Company Benefits & Commercial Environment​

Company Benefits & Commercial Environment

Cyprus, with its forward thinking taxation policy and business incentives, as well as being a full member of the European Union since 2004, is one of the greatest places for companies to locate their headquarters and any number of their activities.

Combining low corporate tax rates and specialised tax exemptions with the fantastic lifestyle experienced by owners, their families and their employees that have moved to the island, has led to Cyprus being one of the top destinations for business owners of all types.

Owners and their families who choose to couple Cyprus company formation for their businesses as well as Cypriot personal tax residency including “Non-Dom (Non-Domicile)” status to enjoy even greater tax savings.

• A company is a tax resident in the Republic of Cyprus if it is managed and controlled from the Republic of Cyprus. The level of substance can be adjusted according to the level of international business in order to create optimum business structures for owners and employees.

Some of the great benefits of businesses that are tax resident in Cyprus are:

• 12.5 % corporate tax rate gives your business a significant advantage. The corporate tax rate is one of the lowest that can be found in the European Union and internationally.

• Cyprus has only one federal corporate tax rate that is applicable to businesses. Unlike many other international destinations there are no state or city corporate tax rates. Only the 12.5% federal corporate tax is applicable and as such makes Cyprus an even more attractive destination when considering total tax payable.

• Cyprus has a long tradition of attracting foreign investment and foreign companies. The government of the Republic of Cyprus has a long term commitment to this strategy and as such companies moving to Cyprus can feel safe that the regulatory environment will remain welcoming for many years to come.

• 0% tax rate on any income for selling Securities (Shares). This includes options and derivatives of shares, making Cyprus an excellent location for companies wanting to profit from investments. Furthermore this makes Cyprus the perfect destination for any company trading shares or taking part in the stock market. This exemption also applies to privately traded shares and so makes it a great way for owners of businesses to profit from the sale of their shares.

• 0% tax rate on Forex derived income that is not from the sale of foreign currencies and their derivatives.This allows for huge tax savings for any business that are involved in this market. This has led to Cyprus being one of the international leaders in locations for Forex companies.

• Companies are 100% exempt from paying any tax on dividends received from owning other companies abroad and as such makes Cyprus an excellent location for holding companies of all kinds.

• Upto 80% of corporate tax can be exempt if companies are working on intellectual property and the corresponding research and development. Future income derived from royalties or the sale of this intellectual property will also be upto 80% exempt from corporate tax. This can include software that is copyrighted and as such makes Cyprus a great location for any companies working on new products or technologies.

• All expenditure on science and development can be deducted fully as an expense and as such makes Cyprus a competitive location for any development projects.

• Tax exempt re-organizations of companies and group of companies allows business owners to rest assured that their future reorganisation of companies will not be subject to additional tax.

• Up to 50% tax exemption for companies working in the audiovisual space. This makes Cyprus an excellent destination for companies working in this domain. Additionally these companies will find an increasing amount of funding available to them through government schemes.

• There are huge tax savings for individuals in Cyprus in addition to the company structure. Cyprus has some of the most favorable individual tax laws around the world. Non-Cypriot owners can combine their businesses tax residency with their personal Cyprus tax residency gaining the “Non-Domicile” status. By doing so business people and their families can make one of the beneficial financial moves available. Find out here how you can gain from the Cyprus Individual tax laws by combining with your Cypriot company formation.

• Owners of Cypriot companies are able to transfer shares to family or others with no tax imposed on transaction even if given at well below market rate. This gives owners the freedom to do what they wish with their shares without additional tax concerns.

• Exemption on capital gains tax including on immovable property if transfer occurs on death, meaning that owners can be safe in knowing that their family or whoever they choose to leave their company to will not be penalised through taxation.

• There are no withholding taxes on any outgoing dividends, interest payments or royalties, meaning that all shareholders, including those remaining abroad, will be able to benefit from a Cyprus company formation.

• Cyprus has an excellent commercial law basis and business friendly legal system based on British commercial law (being an ex-colony) and has additionally been incorporating elements from the rest of Europe.

• Employers can enjoy the benefits of having one of the most highly educated workforces in all of Europe. More than 57% of people (sample taken as those 30-34) has at least a Bachelor's degree meaning that businesses can obtain quality workers for their operations.

• Non-EU owners can choose to register their company as a company of foreign interest if they meet the capital requirements. If they do they are able to bring their own workforce to Cyprus and obtain an immigration exemption. This allows for businesses to relocate their workforce to Cyprus easily even in the case of Non-EU origination.

• Being a full member of the European Union (EU) since 2004, Cyprus and those who choose to do business in Cyprus enjoy these additional benefits:
  • Free movement of goods and services in Europe with 0% tariffs.
  • Free movement of people and workers within the EU allows businesses access to a large pool of workers.EU trade agreements with 36 nations already in force.
  • EU trade agreements with another 28 nations partially ratified and another 27 finalised waiting signing.
  • Full protection of private property under Charter of Fundamental Rights of the European Union, protected by law by the European Union and the Cypriot courts.
  • Full protection and application of EU directives for business and otherwise, giving businesses a transparent and clear framework for many industries.
  • Access to European Commission funding grants for research through programs such as Horizon 2020 (80 Billion Euros over 7 years) .
  • Security through being an EU member state and having increasing harmonisation and integration of an EU military.

• Cyprus is encouraging small and medium innovative businesses through incentives such as giving tax exemptions to individuals and businesses that invest in approved innovative companies. This is a great benefit for companies that will be investing in such businesses and also for companies who wish to be designated an innovative business,

• Businesses in Cyprus has access to the following three schemes that heavily subsidise the employment of workers:
  • Scheme providing incentives for employment of the unemployed.
  • Scheme providing incentives for hiring individuals with disabilities.
  • Scheme providing incentives for hiring disadvantaged individuals.

As can be seen by some of the various advantages of Cyprus, it is a great place to form a business in, where you can enjoy both the great commercial benefits and the lifestyle from the island. Get started with us today and we can help you create the optimum business solution for your company and individual needs.