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Why Cyprus

Investing in Cyprus offers a unique blend of strategic advantages and potential opportunities that make it an appealing destination for investors. With its favorable tax regime, well-established legal framework, and strategic geographic location at the crossroads of Europe, Asia, and Africa, Cyprus provides a gateway for businesses to access and serve diverse markets. The country's skilled and multilingual workforce, coupled with a robust financial sector, fosters an environment conducive to innovation and growth. Moreover, Cyprus boasts a stable political environment, modern infrastructure, and a high quality of life, making it an attractive destination for investors looking to establish a presence in the European Union. From real estate and tourism to financial services and technology, Cyprus offers a range of sectors with untapped potential, making it a compelling choice for those seeking promising investment opportunities.



Legal Framework

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Cyprus's favorable legal framework is one of the key factors that makes the country an attractive destination for investors. Here are some reasons why the legal environment in Cyprus is considered advantageous for investment:

  1. Stable Legal System: Cyprus has a well-established legal system based on English common law principles, providing a sense of familiarity and predictability for investors coming from common law jurisdictions. This stability reduces the risks associated with legal uncertainties.
  2. EU Membership and other important legislation: As a member of the European Union (EU), Cyprus adheres to EU laws and regulations, ensuring a high level of transparency, investor protection, and adherence to international standards. This EU membership provides a strong foundation for businesses looking to establish themselves within a reputable legal framework. Cyprus is fully compliant additionally with OECD, FATCA and the Financial Stability Forum laws and regulations.
  3. Double Tax Treaties: Cyprus has an extensive network of double tax treaties with over 65 countries, including major economies. These treaties aim to prevent double taxation and provide reduced withholding tax rates on dividends, interest, and royalties. This makes Cyprus an effective jurisdiction for international tax planning and cross-border investments.
  4. Investor-Friendly Legislation: Cyprus has introduced various investor-friendly legislation aimed at attracting foreign investment. The Cyprus Investment Programme (CIP), for example, offers a path to citizenship for qualifying investors, encouraging direct investment and stimulating economic growth.
  5. Efficient Company Formation: Setting up a business in Cyprus is relatively straightforward, with efficient registration procedures and a range of legal entity options to choose from. This flexibility allows investors to tailor their business structures to their specific needs.
  6. Intellectual Property Protection: Cyprus offers strong intellectual property protection through its comprehensive legal framework. This protection is crucial for companies operating in technology, innovation, and creative industries.
  7. Banking and Financial Services: Cyprus has a well-developed banking and financial sector that adheres to stringent regulations and international best practices. This fosters trust among investors and ensures the safety and security of financial transactions.
  8. Arbitration and Dispute Resolution: Cyprus provides a well-regarded arbitration system for resolving commercial disputes. The country's arbitration laws are aligned with international standards, making it an attractive jurisdiction for businesses seeking efficient and impartial dispute resolution.

Tax Regime

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Cyprus's favorable tax regime is a significant draw for investors, offering a range of benefits that contribute to its reputation as a business-friendly jurisdiction. Here's a deeper look into why the tax regime in Cyprus is considered advantageous:

  1. Low Corporate Tax Rate: One of the standout features of Cyprus's tax system is its low corporate tax rate. The corporate tax rate is 12,5%, which is one of the lowest in the European Union. This competitive rate allows businesses to retain more of their profits and reinvest in growth.
  2. Wide Network of Double Tax Treaties: Cyprus has an extensive network of double tax treaties with more than 65 These treaties aim to prevent double taxation and reduce withholding tax rates on dividends, interest, and royalties. This not only minimizes tax liabilities for businesses engaging in cross-border transactions but also enhances Cyprus's appeal as a hub for international business activities.
  3. Full Participation Exemption: Cyprus's tax regime includes a full participation exemption, which means that profits earned from qualifying subsidiaries or permanent establishments abroad are exempt from corporate tax. This encourages businesses to establish international structures and engage in cross-border investments without incurring additional taxation.
  4. No Withholding Taxes: Cyprus does not impose withholding taxes on dividend payments to non-resident shareholders, making it an attractive jurisdiction for dividend distribution within multinational groups.
  5. Capital Gains Tax Benefits: The capital gains tax regime in Cyprus offers favorable treatment for both individuals and companies. Capital gains are exempt from taxation except for disposal of real estate or shares of a company holding real estate. In cases where taxation applies, the rates are generally lower than in many other jurisdictions.
  6. Attractive Intellectual Property Regime: Cyprus offers an Intellectual Property (IP) regime that provides tax incentives for companies holding qualifying IP assets. This includes substantial exemptions on the net profit generated from qualifying IP assets, making it advantageous for businesses involved in research, innovation, and creative endeavors. The effective tax rate can be as low as 2,5%.
  7. No Wealth or Inheritance Tax: Cyprus does not levy wealth or inheritance taxes, contributing to an environment that is particularly attractive for high-net-worth individuals and families.
  8. Transparent Tax System: Cyprus is committed to international standards of transparency and information exchange. It is on the Organization for Economic Co-operation and Development (OECD) "white list" of jurisdictions that adhere to global tax cooperation standards.
  9. Effective Use of Holding Companies: Cyprus's tax system, combined with its network of double tax treaties, makes it a popular choice for establishing holding companies. These holding structures can help optimize tax planning and facilitate international investments.
  10. Tax Incentives for Startups and Innovation: Cyprus has introduced various tax incentives to support startups, research and development, and innovation-driven businesses, fostering a dynamic ecosystem for entrepreneurial ventures. New legislation applies whereby 120% of R&D expenditure are eligible for deduction.
  11. Low personal tax: Up to €19.500 the income is tax free after which the income is tax progressively from 20% to 35% over €60.000. No tax on dividends and interests on non-domiciled individuals. 20% or 50% exemption on income from employment in Cyprus provided that person was for a certain period prior to the commencement of employment not residing in Cyprus. 20% exemption applies up to 2027 while the 50% exemption applies for a period of 17 years but only for income above €55.000.
  12. Tonnage tax for shipping companies: Shipowners, charterers and shipmanagers of qualifying ships are exempt from corporation tax and they are subject to tonnage tax which is one of the most favorable worldwide.

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