Foreword
I am pleased to introduce our guide to the international tax and business environment in Cyprus.
Cyprus is well placed at the eastern-most point of Europe, occupying a key strategic position at the gateways of Europe, Asia and Africa. Its geographic location together with its tax and business environment make Cyprus the ultimate country for investors and businesses moving into Europe and for European business expanding internationally. Cyprus offers many key benefits that contribute to the success of business and investments and Deloitte in Cyprus is well placed to ensure this success.
Deloitte is known for its values of ethos, integrity, specialised knowledge and professionalism. Our ongoing commitment to continuous investment in our people and our deliverables is the key to our success and our ability to look at business issues from every angle is what sets us apart.
Deloitte in Cyprus can coordinate with the Deloitte member firms around the world and other advisers to assist entrepreneurs and groups investing and operating through companies incorporated and tax resident in Cyprus. Our Tax Services team can assist with establishing Cypriot companies to perform functions which can benefit from the favorable tax system and business environment in Cyprus, such as holding companies, financing companies, investment trading companies, intellectual property holding companies, shipping companies, companies for oil & gas exploration as well as Cypriot fund management companies and collective investment funds.
Deloitte in Cyprus has the ability to offer practical solutions that are adapted to the needs of all businesses. Whether considering establishing in new markets, acquisitions or rationalization of current operations, our professionals can assist in the planning and implementation. Deloitte in Cyprus will ensure that investors and businesses will achieve signifi cant benefi ts.
We at Deloitte Cyprus look forward to working with you.
The Cyprus business Environment
In recent years Cyprus has been voted as one of the most attractive European tax jurisdictions by major business organisations across Europe. Cyprus has been commended for the stability of its tax law, the consistency in interpreting its tax legislation and its low tax rates. This accolade shows how the Cyprus tax system, combined with its first-rate infrastructure, highly skilled workforce and membership of the European Union has made Cyprus the international business hub it is today.
Reputation and stability
Cyprus joined the European Union in 2004, resulting in an economy offering a great number of advantages within a common European market. The Euro was adopted by Cyprus as its unit of currency on 1 January 2008, further confirming the country's macro-economic stability and its commitment to low inflation, low interest rates and high growth.
Cyprus participates in the European Union's internal market where there is free movement of goods, services and capital. European citizens are able to conduct business, travel to, and live in Cyprus with no legal restrictions.
Demonstrating a business-friendly environment since the 1970s, Cyprus has attracted foreign investment and capital flows for decades. The country's financial and regulatory environment is harmonized with that of the European Union. Furthermore, Cyprus tax system is aligned with the framework of the European Union Code of Conduct for business taxation and demonstrates a commitment to the OECD policies against harmful tax practices.
Strategic location
The island of Cyprus is situated in the eastern Mediterranean at the hub of three continents, linking Europe with the Middle East, Africa and Asia.
Cyprus is one hour by air from Athens, Egypt and Israel, three hours from Dubai and Moscow and four hours from London.
Cyprus is two hours ahead of Greenwich Mean Time (GMT).
International familiarity
Banking & financial regulation
Commercial banking follows the British and European Union models and is of a very high standard. There are currently over 40 Cypriot and international banks operating in Cyprus.
The banking system conforms to EC Directives, under the regulation of the constitutionally independent Central Bank of Cyprus, as integrated with the Eurosystem. The Bank's governance is compatible with the provisions of the Treaty establishing the European Community and the Statute of the European System of Central Banks and of the European Central Bank.
The Cyprus Securities and Exchange Commission (CySEC) supervises and controls the operation of the Cyprus Stock Exchange and the issuers of securities listed on the Exchange.
The Central Bank and CySEC supervise and licence the growing number of investment services companies, collective investment schemes, brokerage firms, investment consultants and mutual fund management companies.
Legal system
Cyprus has a well-functioning common law legal system based on principles established through historical links with the United Kingdom.
The origin of Cyprus company law and other laws regulating business is the laws of the UK, updated for 21st century business practice and harmonised with EC Directives.
The familiarity of the legal and commercial systems assists international business people in working within the Cypriot commercial environment. English is spoken universally and is the accepted language of business.
Political respectability
Cyprus has excellent diplomatic and economic relations with the rest of Europe as well as, China, Russia, India, North America and the countries of the Middle East. As a result, Cypriot entities enjoy great respectability around the world.
Telecommunications
Cyprus has a highly advanced telecommunications infrastructure system with a number of companies providing modern telecommunication products and solutions.
Air transport
The two international airports in Cyprus are served by over 35 international airlines. There are daily flights to other European countries, Russia and the Middle East including major hubs for onward and long haul international destinations. New airport terminals at both Larnaca and Pafos international airports can serve up to 10 million passengers per annum.
Economy
Cyprus is a small and adaptable free-market economy built upon tourism, fi nancial services and real estate, which account for almost 85% of the island's total GDP.
The country's economy has been remarkably resilient following the fi nancial crisis. Cyprus has recently implemented structural reforms across all major sectors of its economy, with progress made in all key objectives set out by the country's international lenders. Despite the short-term challenges, the discovery of significant quantities of natural gas in Cypriot exclusive economic zone raises the prospect of a resurgence of the Cypriot economy in the medium to long term.
High standard of living – low cost base centre and skilled workforce
Economic indicators place Cyprus amongst the few international financial centres with low operational costs. At the same time, the island offers a high standard of living with an enjoyable climate and a very low crime rate making it an ideal place to live and conduct business.
The costs of setting-up and maintaining a structure in Cyprus are low when it comes to incorporation costs and fees for meeting Cypriot tax and company law compliance obligations.
The cost of labour, rents and other infrastructure are highly competitive and often lower than in other European countries.
Cyprus has a young and flexible work force, with university education obtained predominantly in the UK and the USA. The island ranks among the leading countries in the world and the highest in the European Union in respect of university graduates in proportion to its population, with the percentage of graduates from tertiary institutions being the highest in the EU.
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