CYPRUS HOLDING COMPANIES

 

 

Companies incorporated in the Republic are sometimes used as holding companies. A holding company is essentially used as a shareholder in another company. Such shareholding companies do not necessarily produce goods and their mere role is to hold the shares of another company as their shareholder. The use of such allows the beneficial owner of a legal entity whose shares are held by the holding company to reduce risk whilst also providing ownership rights and indirect control through the holding company, to many other companies.

 

For many years, businesses have used legal entities, registered in the Republic in this manner, mainly due to the fact that the Republic allows them to benefit from the numerous tax advantages offered to them.

 

 

• The Republic of Cyprus has one of the lowest corporate tax rates in Europe (being 12.5%)

• Dividends received by the Republic’s parent company which derives from overseas subsidiary companies, may provided certain conditions are met, be exempted from tax

• Dividends are withholding tax free in the event they derive from subsidiaries of the European Union

• Profits made by the sale of securities are not imposed with any capital gains tax

• In the even the company is to undergo liquidation, it will not be imposed with tax on capital gains nor on income

• Shareholders that are non-Cyprus residents do not pay tax for the payment of dividends

• No withholding tax is imposed for the distribution of profits

• A large number of bilateral double taxation treaties with more than 30 jurisdictions

 

 

 There are many types of Holding Companies mainly allocated based on their holding nature:

 

• Operational Trading

       Used when the main holding entity has grown and its functions need to be allocated to other companies.

 

• Asset Holding

      The function of this entity is merely increasing profit for share value by purchasing profitable shares.

 

• Management Company

      Chosen as a vehicle containing both the and the companies, entitling this type of company to also be able to                                provide loans and services to its associated companies and as it is registered abroad, it enjoys lack of taxation.