A Cyprus Holding Company can be effectively utilized for international tax planning purposes and at the same time enjoy the status of being located at a reputable business center within the European Union.
In summary, a Cyprus Holding Company offers the following advantages in relation to the major tax considerations:
Dividend income received from subsidiary companies abroad is exempt from taxation, provided the subsidiary company does not engage in more than 50% of its activities in producing investment income and the foreign tax burden on its income is substantially lower than that in Cyprus.
Double Tax Treaties with over 50 countries, enabling lower withholding tax rates on dividends or other income received from the subsidiaries abroad.
Being an EU Member State, holding companies registered in Cyprus may also enjoy no withholding tax on dividends received from EU subsidiaries as a result of the utilization of the EU Parent-Subsidiary Directive.
Profit arising from the disposal of shares is exempt from income tax
Full capital gains tax exemption on capital gains, except on the sale of immovable property situated in Cyprus.
No tax on capital gains or income on the liquidation of the Cyprus holding company.
No withholding tax on distribution of profits.
Outward dividends by the Cyprus holding company to its non-resident shareholders are exempt from any withholding taxes.
Profits earned from a permanent establishment abroad are fully exempt from Cypriot tax, subject to certain conditions.
A diversified group of Cyprus companies belonging to a Cyprus holding company can set off group relief for the utilization of tax losses.
No minimum holding period.
The above is brief and general in nature. Kindly contact our professionals for in-depth analysis and advice.