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.

 

Dividends:

  • 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.

 

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.

 

Conclusion:

There are three main benefits to consider…The ability of a Cyprus holding company to:

  1. Receive income from operations or subsidiaries abroad with zero or minimum tax loss
  2. Pay dividends abroad without withholding tax
  3. Dispose of investment in a subsidiary without capital gains tax

 

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