Cyprus as a Base for International Tax Planning




Cyprus is a Full Member of the European Union

After its accession to the European Union, the government opted to dismantle most of its investment restriction, which attracted foreign direct investment from fellow EU members. It concentrated on the improvement of its telecommunications, labor force, legal system, and financial services. Soon, it found itself as one of the ideal candidates for any company looking for a home for their offshore companies.

Cyprus as a Tax Haven

Companies registered in Cyprus are only taxed for revenue earned through direct activities within the country, which amounts to 10% of their annual earnings.

Tax Exemptions

Dividend income received through foreign corporation is fully exempted from Cyprus taxes. If the company presents that more than 50% of the paying activities of the company resulted from foreign transactions independent of the home-based company, then it will also be exempted from tax payment.

Capital Gains Tax

It is interested to note that immovable property, which are situated in Cyprus, are subject to capital gains tax; but immovable property outside of Cyprus owned by the company will not fall under the jurisdiction of the government. Therefore, sale of these properties will not be subject to capital gains tax.

Double Taxation Treaties

The double taxation treaties entered by the government are geared toward favorable trading transactions with these countries. It encourages tax incentives that are highly appreciated by foreign investors. Nevertheless, for the company to reap these advantage it is important that it must be a resident of two contracting states, one being Cyprus. If a company is interested to expand to territories listed in countries with existing double tax treaties with Cyprus, then it is best to consult these matters with a knowledgeable and competent law firm or accounting office for the proper documentation and registration process.

Benefits of Offshore Banking

As a member of the Offshore Group of Banking that has been granted license to operate Offshore Banking Units, registered Cyprus companies are in full authority to transact business using foreign currencies with non-residents. However, the legalities and technicalities of these matters has to be drafted, evaluated, and signed by a registered Cypriot lawyer for authentication. Otherwise, it would be difficult to accomplish the goal of registration.

The Professional Sector

It helps to know that the labor force in Cyprus is knowledgeable of the English language and is very much competent with their chosen profession. Investors will not find it difficult to find reliable employees that will assist the growth of their companies. You will find it very convenient because most, if not all of the services you need is ready to be provided to you by Cyprus.


International business companies have regarded Cyprus as an ideal international business center. The sound economic policies implemented by the government have attracted numerous companies to choose it over other European countries and it has resulted to a booming financial sector for the country. If you deem to choose it as the future home of your planned business center, then be prepared for a wealth of favorable trading and tax benefits. It is a decision guaranteed to fulfill your desire to expand your reach in the global community.