Cyprus, located between three continents – Africa, Europe, Asia – is a proud member of the Eurozone and home to around 1 million people. Since 2014, Cyprus has been experiencing strong and rapid growth and is fast becoming an appealing destination for the jurisdiction of choice.
The competitive, modern, and transparent legal, financial, and regulatory framework that Cyprus possesses allows the island to be a credible and highly reputable hub for software companies and startups.
The Cyprus Tax Regime
The Cyprus tax regime has been designed to attract investors and entrepreneurs.
A company is considered to be a Cyprus tax resident if it is managed and controlled from Cyprus. Worldwide business profits of a Cyprus tax resident company will be subject to a corporation tax of 12.5% with a number of other tax advantages that companies can benefit from:
- Dividend income is in general exempt from tax irrespective of its source,
- Cyprus does not impose income or capital gains tax on profits and gains from the disposal of shares, bonds, debentures.
- Cypriot companies are exempt from taxation on foreign exchange (FX) gains,
- No withholding tax is imposed on interest and on royalties paid from Cyprus in respect of intellectual property used outside Cyprus.
- Dividends paid to non-resident shareholders are exempt from withholding tax in Cyprus.
- Profits of a permanent establishment maintained abroad are generally exempt from tax in Cyprus.
- Individuals who spend more than 183 days in Cyprus are considered a tax resident of Cyprus.
- Individuals are able to become a Cyprus tax resident by spending just 60 days in Cyprus provided they satisfy a certain criterion such as maintaining a permanent residence in Cyprus and carrying on a business here or being employed in
- A Cypriot tax resident individual is subject to income tax on his/her worldwide income whereas a non-Cypriot tax resident individual is subject to income tax only on Cyprus sourced income.
- Cyprus’ personal income tax rates are progressive, ranging from nil to 35%, on taxable income exceeding €60,000. The income of up to €19,500 is not subject to tax.
- 50% of the remuneration from employment exercised in Cyprus by an individual who was not a resident of Cyprus before the start of their employment in Cyprus. This exemption will apply for a period of 10 years from the 1st year of employment, as long as the salary exceeds €100,000 per annum.
Double Taxation Treaties
Cyprus has currently tax treaties with more than 60 countries, including countries in North America, Europe, Africa, the Middle East. Treaties provide two advantages:
- protection from double taxation on the same income from two states
- protection against excessive foreign tax.
The IP BOX Regime
Cyprus is an attractive location to establish an Intellectual Property (IP) which is a holding and development company, as the island offers an efficient tax rate as well as sound legal protection conferred through EU Member States and major IP treaties and protocols that Cyprus entered into.
- 80% of the profits qualifying for the regime are exempt from tax. With a corporate tax rate of 12.5%, this can result in an effective tax rate of as low as 2.5%.
- Qualifying assets under the new regime include:
- copyrighted software programs, and,
- other intangible assets that are nonobvious, useful and novel.
Location, Location, Location
Cyprus’ location is very strategic as it is positioned between Europe, Africa, and Asia, with the island’s two international airports linking Cyprus to all major airports:
- London – 4 hours 30 minutes (Direct)
- Paris – 4 hours 15 minutes (Direct)
- Frankfurt – 4 hours (Direct)
- Zurich – 3 hours 30 minutes (Direct)
- Dubai – 3 hours 30 minutes (Direct)
- Doha – 3 hours 30 minutes (Direct)
- Beijing – 13 hours (1 stop)
- New York – 11 hours 30 minutes (1 stop)
- Singapore – 10 hours 40 minutes (1 stop)
- Benefit from the local impressive skilled workforce Cyprus has to offer, direct access to a great pool of talent from other EU countries.
- Benefit from programs allowing international professionals to easily relocate.
- Work visas for non-EU nationals are available to enable companies to hire from non- EU countries whenever the required skill-set is not available locally.
- Almost half of the workforce in Cyprus have a tertiary degree, predominantly from the U.K. – one of the highest in the EU. More Cypriots earn degrees from foreign universities than any other EU country.
- Rapid growing education system – one of the highest enrolments in domestic universities with many U.K. universities partnering up with Cyprus universities.
Launching and running your business in Cyprus reduces your overall set-up costs compared to other EU countries resulting in more budget being allocated for growth and development of your business.
- Lower labor costs than other E.U. countries Lower office rentals costs than most E.U. countries
- Low business support costs and high quality – services like I.T., accounting, legal, etc.
Member of the EU
As a proud member of the European Union Full access to European Markets with free movement of goods, services, capital, along with access to 40+ EU trade agreements with countries outside the E.U.
Cyprus’ legislation is fully compliant with the E.U. legislation. European Union directives are fully transposed into Cyprus legislation and E.U. regulations have direct effect and full application in Cyprus.
Post-Brexit and U.K. Connection
UK-Cyprus trade relations existed before the E.U. and will continue strongly after Brexit as Cyprus belongs to the Commonwealth and has sovereign British bases on the island.
Cyprus’ legal and judicial system is very much aligned with that of the U.K. As such, Cyprus’ primary corporate statutes are based on and derive from English company legislation and its legal system is modeled on the English common law system.
73% of Cypriots speak English and is an official language due to British Colonization.
Life in Cyprus
When considering where to launch your business, it is always vital to consider the quality of life you aim to have for you, your family, and your employees. Choosing Cyprus ensures you and your team work on a Mediterranean island that provides you with a very high standard of living that include:
- One of the EU’s best all-year climates and one of the best worldwide,
- Over 65 Blue Flag status beaches for all tastes (highest % per capita) sports, entertainment, etc, High level public & private healthcare services,
- Short distances – can travel from one side of the island to another in 2 ½ hours Considered one of the world’s safest countries with one of the lowest crime rates in E.U., Reasonable cost of living with great choice fresh products always available – both local and international
- According to the European Environmental Agency, Cyprus also has the cleanest beaches in Europe
- Real Estate available to cater all needs – city center, skyscraper, beach, countryside, etc
- High Level of Education – many private schools and private institutions offering a high level of education in English.