How to Capitalize on Cypriot Tax Regulation

According to the Business Report and World Bank, Cyprus is one of the few countries throughout the world in which the economy can actually offer a significant advantage to businesses. With its taxation system, friendly legislation, location, and membership to the Economic and Monetary Union and EU, foreign investors can access the EU market in the most cost-efficient manner.

What business opportunities await you?

Most businesses that run in the country revolve around the following industries:

• Energy sector

• Security services

• Training and education

• Environmental services

• Health and safety

• Transport

• Construction

• Catering and cleaning services

• Accounting and Consultancy

• Tourism and leisure

• Communications and information technology

How can you capitalize on business-friendly Cypriot regulations?

While the business opportunities in Cyprus is unlimited, there are still risks and challenges; the most common of which is the budget. Luckily, there are many ways you can take advantage of the Cypriot tax regime. For instance, you can initiate the incorporation of a Cyprus-registered company with the help of a holding company.

A holding company doesn’t produce goods or services. Instead, it acts as a stockholder for other companies. Holding companies in the country can easily take advantage of the favorable tax regime; thus they help make Cyprus a more valuable place for foreign investors and other international companies.

Holding companies in Cyprus can achieve low to no withholding tax rate on the profits gained. This privilege can be given to EU Parent-Subsidiary directive. The dividends received by holding companies are exempted from special defense contribution and corporate income tax. Company mergers, re-organizations and takeovers are also tax exempted.

To know more about how much holding companies can offer, read the the following:

Outgoing Dividends

To businesspersons not living in Cyprus, there will be no withholding taxes on the dividend payment, whether there is a double tax treaty in place or not.

Incoming Dividends

The dividends you receive from a Cyprus Holding Company are only taxed at 17%. There are exemptions for this, of course, which if fulfilled, will result in zero taxation.

Capital Gains

Cyprus boasts about not having capital gains tax other than on gains from the disposal of immovable property. Disposal of securities, shares, and debentures is also exempted from taxation.

Interest Income

The interest income, which is connected with the trade or business, can be subject to corporate income tax rate of about 12.5%. Those with are not connected to the trade or business is exempted from the corporate tax, but is taxed separately by the Special Contribution for Defence.

Corporate Reorganisations

There is no tax for reorganisation involving a Cyprus Holding Company.


If you wish to set up a business venture in the country, you should ensure that you have all the necessary documents and licenses in order to operate legally. The rest of the process can be done through the assistance of a local business partner or a Cypriot holding company. With them, you can expect for greater return on investments no matter what kind of business venture you take.

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