Benefits and Advantages
Cyprus Holding Company
Corporate Tax rate:
- A holding company resident in Cyprus is liable to corporate tax on all worldwide income at a single rate of 12.5%.
Tax exemption on disposal or trading of securities:
- Income arising from the disposal or trading of securities (shares, bonds etc) is exempt from corporate tax.
- Income from the disposal of the shares of a Cyprus holding company is be exempt from tax (if the underlying asset is immovable property, in Cyprus, 20% tax applies.
- Dividend income is exempt.
- For dividend from overseas, the exemption applies if more than 50% of the overseas activity DOES NOT result from non-trading (passive) income, and the overseas tax is NOT LESS THAN 6.25%.
- If dividend is received from an EU resident company; there is no withholding tax.
- If dividend is paid from a non-EU resident company, then the rate of withholding tax is according to the relevant double taxation treaty (from 0%). In such cases; a tax credit is provided under the Cyprus Tax regime to the amount equal to the foreign withholding tax.
- Dividends, royalties and interest, paid by a Cyprus resident company, to non-resident shareholders, are not subject to withholding tax (intellectual property used in Cyprus is subject to withholding tax at 10%).
Group loss relief, and losses carried forward:
- Loss in a “group company” may be off-set against the profit of another “group company”.
- Both companies must be; Cyprus resident; have been members of the group for a tax year, and; the group ownership exceeds 75%. Losses can only be off-set against profits for the same year.
- Losses incurred in any tax year not off-set against income from other sources and can be carried forward and off-set against future profits.
There are three main benefits to consider…The ability of a Cyprus holding company to:
- Receive income from operations or subsidiaries abroad with zero or minimum tax loss
- Pay dividends abroad without withholding tax
- Dispose of investment in a subsidiary without capital gains tax