Although Cyprus is no longer the offshore tax haven that it used to be before it joined the EU, it remains an attractive destination for many foreign investors considering company formation. Cyprus offers an efficient and sophisticated business environment, coupled with corporate income tax of just 10%.
Factors that make enterprise registration in Cyprus attractive
The island has double-taxation treaties with 44 other countries, including most of the high-tax countries in Western Europe, and many states in Central and Eastern Europe. As a low-tax centre, this makes Cyprus a particularly effective location for companies aimed at emerging markets. On top of this, business costs are generally low.
A company incorporated in Cyprus is not considered to be a tax resident of Cyprus if it is not managed and controlled in Cyprus. A Cyprus company not managed and controlled in Cyprus is expected to have the majority of the directors to reside outside Cyprus and to hold Board Meetings outside Cyprus.
Companies incorporated in Cyprus but not tax residents of Cyprus are subject to zero taxation in Cyprus.
Far more strict than it was until 2003, certainly as far as offshore companies are concerned. Before then, the Government applied the lightest of touches, and offshore companies paid no corporation tax at all. Today the island remains a business-friendly low-tax centre for those considering company registration- with 10% corporation tax and low treaty withholding tax rates – but regulatory requirements are now on a par with many other EU states. Our legal and tax experts can help you steer clear of the pitfalls and help and advice on the many benefits of a Cyprus enterprise formation.
Cyprus remains divided as a result of the Turkish Invasion on 1974, but this does not appear to have hindered the island’s economic development, at least in the Greek sector. GDP per capita on the Greek side was $21,600 in 2005, among the highest in the Mediterranean. GDP in the Turkish sector was one-third of this.
Cyprus does not offer particularly generous incentives for foreign investors considering company registration Cyprus, although the government may argue that its low-tax regime is a sufficient incentive in itself. However, various grants and loans are available for investors in certain high-tech and traditional economic sectors, and the Larnaca free trade zone offers exemption from customs charges. Moreover, there are personal tax concessions for expatriate workers.
Recruiting staff in Cyprus
The economy has powered ahead in recent years, creating near-full employment and raising the stakes for foreign companies seeking to attract good staff. Having said this, the labour pool is generally well educated and rates of pay are low compared to the EU average.
Cyprus is an important regional investment centre and has developed sophisticated international banking facilities to support it. Many major international banks have branches here together with local commercial banks, and the financial system – supervised by the Bank of Cyprus – is robust.