Investing in Cyprus
Over the past few years, Cyprus has established itself as an attractive investment, business and service centre. There are a number of key opportunities that have been introduced to attract foreign investors:
Cyprus marked a significant interest through the construction and investment in projects such as the luxury marinas, new luxury yacht marinas, luxury casino resort, hotels and real-estate. All these provide excellent investment opportunities, combining activities with tourism, leisure and real estate development.
INCREASE IN REAL ESTATE SALES
Cyprus continues to be on the top of the list for investors, mainly in Limassol and Paphos, whereby in the first three quarters of 2017 property purchases by foreign buyers increased to 63%.. In order for a foreigner to be considered a Cyprus tax resident the investment made must be €2.000.000 and a residential property of at least €500.000.
The Cypriot tax regime, which is fully
compliant with the EU and international laws
and regulations continues to improve Cyprus’s international competitiveness as a
location of choice for multinationals.
Notional Interest Deduction (“NID”)
Cyprus tax resident businesses can benefit from the “NID” by obtaining a tax efficient return on new equity, the return of which is achieved through the deduction of a “notional” interest expense from their taxable income. NID is calculated by multiplying New Equity with NID interest Rate. New equity means any new capital contributed from 01 January 2015 in the form of share capital or share premium. NID rate is the yield on the 10 year government bonds of the country where the funds are employed in the business of the company plus a 3% premium.
Other tax benefits
1. The country’s corporate tax rate stands at 12.5%, remaining as one of the lowest in the EU.
2. Dividends received from abroad by a Cyprus company are tax exempt.
3. Capital gains tax (CGT) is imposed on sale of immovable property situated in Cyprus as well as sale of shares in companies whose immovable property is situated in Cyprus. This is important because if international businesses sell immovable property outside Cyprus or shares in companies who have an underlying asset outside Cyprus, the gain will be considered exempt.
4. An international business with operations abroad can benefit if they amend their operations under Cyprus companies. This is because profit of a foreign permanent establishment (PE) of a Cyprus company is exempt from corporate tax in Cyprus. However, the following conditions must apply: (i) the PE does not engage in more than 50%, directly or indirectly, in activities which lead to passive income or (ii) the foreign tax burden imposed on the PE is not substantially lower than that in Cyprus (6,5%).
Should you require any further clarifications and/or more in depth analysis of the above subject matter, please feel free to contact me.
Ms. Sara Starovlah
T: +357 99 772183