Incorporating a company in Cyprus can provide numerous benefits, including access to the European Union (EU) market. The EU is a large and lucrative market, comprising over 500 million consumers and offering opportunities for companies to sell their products and services across member countries. In this article, we will explore five reasons why incorporating in Cyprus can unlock the potential of the EU market for your business.
- Tax Benefits
One of the primary reasons why Cyprus can be an attractive location for incorporating your business is the low corporate tax rate of just 12.5%. This is one of the lowest rates in the EU and can be a significant advantage for companies looking to minimize their tax burden.
In addition to the low corporate tax rate, Cyprus also has a favorable tax regime for non-resident companies (and individuals). Tax benefits include but are not limited to dividend income been tax exempt and there is no with-holding tax on dividends paid either (both under certain conditions). There are also significant tax benefits for Companies with Intellectual Property (IP). Through the IP Box Regime a Cyprus registered entity can enjoy an effective tax rate as low as 2.5% (normally 12.5%). Disposal of securities (shares, bonds, options, derivatives etc) are also tax exempt. Cyprus is also a part to more than 60 double tax treaties that provide for nil or reduced withholding tax rates on dividends, interest, royalties and pensions received from abroad. Any lump sum received as a retirement gratuity is also exempt from tax.
In relation to individuals, Cyprus offers a 50% tax exemption to employees who earn more than €55.000 provided that they were not tax residents of Cyprus for a period of 10 consecutive years before their employment in the Republic. This exemption is applicable for 17 years. Anyone who earns less than €55.000 and hasn’t been a Cyprus resident for at least 3 years prior to taking up employment in the country will receive a 20% or €8,550 (lower of), for the next 7 years.
Further to the above, non-domiciled individuals can also benefit from tax free dividend income and no deductions on interest income. All these benefits make it easier to attract skilled workforce.
- Access to the EU market
As an EU member, Cyprus provides companies with the opportunity to access the EU market. This is especially attractive for companies looking to do business in the EU, as it allows them to take advantage of the benefits of EU membership without having to set up a separate company in another EU member state.
One of the key benefits of the EU market is the ability to sell products and services across member countries without having to deal with customs and other trade barriers. This can make it easier for companies to expand into new markets and increase their customer base.
In addition, the EU has a highly educated and skilled workforce, providing companies with access to top talent. This can be especially beneficial for companies in industries that require highly skilled employees, such as technology and financial services.
- Political stability
Cyprus has a stable political environment and is generally seen as a safe place to do business. The island has a long history of democracy and a well-developed legal system, which can provide companies with a sense of security and stability.
In addition, Cyprus is a member of the EU and the United Nations, which can provide additional protections for companies doing business in the country.
- Skilled workforce
As mentioned, Cyprus has a highly educated and skilled workforce, which can be beneficial for companies looking to hire employees in a variety of fields. The country has a high literacy rate and a well-developed education system, which has produced a large number of highly qualified professionals.
In addition, you can easily attract expat workers in Cyprus, with the very beneficial tax benefits for individuals mentioned above.
This can be especially attractive for companies in industries that require highly skilled employees, such as technology and financial services. In addition, the country’s skilled workforce can be beneficial for companies in other industries that require a high level of expertise, such as manufacturing and engineering.
In addition, Cyprus has also in place regimes for companies of foreign interests (i.e. companies with shareholders who are not EU Nationals) to setup base and apply for work permits for third country national employees. EU Nationals can also easily work in Cyprus, just by applying for a yellow slip.
- Strategic location
Cyprus is strategically located at the crossroads of Europe, Asia, and Africa, making it an attractive location for companies looking to do business in the region. The country’s central location and good transportation infrastructure make it easy for companies to access markets in the Middle East, Africa, and Eastern Europe.
In addition, Cyprus has a well-developed telecommunications infrastructure, which can be beneficial for companies that rely on internet connectivity and other digital technologies.
Advantages of the EU market:
The EU market is a significant opportunity for companies, with over 500 million consumers and a GDP of more than $18 trillion. Accessing this market can provide numerous benefits for companies, including:
- A large customer base: The EU is home to over 500 million consumers, providing companies with access to a vast market for their products and services.
- The ability to sell across member countries: As an EU member, Cyprus allows companies to sell their products and services across member countries without having to deal with customs and other trade barriers.
- Access to a highly educated workforce: The EU has a highly educated and skilled workforce, providing companies with access to top talent.
Tips for accessing the EU market through Cyprus incorporation:
If you are considering incorporating in Cyprus as a way to access the EU market, there are a few steps you can take to ensure a successful entry:
- Research the EU market: It is important to thoroughly research the EU market before entering. This includes understanding the needs and preferences of your target customers and identifying potential competitors.
- Understand EU regulations: The EU has a complex regulatory environment, and it is important to understand the rules and regulations that apply to your business. This includes obtaining any necessary licenses or permits and complying with consumer protection laws.
- Consider working with a local partner: Working with a local partner in the EU can be a helpful way to navigate the regulatory environment and build relationships with customers. We can assist you with anything you need, from incorporation to ongoing maintenance of your Cyprus Company.
Incorporating in Cyprus can provide numerous benefits for companies looking to access the EU market. The low corporate tax rate, skilled workforce, and stable political environment make Cyprus an attractive location for doing business. By thoroughly researching the EU market, understanding EU regulations, and considering working with a local partner, companies can successfully enter the EU market through Cyprus incorporation.
*This is a guide for information purposes. Laws may change, and you should always take professional advice for the situation in hand. You should seek updated information if required as Asterisk Corporate Services Limited does not take any responsibility for the validity of the material at the time of reading. We suggest allowing qualified professionals to implement and handle the necessary tasks.