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Cyprus / Cyprus

Cyprus

Strategic geographic location and good infrastructure

Cyprus is an island situated in the southeastern part of the Mediterranean Sea among three continents – Europe, Asia and Africa. After joining the European Union in 2004, Cyprus has been characterized as the portal of Europe to Middle East and Africa due to its strategic geographic location. It is easily accessed with frequent flights through its two international airports that offer daily flights to most European, Asian, Far East and major African countries. There are also two ports from where cargos can be shipped almost anywhere around the globe. The Island is one of the top countries in the telecommunication services with a telephone network that has direct connections to more than 200 countries.

Population

The estimated population is 1.1 million. The city with the highest number of inhabitants is the capital – Nicosia – with an estimated population of 239.277.

Language

The official languages are Greek and Turkish. English is widely spoken and understood and is very much used in commerce and government.

Currency

Since 1st of January 2008 Cyprus has adopted the Euro.

Tax system

The Cyprus tax system offers significant advantages for companies based in Cyprus.

Briefly the main advantages are:

  • Resident companies in Cyprus pay the lowest corporation tax in the European Union (only 10%).
  • Dividends received from holding companies are not taxable.
  • There are no withholding taxes on dividends, interest and royalties payable to non- residents.
  • Resident companies can take advantage of an extensive network of double tax treaties.
  • There is no taxation on gains from trading of titles (e.g. shares).
  • There is no capital gains tax except on sale of immovable property situated in Cyprus.
  • Losses can be carried forward indefinitely and set off against future profits.
  • The tax system in Cyprus is fully EU and OECD compliant making Cyprus a respectable country to have operations in (non-tax haven jurisdiction).

Double tax treaties

The main advantage that Cyprus has over the other low or zero tax jurisdictions is the existence of an extensive and increasing network of double tax treaties (DTT’s). These are legal and efficient tax planning tools that aim to protect legal persons and individuals against the double taxation of income earned in other countries. Until now, Cyprus has signed double tax treaties with more than 45 countries and is in the process of negotiating agreements with several others. Cyprus’s DTT’s are perfectly in accordance with the requirements and standards of the OECD (The Organization for the Economic Cooperation and Development) model tax treaty. Cyprus is one of the most attractive investment destinations in the world, having a tax legislation system that responds to the international standards. The following countries are among those which have double-tax treaties with Cyprus, although not all have been ratified at the time of writing:

  • Azerbaijan
  • Armenia
  • Austria
  • Belarus
  • Belgium
  • Bulgaria
  • Canada
  • China
  • CIS (ex-USSR)
  • Czech Republic
  • Denmark
  • Egypt
  • Estonia
  • Germany
  • Finland
  • France
  • Greece
  • Hungary
  • India
  • Ireland
  • Italy
  • Kuwait
  • Kyrgyzstan
  • Lebanon
  • Moldova
  • Malta
  • Mauritius
  • Norway
  • Poland
  • Qatar
  • Romania
  • Russia
  • San Marino
  • Serbia and Montenegro
  • Seychelles
  • Singapore
  • Slovakia
  • Slovenia
  • South Africa
  • Spain
  • Sweden
  • Syria
  • Tajikistan
  • Thailand
  • Ukraine
  • United Kingdom
  • United States
  • Yugoslavia

Legal system

Until 1960, Cyprus was a British colony and its legal system was based on the English one. The laws enacted for the colony applied to Cyprus the principles of common law and equity. Many of those laws are still in force today. The laws applicable are the following:

  • The Constitution of the Republic of Cyprus;
  • The laws retained in force by virtue of Article 188 of the Constitution;
  • The principles of Common Law and Equity;
  • The Laws enacted by the House of Representatives.

Following the accession of The Republic of Cyprus to the European Union in 2004, the Constitution was amended so that European law has supremacy over the Constitution and national legislation.

Banking

Commercial banking is based on the British model and is fully compliant with the EU directives. The Cyprus banking system has very high standards, all the banks being able to carry out any financial transaction.

Types of companies

  • Cyprus Private Company Limited by Shares
  • Cyprus Public Company Limited by Shares
  • Cyprus Company Limited by Guarantee
  • Cyprus Branch of Overseas Company
  • Cyprus General Partnership
  • Cyprus Limited Partnership
  • Cyprus Sole Proprietorship
  • Cyprus Trusts
  • International Collective Investment Schemes (ICIS).