For foreign investors and business owners looking to set u p their business offshore, the Republic of Cyprus is a popular jurisdiction. This popularity can be a result of its ideal location, business-friendly government policies, hassle-free incorporation process, and more. Through this article, you will understand the top reasons to register company in Cyprus.
What are the benefits of registering your business in Cyprus?
There are multiple benefits of registering your business in the Republic of Cyprus including the following:
- Strategic Location and connectivity:
Located in the Eastern Mediterranean, Cyprus stands at the crossroads of Middle East Asia, Africa, and Europe. Therefore, it acts as a gateway between the East and the West.
Its strategic location accompanied by its well-established transportation infrastructure including its seaports, airports, and roads allows Cyprus to be connected with major cities worldwide.
- Government Policies:
The Cypriot government has introduced various policies that are advantageous to businesses. They are actively reforming the business framework in order to attract investments to the country.
Firstly, the government offers foreign business owners with Start-up Visa to attract foreign investment to the country. This Visa allows business owners to live and conduct business activities in the country.
Secondly, the government levies a relatively low corporate tax rate of 12.5%, which is lower than the worldwide average statutory corporate income tax of 23.85% which is measured across 177 countries.
Thirdly, businesses are exempted from paying capital gains tax, interest income tax, dividend income tax, sales tax, withholding tax, and more. Despite the low corporate income tax levied on businesses in Cyprus, the country is not considered to be a ‘tax haven’ country as it is in compliance with the legislation of the European Union. Moreover, it still remains on the Organisation for Economic Cooperation and Development’s (OECD) white list.
Fourthly, Cyprus has an extensive network of tax treaties signed with over 45 countries which prevent businesses from being subjected to tax twice.
Lastly, foreign investors and business owners can own properties in Cyprus through an international trust which allows for the protection of their identity. Alternatively, businesses can be established in the name of a nominee shareholder so that the identity of actual shareholders remains anonymous.
- Benefits received by foreign investors and business owners:
The government allows foreign investors and business owners to have complete ownership over their business. Thus, businesses are not required to meet any nationality criteria for the directors and shareholders of the business. This implies that the business owners will have complete control over their business.
If needed, businesses can appoint a local agent to represent them in Cyprus by signing a Power of Attorney document. By doing this, business owners will not give up control over their business.
Moreover, foreign businesses are not subjected to any additional requirements than local businesses in most industries other than financial services and media.
Besides this, the government also allows foreign investors and business owners to obtain citizenship of the Republic of Cyprus by investing a minimum amount of EUR 2 million to purchase or set up business in Cyprus, purchase real estate, or invest in financial assets. Being a citizen of Cyprus will allow individuals to have the benefit of being a citizen of the European Union which implies that individuals would have the right to live, work, and travel around the different countries in the region.
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- Strong diplomatic relations:
The Cypriot government has established strong bilateral relations with over 179 different countries around the world including the United States of America, the United Kingdom, India, Japan, the British Virgin Islands, and more.
The Republic of Cyprus is also a member of various organisations including the United Nations, European Union, Union for the Mediterranean, World Trade Organisation, and more.
Such relations allow for a more efficient trading system between the countries accompanied by lower tariff rates.
- Cyprus’s political and economic environment:
With a rank of 42nd out of 180 countries as per the Corruption Perception Index of Transparency International, Cyprus is a relatively corrupt free country.
As a member nation of various organisations along with strong bilateral relations with different countries, the Republic of Cyprus may have foreign trading opportunities that businesses can take advantage of.
Besides, Cyprus has a ranking of 33rd out of 178 countries in terms of economic freedom as per the 2021 Index of Economic Freedom by the Heritage Organisation.
As can be seen from the scores Cyprus has received from various indexes and rankings, we can see that Cyprus has a relatively stable political and economic environment.
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- Banking System in Cyprus:
Along with a high emphasis on privacy and security, the banks in Cyprus also provide businesses with various financial services including internet banking, loan facilities, and more.
Besides this, businesses are not required to travel to Cyprus to open a corporate bank account and nor are they required to make a minimum deposit. The bank set up process is completed quickly, within a period of 4 weeks.
- Straightforward Incorporation Process:
The business incorporation process in the Republic of Cyprus is a simple process that can be completed without any hassle, provided you understand the steps that are needed to be undertaken.
Firstly, businesses in Cyprus have to meet fewer compliance requirements as there are no nationality criteria for shareholders and directors of the business or any minimum paid-up share capital required. However, you will be required to obtain a local office address, appoint a local director to act on behalf of the business, and prepare necessary incorporation documents.
Secondly, the entire business set up process can be completed within a period of one week.
Thirdly, the government fee that is to be charged from businesses during this process is being reduced gradually. This implies that the incorporation process will be relatively inexpensive.
Besides, the Republic of Cyprus has a ranking of 50th out of 190 jurisdictions in terms of the ease of starting a business as per the Doing Report of 2020 prepared by the World Bank.