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Benefits of Cyprus Company Registration

Cyprus offers wide opportunities, which should be properly used and applied. 

Republic of Cyprus as an entire member of the European Union is considered a safe and popular destination for investment due to significant tax benefits. 

If you are looking for the best way to use the privileges and act as a company with international images, Cyprus opens appropriate gateway for this purpose. You will be exposed to global appreciation, making it easy for you to raise and development of your business. Detailed advantages of Incorporation of a Cyprus Company: 

1. Political And Geographical Location of Cyprus 

Cyprus is situated between three continents. It has been a member of the European Union since 2004 and of the Eurozone since 2008. This is perfect option for the development of international trade and financial cooperation. The usage of the common currency for the European Union (Euro) also provides great convenience when conducting business in Cyprus.  

2. No Investment Restrictions 

There are no restrictions on what foreign investors can be engaged in Cyprus. They can choose whatever activity they like, unless, of course, the business requires a special license. Still, its not an issue, you just need extra time to obtain it. 

3. Favorable Corporate Tax Legislation 

The main reason why Cyprus has become attempting territory to conduct business is its business-friendly tax system, which propose many advantages to the companies located in the Republic. 

The key benefit of a resident corporation is the flat and lowest in Europe corporate tax rate of 12.5%. 

Tax Benefits are offered/expected under all of the following circumstances: 

  • for non-domiciled employees with a minimum required salary of EUR 55.000 per annum, a 50% tax exemption for 10 years is expected to be granted; 
  • A 50% tax exemption for investment in certified innovative companies to corporate investors is expected to be granted; 
  • An increased deduction of 120% for research and development costs is expected to be granted; 

4. IP-Box Regime 

For the companies whose business are refers to intellectual property, the IP Box taxation regime. According to it 80% of the profits received from the activities concerned with the creation and use of IP are exempt from income tax, which decrease the effective tax rate to 2.5%. 

5. Notional Interest Deduction 

Cyprus also offers a Notional Interest Deduction (NID) Regime, whereby the income earned from financing a company’s operations with new capital contributed after January 1, 2015, is reduced by the notional interest expense calculated by multiplying the company’s new capital and the yield on 10-year government bonds of the state in which the income from the use of the assets was received, increased by a percentage premium.  

Notional interest deduction can be up to 80% of the profit before the deduction, which also allows the effective corporate tax rate to be decreased to 2.5% or less. 

6. Royalties/Dividends 

  • Royalties paid from Cyprus to non-resident companies are not taxed (with a few exceptions for intellectual property used in Cyprus). The same applies to the capital gains and income from the liquidation of a Cypriot holding company. 
  • There is Nil imposition of withholding taxes on the outbound dividend and interest payments; 
  • Dividend incomes are exempt from corporation tax, unless they classify as hybrid instruments

7. VAT

An EU VAT registration number can be obtained within 48 hours. 

The value-added tax rate in Cyprus is one of the lowest in the European Union and ranges from 0% to 19%. As with all members of the European Union, import and export of goods and services to other EU countries is VAT-free (so-called triangular trade). 

8. Corporate benefits 

  • Annual corporate and maintenance expenses are quite low; 
  • A company registered in Cyprus is able to establish a banking relationships with any financial entities  
  • A company can be registered without  physical visit to Cyprus; 
  • A virtual office can be maintained in Cyprus as the business headquarters of the company, with a dedicated telephone line, fax, email account and office space; 
  • A Cyprus company can be closed down under a few procedures; 
  • A Cyprus company can be managed remotely; 
  • Incorporation of a Cyprus company gives the right to the (third country nationals) Real Owner and employees to relocate to Cyprus and obtain a long stay visa for two years (renewable) and a work permit if they have physical offices and operate in Cyprus; 
  • A Cyprus company can be re-domiciled abroad to any other country; 

9. Double Taxation

Companies registered in Cyprus benefit from the double taxation avoidance agreements concluded between Cyprus and more than 60 countries around the world. Overall, the agreements on the avoidance of double taxation concluded by Cyprus are in line with the OECD model. Therefore, the foreign investors do not need to pay extra tax in their country.