Post EU Accession

Having as from 1 January 2003 amended its tax legislation in anticipation for EU accession Cyprus has set-up a tax system which is ideally suited both to inbound and outbound EU investors.

• The new tax climate offers to the investors
  
• low taxation
• extensive double tax treaties network
• exemption from tax in most cases on dividends received
• exemption from tax of profit from sale of shares and securities
• exemption from withholding tax on the repatriation of income either of dividends, interest and on royalties
• access to EU directives

Tax costs play a significant role in investment decisions. Investors aim in maximizing after-tax return on investment. Therefore investment structures which have the least tax leakage are preferred by investors and are recommended by the advisers.

As such, a Cyprus investment vehicle can collect income which is a charge against high tax income. Withholding tax is eliminated or reduced under double tax treaties or under EU directives. The rate of tax in Cyprus is low compared to other EU countries. The income can then be repatriated in any form the investor wishes without withholding tax.

This investment vehicle is suitable both for EU inbound and outbound investments. There are no investment activities which are inappropriate for the Cyprus tax environment. However, there are investment activities which are indeed ideally suited to the Cyprus tax environment such as

• investment funds
• finance companies
• royalty companies
• south Europe, Middle East, Russia and central and eastern Europe headquarter business activities

European enlargement and the accession of Cyprus opens up a new gate to investors who wish to invest in EU or who wish to invest from the EU.