As international tax laws and rules keep changing, many companies are revisiting their current corporate structures looking to make them more efficient, less complicated, and better able to support future growth. Cyprus is becoming more and more appealing as a place to do business in the European Union, especially for companies that are currently using Dutch holding companies. Cyprus has built a strong reputation as an international business centre, combining regulatory stability with a commercially focused environment.
The 15% Corporate Income Tax Rate remains extremely competitive in Europe. Cyprus also has participation exemption provisions that may let qualifying dividend income from foreign subsidiaries be received tax-free, as long as certain conditions are met. Another important feature is that Cyprus does not generally charge withholding taxes on dividend, interest, or royalty payments to non-residents. This can make it easier for High-Net-Worth Individuals and multinational groups to manage cash flows and returns across borders. The jurisdiction also offers zero capital gains tax from selling securities, and companies that are involved in innovation and intellectual property may benefit from the Cyprus IP regime, depending on their situation.
More than a Tax Decision
Although tax efficiency is often a significantfactor, relocating a business structure to Cyprus is rarely based on taxation alone. Companies will often review their structure to simplify ownership, enhance governance and create a stronger base for future expansion.
A Cyprus holding company can consolidate investments and subsidiaries under a single parent entity, leading to improved oversight and more efficient decision making. It may also support future acquisitions, investor entry, succession planning, and regional expansion.
Planning Effectively
It’s important to note that each restructuring plan will need to be different and suited to the business, the shareholders and the jurisdictions involved. The first step is usually a review of the existing Dutch-based structure, commercial objectives and potential tax consequences. Following this review, a Cyprus entity may be established with the appropriate operational substance and management framework. Existing participations can then be transferred or reorganized under the new structure using a suitable implementation model, such as capital contribution or share exchange arrangements.
Careful planning is essential to ensure the transition is commercially effective and aligned with all legal and tax requirements.
Cost Effectiveness
Cyprus is equally known for its low cost yet high quality services. You can implement the restructuring and setup your new structure at a fraction of the cost in Netherlands. Equally important maintaining your structure in Cyprus is going to cost much much less.
Eurofast’s Take
Eurofast has been operating in Nicosia since 1978, providing company formation and a range of other professional services across our 4 main service lines; Accounting & Compliance, Payroll & Employment, Tax & Legal and Advisory & Corporate. Throughout our 48 years of experience in the industry, we have accumulated considerable know-how in addressing cross border tax issues which have proved an invaluable competitive advantage for both our local and international clients. Our company registration services include but are not limited to: Setting up private & public companies, companies limited by guarantee, branches of overseas companies and trusts.
To find out how you can make the move and why it’s the right one for you, contact our experts at [email protected]