Savva & Associate’s expertise in the international business environment enables our staff to offer a comprehensive set of tax consultancy and customized solutions that can be tailored to any specific need. We offer Cyprus and international strategies designed to enhance your business legally, considering all applicable taxes – corporate or personal, and taxable gains resulting from Business tax, Capital gains tax, VAT, and other related taxes. Considering the bigger picture, we can efficiently and precisely devise a strategy to manage your ongoing liability in Cyprus and internationally.
We excel in Cyprus Tax Planning, Double Tax Treaties, Corporate Tax Residency structuring, VAT Advice and Compliance, Notional Interest Deduction, Intellectual Property Taxation, Substance Solutions, and Personal Income tax. Our expertise ensures timely and cost-effective solutions for your international tax challenges. Curious to learn more? Please contact our managers for a free consultation tailored to your needs.
Cyprus Tax Planning
Cyprus is highly regarded as one of Europe’s top tax regimes, praised for its stable tax laws, consistent interpretations, and low rates. It is an ideal location for holding, finance, intellectual property, royalty, and trading companies, offering one of the EU’s lowest corporate tax rates at 12.5%. Cyprus also provides tax advantages, such as no withholding taxes on dividends, interest paid to non-residents, or royalties used outside the country. This combination of stability and low-tax benefits makes Cyprus a prime destination for businesses seeking to optimize their financial strategies in Europe.
Cyprus Double Tax Treaties
Cyprus has an extensive network of over 65 double-tax treaties, making it a favored jurisdiction for routing investments. It is a gateway to the European Union, often used by investors from the USA, UK, Canada, China, and Russia, leveraging EU tax directives for efficient business structuring. Historically, Cyprus has been the top choice for investments in Eastern Europe, including Bulgaria, Hungary, and Poland. It is also commonly used by Chinese companies for global expansion and by international firms targeting investments in the Near and Far East and Africa.
Corporate Tax Residency Structuring in Cyprus
As of December 31, 2022, Cyprus expanded its definition of corporate tax residency to include the incorporation test. A company incorporated in Cyprus is considered a tax resident unless it is elsewhere. However, if the company is managed and controlled outside Cyprus, there is a risk that foreign jurisdictions may challenge its tax residency, a common occurrence with Cyprus-based companies.
Cyprus VAT Advice and Compliance
We provide expert guidance on Cypriot and EU VAT/VIES regulations, ensuring full legal compliance. Our services include identifying opportunities for voluntary VAT registration, optimizing transaction structures for efficiency, and managing the preparation and filing of VAT returns, VIES reports, and One Stop Shop Legislation filings.
Notional Interest Deduction (NID)
The Notional Interest Deduction (NID) was introduced to encourage companies to favor equity over debt by offering tax benefits. It enhances the appeal of the Cyprus tax system by potentially lowering the corporate tax rate from 12.5% to as low as 2.5%, the lowest in Europe. Cyprus tax resident entities and permanent establishments of non-resident entities qualify for NID benefits. NID is an annual tax-deductible expense based on new equity introduced into a Cyprus company on January 1, 2015. It can be claimed indefinitely unless there is a reduction in share capital or redemption of preference shares.
The Taxation of Intellectual Property
Intellectual Property (IP) is vital for many businesses, and selecting the right location to manage it is crucial for strategy and tax benefits. To benefit from an IP regime, assets must qualify as “Qualifying Intangible Assets,” which include patents, software, and non-obvious, novel, and useful IP linked to research and development. These assets must be used in businesses generating less than €7.5 million in revenue (or €50 million for a group of companies). Assets like business names, brands, and trademarks do not qualify. This regime allows for a corporate tax rate as low as 2.5%, the lowest in the EU.
Substance Solutions
The global tax landscape is evolving fast, spotlighting economic substance. Lacking it can signal tax abuse. Each client’s needs are unique, and our firm crafts customized solutions for establishing substance in Cyprus. We’ve developed a proposal with various options to help clients build a robust presence. Reach out to discuss your requirements with our expert tax professionals.
Personal Income tax
In Cyprus, tax residents are taxed on their worldwide income, while non-residents are only taxed on income from Cypriot sources. Cyprus offers a favorable tax regime for non-domiciled individuals, allowing them to avoid the Special Contribution for Defence (SCD) on dividends and interest for up to 17 years. Combined with the country’s income tax laws, this exemption is recognized as one of the most appealing personal tax systems globally. Individuals can benefit from these tax advantages by spending just 60 days per year in Cyprus and meeting other criteria. Expert tax and legal services are available to help individuals establish tax residency in Cyprus.
