Over the past few years there was an enormous step towards the de-offshorization of companies, elimination of the so-called tax heaven jurisdictions and total compliance with the new rules regarding transparency, real business and actual economic substance.
What was considered back then the norm, it is nowadays questionable and problematic. This is the reason why many companies have shifted to actual economic substance, where the corporate activities will be transparent and substance together with rationale will no longer be questioned.
However, companies will now have to face other challenges since, new rules, mainly tax related and budgeting concerned will be brought forward. This is the reason why the chosen jurisdiction for establishing the headquarters is of significant essence.
Cyprus offers a stable legal framework for corporations to work and thrive. Balance between compliance and transparency on one hand and the flexibility and efficiency in operations on the other, allows companies to benefit from the prestigious jurisdiction as a strict and ‘zero tolerance to money laundering offences’ country, while enabling the companies to increase their turnovers and expand accordingly.
Apart from the business oriented regulatory framework, other incentives are being given from time to time since, the law makers are constantly trying to attract new investments as well as to maintain the current ones.
One of the biggest challenges’ companies must face when it comes to transferring their headquarters is the tax treatment. Tax planning is crucial and is an element which should not be chosen lightly. Cyprus offers a favorable 12.5% corporation tax on income generated from tax residents of Cyprus. Companies may also benefit from other schemes related tax residents of Cyprus which allows companies to have tax relief and thus not be taxed in a group of incomes such as dividend income (total amount exempted), interest income (with some exemptions)(total amount exempted), FX gains (total amount exempted), gains arising from loan restructuring (up to total amount exempted) and many others.
Lastly, it is worth mentioning that Cyprus has been engaged in a large double tax treaties network which counts over 64 jurisdictions globally.
Apart from the advantages of the island due to its strategic location in the middle of three continents (that is Europe, Africa and Asia) and the fact that Cyprus is part of European Union since 2004, the island has much more to offer when it comes to corporations transferring their headquarters in Cyprus.
Cyprus, being a member of European Union and Eurozone, allows corporations to transfer their headquarters within Europe without compromising the European status when it comes to operations with other branches, access to the markets and business relationships with associates.
Furthermore, thanks to the convenient time zone, companies will face no obstacles when it comes to communication and networking around the globe. Its business-friendly time zone allows companies to do business with Asia Europe and Africa throughout the day (GMT+2).
Cyprus offers a low operational cost which makes the transfer of both regional and international headquarters a significant advantage. Costs relating to office rental, office equipment and labor force are significantly lower comparing to other reputable jurisdictions and without compromising the quality of what will be offered. On the other hand, Cyprus has a highly educated, English speaking labor force which is essential in recruiting employees and key personnel.
Cyprus has been privileged with an exceptional climate and exquisite lifestyle especially in the large cities such as Limassol and Nicosia. This allows corporations to relocate key and decision-making persons or even to relocate all employees if this could be of an option.
The friendly environment and the hospitality offered by the locals is outstanding and together with the beautiful places the island has to offer, living and working in Cyprus is a unique experience.
The island has undoubtedly been ranked among the most popular jurisdictions in terms of headquartering and establishing a real economic substance. The current benefits offered so far as well as the trend for an even more business-friendly future, give Cyprus an advantage against other jurisdictions.
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