A holding’s company main objective is to hold shares of subsidiaries in Cyprus or international companies. Besides this a holding company can perform various activities without any restrictions in sectors such as, commercial, financial, manufacturing, construction, engineering and other. Cyprus Holding companies can ensure the risk reduction for owners and provide simultaneously the possibility of ownership and control of other companies. Cyprus is one of the most favourable destinations to form of holding company in Europe.
The use of a holding company provides serious financial advantages to the shareholders or business people operating from all around the world.A rich network of double tax treaties with third countries enables a Cyprus Holding Company to receive dividends from other legal entities local or foreign without having to pay tax on those dividends in respect of the same company or even physical person.
Here are the 8 most important reasons why you should form a Cyprus holding company.
- Profits of a Cyprus Company are only taxed at a standard corporate rate of 12,5%
- The dividends received from subsidiaries the holding participates are tax free.
- The outgoing dividends towards a Holding Company of another EU state member are not subject to withholding tax from a state member that dividend comes from, as a result no taxation is applied.
- No capital gains tax is applied on profits arising from the sale of securities.
- No capital gains (goodwill) or income tax is applied after the liquidation of the company.
- No withholding tax on interest paid to non-tax resident shareholders.
- No withholding tax on dividends paid to non-tax resident shareholders.
- Extensive network of advantageous double tax treaties with 64 countries.
The Holding company is considered a tax resident and enjoys the attractive tax regime as long as the control and management of the company are operated in Cyprus. Meaning some criteria should be met to prove that the company operates and uses Cyprus as its base.
When a company is considered Cyprus Tax resident, is then taxed based on the tax rates for income arising from any world-wide source.
Cyprus uses the Anglo-Saxon legal system, support the corporate formation providing anonymity of the shareholders through Trust formation.