We are a Cyprus firm providing legal services to both Cyprus & International companies, financial institutions and private clients. Our practice is primarily commercial, servicing the needs of a wide range of companies and foreign corporations. We also advise entrepreneurs on establishing new ventures and companies on expanding their businesses.

The requirements to set up a holding company in a particular jurisdiction  are the following:

• Low or zero rate of foreign withholding tax on dividend distributions by the subsidiary to the parent relying on any foreign legislation or on any applicable Double Tax Treaty
• Low or zero tax rate on dividend  income upon receipt by the parent
• Access to the Parent/Subsidiary Directive whereby tax-paying companies in the EU are entitled to receive dividends from subsidiaries in other countries free of withholding tax
• Exemption from capital gains tax of subsidiaries or the holding company
• Flexible reorganization rules enabling restructuring with minimum tax implications

Cyprus is a rising star. What is special about Cyprus? Dividends from trading companies can be Tax–free. There are no withholding taxes on dividends, interests and royalties paid out of Cyprus, even when paid to offshore entities. Loan interest is deductible when applied to the acquisition of shares and Cyprus has a wonderful array of tax treaties with ex Soviet Union states in Eastern Europe. There is one or two rules for dividends received to be tax–free there must be a 1% holding and more than 50% of the paying company’s activities should result from trading activities and not from investment income. »

EU Countries as Holding Bases-International Tax Planning Association
Journal Volume VI number 1, Amsterdam 13-14 June 2005