Why forming a Holding company in Cyprus is a great move for your business.
What is a Cyprus holding Company?
Holding company or Parent company is a legal entity registered in Cyprus which participates in other companies with a percentage of shares. The aim of the Holding company is the holding of participation shares in subsidiaries based in Cyprus or abroad.
Beyond the participation in other subsidiaries, the holding company can develop other activities such as commercial, developments, financial and more without any restrictions.
What can a Holding company do for you?
Cyprus Holding companies ensure the reduction of risk for owners and can provide simultaneously the ability of ownership and control on other companies. Cyprus is one of the most favorable destinations for the forming of Holding in Europe for many reasons. When owning a holding company distribution of dividends to non-tax resident beneficiaries is done without the need for cutting any withholding tax. Beneficiaries can hold their shares as shareholders or even through nominee shareholder securing in this way their anonymity. This is applied when the beneficiaries are real person or even corporations. Another important advantage of a Cyprus company is that when the shareholders / beneficiaries are not Cyprus tax residents, deemed distribution is not applied (either for a person or a corporation).
The most important advantages of holding company formation.
- One of the lowest corporate tax in Europe, 12,5%
- No withholding tax on interest paid to non-tax resident shareholders
- No withholding tax on dividends paid to non-tax resident shareholders
- Cyprus maintains an extensive network of advantageous double tax treaties with over 50 countries that allows a Cyprus Holding Company on payments of dividends, interests and royalties to suffer a tax burden at destination jurisdiction from 0% a maximum of 15%
- According to the provisions of the community directive 90/435/EEC for Holding Companies (EU Parent Subsidiary Directive) the outgoing dividends towards a Holding Company of another 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 is applied on the distribution of profit, except those arising from the disposal of property in Cyprus or profits arising from the disposal of the shares of a company that owns real estate in Cyprus
- Holding company pays no withholding taxes on interest income or revenues from Intellectual property (fees).
- It can be re-domiciled to a third country (provided is allowed by that country law)
- Can be listed in any stock exchange abroad
- No thin capitalization rules
- It can be incorporated and maintained with very low costs
- The holding company is considered a tax resident and enjoys the attractive tax legislation, when the control and the management takes place in Cyprus
- Meaning the company should meet some criteria to prove that the base is in Cyprus
- When the company is considered a tax resident, then is taxed according to the tax rates on the world-wide income
Cyprus uses the Anglo-Saxon legal system, which supports the corporate formation providing anonymity of the shareholders through Trust formation. The Trust is founded from the Trustee, the owner and holder of the property. With the Trust, the property owned is hold by one or more people, the “Trustees” at the name and account of the beneficiaries, those who benefit out of the Trust. The Trustees are the registered owners of the Trust, and handle the property of the Trust according to the agreement (Trust deed) signed between the involved parties.