The decision to found a company and to reorient oneself professionally and personally is a significant step that requires thorough consideration. Cyprus, a member state of the European Union, has become an attractive destination for entrepreneurs and company founders from all over the world in recent years. The country’s popularity is owed not just to its pleasant Mediterranean climate and strategic location, but also to a business-friendly tax system and a host of other advantages that make it an ideal place to set up and run a business.
10 advantages of Cyprus that you need to know
Cyprus, an island in the Eastern Mediterranean, is not only a geographical bridge between Europe, Asia, and Africa, but also an appealing location for entrepreneurs, investors, and expatriates. The combination of strategic location, EU membership, advanced infrastructure and a business-friendly tax system makes Cyprus an ideal destination for setting up a company and living abroad. In this guide, we will take a closer look at the many advantages that Cyprus offers. You can find out what other advantages Cyprus has to offer in the following section.
Geographical location and climate
Cyprus enjoys an enviable position at the crossroads of three continents: Europe, Asia and Africa. This central location makes Cyprus a strategic gateway for international trade relations and offers companies easy access to various markets. The year-round mild climate with warm summers and mild winters not only makes the island a popular vacation destination, but also offers a high quality of life for those who choose to live and work here.
Economic and tax advantages
Cyprus is known for its business-friendly tax policy, which is one of the most attractive in the European Union. With a corporate tax rate of just 12.5%, it offers one of the lowest tax rates in the EU. In addition to the low tax rates, there are numerous tax incentives and reliefs for companies and individuals, such as the Non-Dom status, which offers significant tax benefits for individuals not born in or residents of Cyprus.
EU membership and the eurozone
As a full member of the European Union and part of the eurozone, Cyprus enjoys the stability and security of the European economic and legal systems. EU membership offers companies in Cyprus access to the European single market and its trade agreements, while the use of the euro facilitates trade and business transactions within the EU.
Highly qualified workforce
Cyprus has a well-educated, multilingual population that provides companies with a rich source of talented workers. The high level of education and multilingualism are particularly advantageous for companies operating in international markets.
Quality of life
Cyprus offers an exceptional quality of life with a perfect blend of modern lifestyle and rich cultural heritage. The island is known for its hospitality, safety and clean environment. Cyprus also offers a wide range of leisure activities, from water sports and hiking in the mountains to cultural events and gastronomy.
Infrastructure and services
With modern airports, an efficient road network and advanced telecommunications services, Cyprus has an infrastructure that meets the needs of business and daily life. The island also offers a high level of services, including first-class medical facilities and educational opportunities.
Strategic business opportunities
Cyprus serves as an ideal springboard for companies looking to expand into the Middle East, North Africa and Asia. The favorable tax environment, EU membership and strategic location offer unique advantages for international business activities.
Security and stability
As part of the European Union, Cyprus enjoys political and economic stability. The low crime rate and safe environment make it an ideal place for families and businesses. In addition, the strong rule of law ensures that investments and property are protected.
Healthcare
The healthcare system in Cyprus is supported by both public and private institutions, providing high-quality medical care. With modern hospitals and specialist clinics offering a wide range of healthcare services, residents and visitors enjoy access to first-class medical care.
Mediterranean & Lifestyle
The sea around Cyprus is more than just a geographical feature; it is at the heart of Cypriot identity and way of life. The crystal clear, turquoise waters of the Mediterranean Sea surround the island, creating a coastal landscape of breathtaking beauty that attracts visitors from all over the world and gives the locals a deep connection with their environment.
Besides tax advantages, which we will detail further below, the benefits of living in Cyprus and the business location should not be overlooked. If you want to relocate your company to Cyprus, you should also consider the cultural conditions. Our recommendation: At least Having traveled to the country 1 time.
Tax benefits and financial incentives in Cyprus
Cyprus is undoubtedly an attractive destination for entrepreneurs and companies from all over the world. Its strategic location, pleasant climate and vibrant economy make the island a sought-after location. In addition, there are tax advantages and financial incentives that make Cyprus particularly attractive for business people and investors. In the following sections, we will take a closer look at some of these advantages that Cyprus has to offer.
However, it is crucial to emphasize that starting a business is a complex decision that should be carefully considered. While the tax advantages and financial incentives in Cyprus are tempting and can have a significant impact on business development and expansion, they should never be the sole initiator for starting a business. The choice of location for a new or expanding company should always be based on a balanced assessment that takes into account various factors such as the business environment, the legal framework, access to markets and the quality of life.
Low corporation tax
One of the outstanding features of the Cypriot tax system is the low corporate tax rate of only 12.5% for companies based in Cyprus. This rate is one of the lowest in the European Union and offers a considerable advantage over many other jurisdictions. Income from intellectual property, such as patents and copyrights, is only subject to a reduced tax of 2.5%.
No trade tax
Unlike many other countries, Cyprus does not levy business tax. This absence of an additional tax burden at local level makes the location even more attractive for the establishment and operation of a company.
Non Dom Program
The Non Dom program offers a further incentive for foreigners moving to Cyprus. Under this program, they are exempt from all taxes on domestic and foreign interest income and income from dividends for seventeen years. This represents a significant tax relief and is particularly attractive for private individuals and entrepreneurs who choose Cyprus as their tax domicile.
Tax efficiency and flexibility
Cyprus offers a high level of tax efficiency and flexibility for companies. Profits from share trading and other areas of trading can be received tax-free by a Cyprus Limited. Losses can be carried forward and dividends paid by subsidiaries to a Cyprus holding company are generally tax-free.
Dividend payments and double taxation agreements
Dividend payments to shareholders resident abroad can be made tax-free by a Cyprus limited company or holding company. Cyprus has concluded double taxation agreements with a large number of countries, which minimize the tax burden for international business activities and increase planning security.
Further tax and administrative advantages
- The share capital of a Cyprus limited company or holding company does not have to be fully paid up immediately upon formation.
- A VAT number makes it easy to trade and provide services within the EU.
Other alternatives to Cyprus
In addition to Cyprus, for example Malta also offers lucrative tax incentives for companies: Malta’s unique tax rebate system can reduce the effective tax rate by up to 5%. The fact that English is the official language of Malta makes it easier to do business and attracts an international audience. MORE ABOUT MALTA
Conclusion: Professional support from the law firm DW&P
Deciding where to set up or expand your business is crucial and requires careful consideration and comprehensive planning. At this point, it is crucial to seek professional advice and support in order to make an informed decision. Our law firm DW&P is at your side to provide you with comprehensive support in both Cyprus and Malta. We not only offer insights into the tax and legal framework of both jurisdictions, but also guide you through the entire process of setting up a company, from the initial consultation to the successful establishment of your business.
