of Europe, Asia and Africa coupled with all the aforesaid factors have developed the country into an ideal business centre as evidenced by the substantial growth in the registration of International Business Companies (IBCs), term used to denote that the companies’ beneficial owners and activities are outside Cyprus.
However with the aim to conform with the EU code of Conduct, followed by the County’s accession to the EU (1st of May 2004), the joining of the Economic and Monetary and its accession to the Euro zone (1st January 2008), Cyprus has by a new legislation on 1st January 2003 repealed the distinction between International and local companies.
The abolition of the distinction was also necessary to enable the country conform with its commitment to the OECD to eliminate harmful tax practices and has put Cyprus in the OECD’S white list, without however eliminating its tax advantages as an International centre as it has the lowest tax regime in the EU which also provides many tax exemptions. A standard uniform corporate tax rate of 10% is applied but with proper tax structuring much lower effective tax rates can be achieved.
There are more advantageous provisions that relate to holding companies, finance companies, royalty companies, companies trading in securities, shipping companies, maritime management companies and other types of companies (details are available upon request).
Cyprus has a wide and exceptionally beneficial Double Tax Treaty network and unilateral tax relief is granted to all Cyprus Companies for foreign tax suffered irrespective of the absence of a double tax treaty. There can be also beneficial use of EU directives enacted into Cyprus Law, the benefits of which can be extended to residents of Third Countries.
Having succeeded in differentiating itself from other financial centers, Cyprus is the gateway for investments into or from Europe, Asia and the Middle East.