Cyprus Tax Haven Guide 

This Cyprus tax haven guide will hopefully be informative enough to give you confidence to consider the island for financial benefits.

Cyprus is well known to be a top EU tax haven, offering professional offshore business and personal financial consulting advise and services.

Nowadays, the reality of high taxes in many countries continues to span many jurisdictions offering offshore investing and banking options with very minimal to no taxes.

Keep in mind that the higher the taxes, the more adversely affected the bottom line - net profit after taxes, that is - will be affected.

Again, fortunately, there are tax havens like Cyprus in the European Union that offer favorable tax shelters to any individual and company able to meet minimum requirements.

But first, definitions and discussions about these aspects of taxation. 




This way, you can become more knowledgeable about your  options and make informed judgments.

What is a Tax Haven

It may come as a suprise but there isn't a true global definition of term tax haven.

The US Government Accountability Office indicates what a tax haven is in general terms...:

  • Nominal to zero taxes on many investments especially those related to offshore accounts
  • Lack of effective tax information exchange between the investor and the foreign tax authorities
  • Lack of transparency in regards to the operation of administrative and legislative provisions
  • No requirements for substantive local presence in the jurisdiction
  • Promotion as an offshore financial center by the governing authorities of the country itself

Cyprus fits into this characteristic and is considered to be among the world's best tax havens.

It offers generous tax shelters to offshore investors.

A tax shelter is basically any method of lessening taxable income so there is a reduction of required payments to the tax man, at state and federal levels.

Of course, the method by which this is made possible varies from one country to the next in accordance with the local and international tax laws.

In Cyprus, offshore companies are offered very generous tax breaks that make it possible for greater profits on interest and other incomes earned especially when their income is sourced from outside the country.

Benefits of Cyprus as a Tax Haven

As I previously mentioned, Cyprus is one of the best tax havens in the European Union and, most probably, in the world.

It is considered a low-tax haven that pensioners should take advantage of in their pension fund management activities considering that the tax shelters offered are one of the lowest, if not the lowest in the region.

Personal income tax is levied at approximately 5 percent for pensioners.

 

For other taxes, personal capital gains tax is at zero percent for foreign assets such as shares of stocks and real properties as well as a zero percent levy on inheritance tax.

Take note, however, that there is a maximum of 15 percent tax on stock dividends and bond coupons.

 

10 percent corporation tax and 20 percent tax on personal capital gains on local assets.

 

All these tax shelters including Cyprus tax haven are possible through many means. The following are the most notable:

  • Limited Liability Company - A copy of the owner's passport and valid Cypriot bank reference are necessary for offshore company formation.
  • Branch - Any overseas company is allowed to operate in the country as a branch, subject to compliance with laws in the matter.
  • General or Limited Partnership - This can come in many forms including trusts, limited partnerships and sole proprietorships.
  • Offshore Banking Unit - This is now known as an International Banking Unit, which is basically either a branch of a foreign bank or a Cypriot limited liability company. Of course, the Central Bank must provide a banking license to operate.
  • Offshore Financial Services Company - It must engage in the various transactions involved with investments from dealing with them to providing professional advice to clients as well as the establishment of collective investment schemes.

    • Offshore Captive Insurance Company - If it has non-resident ownership and derives income from non-Cypriot sources, then it is exempt from Cypriot taxation.

  • Shipping Company - The rule on taxation when it comes to ownership and sources of income are similar to offshore captive insurance companies.

Aside from Cyprus tax haven offering various tax shelters as one of the world's havens.


Offshore investments in the country also offer benefits like high-degree of anonymity and discreetness in the transactions.

Minimal capitalization and reporting requirements as well as the ability to dispose of funds anytime, anywhere, anyhow.


I hope you found this Cyprus tax haven information helpful.

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