Advantages of Operating a Cyprus Company

Last updated on May 30th, 2023 at 10:28 am

The popularity of Cyprus International Business Companies (previously called ‘Cyprus offshore companies’) is ever growing.  There are many reasons why Cyprus is considered an international business hub and go-to jurisdiction for establishing enterprises:

  • strategic location of the island
  • economic stability
  • reliable banking system
  • transparency of the tax system
  • government consistency in supporting private business
  • membership in European Union

A non-resident, who establishes Cyprus Company can benefit from the following advantages:

Issue Advantage
Corporate Tax Rate Only 12.5%
Double Tax Treaty Network Over 45 countries
Tax Treaty Protection Exists if the company is managed and controlled in Cyprus
  • No withholding of tax on dividends
  • No participation or min holding period requirements
  • No taxation requirement if profits in subsidiary taxed less than 5% or passive income is less than 50% of total income
Distribution of Profits No withholding taxes on the distribution of profits by way of dividend payments to non-tax residents (either a corporate body or individual) and irrespective of the country of residence or the existence of a double tax treaty
Capital Duty Zero capital duty.
Capital Gains
  • No income tax except on sale of immovable property situated in Cyprus
  • No participation requirement or min holding period
Deduction of Costs Interest costs may be deducted unless they relate to the acquisition of assets not used in the business of the Company
Disposal of Shares No tax upon disposal of:

  • participation held by the Cyprus Holding Company
  • shares of a Cyprus Holding company
Liquidation No tax upon liquidation of the Cyprus Company owned by non-residents
Inheritance of Shares No estate duty on inheritance of shares in Cyprus Company
Tax Losses Corporate tax losses can be carried forward indefinitely or they can be set off against profits incurred from companies within the same group under group relief
Thin Capitalization Riles None
Foreign Employees of Cyprus Companies
  • can easily obtain work and residence permits
  • when living and working in Cyprus – liable to Cyprus income tax at a rate equal to half the normal Cyprus rates
  • when living and working outside of Cyprus – exempt from income tax if they are paid through a bank operating in Cyprus (if such employees are paid directly abroad they are taxed at a rate equal to one-tenth of the standard rates
Cyprus Companies Maintaining Actual Office in Cyprus Enjoy full duty exemption for the importation or purchase of cars, office and household equipment (except furniture and air-conditioning equipment) for the use of the of the Company and its foreign employees