Emerald Consult


Today, Cyprus is one of the key tax havens in Europe. Apart from its well-planned and friendly taxation system, Cyprus has retained its key position thanks to 51 signed agreements on avoidance of double taxation. What is also unique about Cyprus is that almost all of the Eastern European countries are among Cyprus’s partners. The country’s system enables people and companies to optimize their taxes in a truly efficient manner.

The list of Cyprus’s special features goes on:

  • Cyprus is on the “white list” of the OECD, which means confidence on the part of 34 member states of the organization, including almost all European Union countries

  • International companies do not incorporate their offices in Cyprus to hide their assets, but mostly to increase the actual business operation efficiency. In early 2013, the Russian Ministry of Finance officially removed Cyprus from the list of offshore jurisdictions, thus considering its financial system sufficiently transparent. Tax rates depend on the location of a company’s business operations: for a Cyprus company working in Russia any interests and royalties are subject to zero rates, and the dividends are subject to a reduced rate of 5%. Cyprus resident companies are subject to profit tax on income received in Cyprus and abroad. Typically, the rate is one of the lowest in Europe and equals 12.5%
  • Attractive tax rates are reinforced by the country’s efficient domestic corporate legislation and developed infrastructure that allows customers to save on both the company’s incorporation and its further operation
  • There is no foreign exchange control in Cyprus
  • Confidentiality levels are considered to be high. However, this is not quite the case for Russian citizens, since the two countries signed the Agreement on Financial Information Exchange. Recently, an amendment protocol has been adopted as part of the agreement that expands the scope of the agreement. Nevertheless, some data about the companies is still securely protected: for example, the information on director and shareholders of the company is listed on a public register, while the information on final beneficiaries is not included into the company register and not even submitted to the Cyprus Central Bank 
  • All resident companies have to retain financial reports based on IFRS in the Greek language and hold independent annual audits of those reports

It is important to understand that non-resident companies pay profit tax only on incomes from sources outside Cyprus, at the same time, they cannot use the benefits of the agreements on avoidance of double taxation. That is why the structure and the type of company should be selected based on goals and type of business.

The former role of Cyprus as a traditional offshore territory is irretrievably lost, but there is no reason for regret: present-day advantages of this jurisdiction ensure its constant presence in most financial flow optimization plans.

Moreover, Cyprus is loyal to its residents (private individuals) and that makes it a popular “second home” for the citizens of many countries.