Cyprus continues to be one of the leading jurisdictions used by blue chip corporations and corporate planners for structuring investments into Europe and world’s leading emerging markets.
Cyprus offers one of the world’s most globally-orientated and business –friendly settings for establishing corporate structures. Easy to set up, having the lowest tax rate in the European Union, operating in a stable and secure environment, backed by an impressive network of Double Taxation Treaties and providing access to key investment markets that include Russia and India. These advantages are a key reason why the island has become one of the most favourable jurisdictions to establish holding, trading and investment companies.
The global financial crisis has seen many organisations seeking to reorganize and restructure their existing corporate and tax strategies. In the new regulatory climate following the crisis many companies have left offshore jurisdictions within the European Union. Cyprus has benefited from this effect and by end of August 2010 the registration of new companies had already increased by around 30% compared to 2009. Cyprus now hosts over 234,000 registered companies, proving Cyprus to be a competitive location for corporate planners.
A key-trading centre for over a thousand years, Cyprus’ strategic geographic position at the confluence of Europe, Asia and Africa gives it an overwhelming advantage as an international business centre, which is one of the most mature and successful centres in the European Union.
Centre for Holding and Financing Companies
Cyprus’ international reputation has increased significantly in recent years, and the island has become one of the most attractive international finance and business centres in the region. Investor activities include international business structures such as holding companies, finance companies, investment funds and head office operations, amongst others.
The most prevalent activities include using Cyprus as a holding company and finance company jurisdiction. Holding and finance companies enjoy numerous benefits under Cypriot law, including the low rate of 10% income tax on company profits, the favourable withholding tax provisions of the Cypriot double taxation treaties network, the advantageous repatriation provisions under Cypriot tax law which allows payment of dividend, interest and royalties without payment of withholding tax, the exemption from tax of trading gains and capital gains from the sale of shares in a foreign subsidiary and many others. However, companies are also attracted to Cyprus by other factors, not necessary tax – related.
World Class Infrastructure
The World Bank Group’s 2011 Doing Business Report ranks Cyprus 37th out of 183 nations in terms of overall ease of doing business. The island’s business infrastructure is well-developed and sophisticated, and the regulatory environment is transparent and welcoming towards investment from overseas. Cyprus has a strong legal system based on English common law and amended over the last few years to ensure it is in line with EU regulations. This means that international companies are dealing with a familiar and well-understood system.
In servicing Eastern and Western clients alike, Cyprus has complemented its geographic proximity with world-class telecommunications services, further enhancing the services sector’s reach and accessibility. The country has a fully digital national network, along with reliable, high-speed connectivity to other modern economies via satellite and fiber optic submarine cable systems. International call rates are the cheapest in the OECD according to Eurostat, the EU statistics office. Cyprus enjoys business-friendly time zones that synchronize neatly with business hours on other continents, enabling international companies to stay connected with every corner of the world, while thanks to its modern road network, extensive port facilities and two international airports, travel and transport in and beyond Cyprus is fast, efficient and economical. Excellent and convenient air routes to the Middle East and Europe add to its advantages as a base from which to conduct business in both regions.
Cyprus’ strategic location at the crossroads of three continents has been a major factor in shaping its history throughout the centuries and its development into an international business centre in recent years. European Union and euro zone membership have further enhanced the island’s attractiveness as a stable base in which to establish a company and today Cyprus is being transformed into a key outpost in the eastern Mediterranean.
As the world recovers from the financial crisis, companies are looking for growth and much of that will occur in new territories and with new trading partners. Cyprus offers such companies significant tax advantages to reduce their overall tax burden, whether they do so by using the island as a springboard from which to launch their products or services into regional markets, or whether they choose to use Cyprus to set up a holding company for their international operations.
The island, with the highest percentage of university graduates in Europe, superb infrastructure, vibrant free market economy, low corporate tax rate of 10%, membership of the EU and the euro zone and long-standing relations with Central and Eastern Europe as well as the Middle East, famously enjoys more than 340 days of sunshine every year and an enviable quality of life. With all these elements firmly in place, Cyprus continues to be ideally positioned to expand its reputation as an attractive jurisdiction for company formation and an international centre of business excellence.