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Zoe Kokoni |
The recent developments in Cyprus that have monopolised the media, the financial and the business sectors worldwide, have created an unprecedented number of speculations, rumours, devastation theories and much more. As a result of the banking crisis, the measures to be implemented are expected to reinforce Cyprus's banking system and make it healthier and fundamentally stronger. Despite the turmoil in the banking sector, it is important to highlight that the corporate sector in Cyprus still stands strong as nothing has changed on the benefits Cyprus offers to international businesses when it comes to corporate structuring. The Cyprus banking crisis is not a barrier to transactions and investments in or through Cyprus. The use of Cyprus companies in international structures has not been affected and their use is still highly efficient. The ambiguity created by the recent developments in the banking sector has not affected the demand for structuring projects and investments with the use of Cyprus companies. The proposed increase of corporate tax rate from 10% to 12.5%, will still place Cyprus as a low tax jurisdiction within the EU.
Moreover, the advantages of holding companies, the majority of companies registered in Cyprus, will not be affected as the rule of no withholding taxes will not be changed. There is zero withholding tax on payment of dividends to non-tax residents, while there is a zero capital gains tax for transactions that do not involve immovable property situated in Cyprus.
The extensive double tax treaty network of Cyprus is still in place offering its benefits to the great number of foreign investors in the island. The Cyprus companies are still enjoying the tax incentives offered, the EU directives, which have been fully implemented in Cyprus, are still applicable and the high level of confidentiality and secrecy rules have not been shifted. Cyprus companies, such as financing, holding, trading, royalty (for which the effective tax rate, after the application of the measures will be 2.5% instead of 2%) and more, have not lost their advantageous edge and benefits.
International Cyprus trusts, which are significantly used for protection of assets and preservation of family wealth, have provided considerable beneficial tax advantages which have not been altered. Their provisions and their application is still fully effective and in force.
For many years now, Cyprus has achieved and gained its title as a solid economic and business model worldwide and the recent developments cannot alter this. The existing legal system, the beneficial tax regime and the qualified professionals that have provided high quality services to local and foreign investors are intact and still well-built.
Cyprus, despite all, remains an attractive international business centre.
Zoe Kokoni (zoe.kokoni@eurofast.eu)
Eurofast Taxand
Tel: +357 22 699 222
Website: www.eurofast.eu
