Location

Cyprus is situated in the eastern Mediterranean at the cross-roads of three continents - Europe, Asia and Africa.

It covers an area of 9251 sq. km. It has a pleasant Mediterranean climate with dry, hot summers and mild winters.

 

Population

The population of Cyprus is about 800.000 with Greek - Cypriots representing approximately 78%,

Turkish - Cypriots 18% and the remaining 4% representing other minorities.

 

Languages

Greek, Turkish and English are the official languages. English is spoken by most of the population and is widely used in commercial and government sectors.

 

Political Structure

Cyprus became an independent republic in 1960. The structure of government is similar to other western democracies where human rights, political freedom and private property are safeguarded. Cyprus has a presidential system of government. The President is the Head of State and is elected for a five-year term. Executive power is in the hands of the Council of Ministers, the members of which are appointed by the President. The House of Representatives is the Island's legislative body and it consists of 56 elected members who serve for a five-year term. The legal system is based on English Law. Cyprus is a member of the United Nations, the Commonwealth and the Council of Europe.

 

Accession to the European Union

Cyprus became a full member of the European Union on 1st May 2004 and will assume the presidency of the Union for the six months from 1 July 2012 to 31 December 2012.

 

Economy and Infrastructure

The island has excellent telecommunications, air and port connections. There are two international airports in Larnaca and Paphos whereas the major port facilities are those of Limassol and Larnaca. Cyprus is a free-enterprise economy with the government's role being limited to regulation, supervision, planning and the provision of public utilities. Excellent banking facilities are also available with a number of onshore banks, offshore banking units (OBU's) and specialised financial institutions operating on the island. International correspondent networks are maintained by onshore and offshore banks.

 

History as an international business center

Since the introduction of the "offshore" concept more than 40 years ago, Cyprus has firmly established itself as a reputable international financial centre. The low taxation, freedom of exchange controls, excellent telecommunication facilities, as well as numerous other advantages offered, have brought Cyprus to the forefront of international financial centres. A lot of international business companies are currently active on the island. A number of these, operate from a fully fledged office on the island whereas the others use local accountants and lawyers as their representatives.

 

Fiscal Advantages

Under the current tax legislation, Cyprus has the lowest tax regime in Europe and its role as an international financial centre is greatly enhanced. Cyprus clearly stands as a prestigious tax - incentive EU country and is be free from suspicions usually associated with "tax-havens" which have zero tax.

 

The principal tax and other fiscal incentives may be outlined as follows (see also Cyprus Tax Overview):

 

A company is resident if its management and control is in Cyprus. Management and control is usually determined by the place of

residence of the majority of the directors and the place where board meetings take place. Full advantage of the Cyprus double-tax treaty

network can be obtained by resident companies.

 

A tax resident company can obtain a European VAT number which is essential for intra-European trading.

 

An company will pay zero tax if it is not considered to be resident in Cyprus. This will be the case when its management

and control is outside Cyprus.

 

A non-resident company will not be able to obtain a Cyprus Tax residence certificate and therefore cannot utilise the

double-tax treaty network.

 

There is no withholding tax on payment of dividends, interest and royalties by a Cyprus company to non-resident

individuals or companies.

 

Dividend income received in Cyprus by a Cyprus registered company is wholly exempt from tax in Cyprus.

 

Profits earned from a permanent establishment abroad are fully exempt from corporation tax.

 

Profits from the disposal of shares are not taxable for all Cyprus tax residents.

 

100% of interest received is exempted unless the interest arises in the ordinary course of business

(e.g. interest on overdue debtor balances).

 

There is 6 years restriction in the carry-forward of tax losses. They can be carried forward indefinitely to be set-off against future profits.

 

Group relief is available whereby losses from a company can be set off against taxable profits of other companies in the same group.

 

Reorganisations, amalgamations, mergers and acquisitions of companies can be effected without any tax implications.

 

Exemption from capital gains tax (except on sale of immoveable property situated in Cyprus).

 

No exchange control restrictions – a Cyprus company can open a bank account in any currency in Cyprus and abroad.

 

Cyprus has 35 Double Tax Treaty agreements which apply to 43 countries and which can be exploited to minimise tax.

 

Confidentiality and anonymity of beneficial owners is safeguarded (true identity is only disclosed to local banks,

if a local account is opened and information is not disclosed to any third party or to other countries,

except in the case of properly authorized criminal investigation (drugs, terrorism, e.t.c.).

 

Other inherent advantages of Cyprus

Other advantages of more general nature that Cyprus can offer include:

 

A stable economy in a western-type democracy

Legal system based on English Law

Excellent telecommunications and air connections

Excellent banking facilities with worldwide networks

High level of professional services

Readily available and highly trained local staff

Relatively low cost of living

Low crime level

Excellent schools up to university level

Excellent climate