Tax Haven Cyprus

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Many are the factors that influence Cyprus’s success as a tax haven and international business center. As a country with positive FDI flows, tax haven Cyprus is set on encouraging foreign investment in specific areas of its economy through specially designed regulations aimed at creating a favourable platform for business activity. However, aware of the possible undesirable impact that vigorous investment activity may have on Cyprus as a tax haven, measures are taken to see to it that national security, safety of the natural environment and general economy are in no way compromised.

Tax haven Cyprus’ free industrial zone area promotes it as a suitable location for manufacturers engaged in exporting to North African and the Middle East. As a tax haven Cyprus imposes no restrictions on direct or indirect investments made by individuals or entities from EU or third countries. An ‘offshore’ regime per se no longer exists in tax haven Cyprus therefore local and foreign nationals can undertake both domestic and international business activities freely and without requiring special licensing.

Brief Country Overview

Tax haven Cyprus is described as the 3rd largest island in the Mediterranean which attracts more than 2.4 million tourists annually. Tax haven Cyprus is described as the 3rd largest island in the Mediterranean which attracts more than 2.4 million tourists annually. Tax haven Cyprus is a former British colony which gained its independence in August 1960 upon the signing of an agreement between Turkey, the United Kingdom and Greece. Turkish invasion and occupation of the northern part of tax haven Cyprus in 1974 was the culmination of disputes that existed between Turkish and Greek Cypriots and resulted in thousands of Cypriots being displaced.

With economic growth averaging at over 6% per year, recent IMF figures reveal that tax haven Cyprus’ GDP per capita has risen above that of the EU’s average GDP. This is sign of the country’s prosperity which is largely attributed to its business climate, productive labour force and diversified economy. The ‘Demographic Report’ published in 2007 by the Statistical Service of Cyprus revealed that the population in government assisted areas had grown by 1.4% from 2006, bringing tax haven Cyprus population to an estimated 789,300.

Tax haven Cyprus is considered one of the most religious countries in the EU, with most Greek Cypriots belonging to the Greek Orthodox Church while a large majority of Turkish Cypriots are members of the Muslim community. Other religious denominations in tax haven Cyprus include Pentecostalism, Judaism, and Armenian Apostolic Church, Baha’i and Roman Catholicism.

Cyprus Fiscal Advantages and Incentive

As a tax haven Cyprus guarantees generous benefits. The list below provides a brief highlight of the fiscal advantages and incentives offered by tax haven Cyprus to offshore companies and investors, foreign and domestic alike, as no distinctions are made between offshore and onshore business activities. Tax haven Cyprus’ offers:

  • Zero withholding tax on dividends, interest, royalties and inheritance
  • Zero capital gains o No exchange controls
  • Corporate tax rate ranked lowest in the EU
  • Friendly tax regime for overseas ship owners
  • Modernized infrastructure and telecommunications network
  • Excellent banking, legal and accounting services
  • Reputable and leading international shipping sector and registry
  • Positive long-term FDI trend
  • Macroeconomic successful
  • Highly skilled multilingual professionals

Cyprus Offshore Financial Services

Offshore financial and professional services in Cyprus as a tax haven stem from growing demands placed by developing international business sectors. Where the ability to satisfy these needs with advanced infrastructure and legislation exists, the removal of a zero tax regime and the imposition of low taxes is balanced off by the availability of endless incentives. Hence, Cyprus has succeeded in providing offshore companies with a healthy and welcoming business climate that despite the existence of a tax on profits on offshore companies carrying out domestic business, as a tax haven Cyprus continues to thrive. A few of the offshore business sectors in tax haven Cyprus are as follows:

  • Offshore/International business company formation
  • Offshore Banking Units (OBU)
  • International trusts o Captive insurance
  • Offshore shipping registration
  • Construction and engineering professional services
  • Licensing royalties and franchising professional services

Cypriot Business Entities:

  • Cyprus Exempt Private Company
  • Cyprus Private or Public Company Limited by Shares
  • Cyprus Company Limited by Guarantee
  • Cyprus Sole Proprietorship
  • Cyprus Limited Partnership
  • Cyprus General Partnership
  • Cyprus Trust o Branch o European Company

Cyprus Offshore Legislative Framework

Below are a few of the laws enacted in Cyprus for business purposes:

  • Cyprus Companies Law 2006
  • Partnerships & Business Name Law
  • Insurance (Companies) Law
  • Insurance Companies Regulations of 1990

Cyprus Financial Services Authority (FSA)

The FSA of tax haven Cyprus is a non-governmental organisation which was formed following the announcement of the Chancellor of the Exchequer to forge a merger between the banking supervision and investment services regulation into the Securities and Investments Board (SIB), which in October 1997 officially acquired the new name, the Financial Services Authority.

In adopting its new roles, the then newly formed FSA in tax haven Cyprus underwent a series of reforms which enabled the organisation to assume its responsibilities as UK Listing Authority from the London Stock Exchange, banking supervisor from the facilitated Bank of England and take over diverse duties from organisations such as the Personal Investment Authority, Friendly Societies Commission, Building Societies Commission, Securities and Futures Authority and Investment Management Regulatory Organisation.

The FSA in tax haven Cyprus regulates financial services in the UK, reduce and eliminate financial crime, promote fair, orderly and efficient markets, improve overall business potential and assist retail consumers with obtaining fair prices. Recent Developments

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