A holding company in Cyprus does not produce goods or services itself but manages or owns other companies’ outstanding stock. Holding companies allow their owners to control more than one company. This type of company in Cyprus enjoys all the benefits of the favorable tax regime and it may be involved in various business activities.
A holding company in Cyprus can take two business forms: a private limited company or a public limited company. The private limited liability company is the most popular business form chosen for holding companies and it may be set up by at least one individual and a maximum of 50 individuals. Every shareholder is liable to the extent of the amount invested in the company’s share capital. No minimum share capital applies for private limited companies.
Our company formation agents in Cyprus can provide more detailed information about the types of companies in Cyprus and can help you invest in Cyprus. If you want to open a holding company in Cyprus, our local consultants explain the main requirements you need to comply with.
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What is a holding company?
The holding company is not a specific legal form, as in Cyprus it can take the form of some of the most popular types of structures, among which the private limited liability company is preferred by foreign investors. However, its main particularity is the activities it can undertake, or better said, its limitations on conducting commercial operations.
Here are the main characteristics of a holding company in Cyprus:
- it is governed by the Company Law, according to which it must be registered like any other Cypriot business;
- it can be set up by local and foreign investors who can be natural persons or other companies;
- its activity is limited to owning assets in other entities, called subsidiaries;
- it is subject to the same tax regulations as local companies, however, it also has several advantages from this point of view;
- as any local enterprise, the holding must have a registered address in Cyprus in order to benefit from the low taxation regime applicable here.
The creation of a holding company is simple and does not require meeting any special requirements.
Our Cyprus company formation officers can explain in detail the main aspects related to running such an enterprise here.
Types of assets that can be owned by a Cypriot holding company
Given that the main role of a holding company in Cyprus is to own assets in one or more subsidiaries, this is one of its main advantages, as the assets it can own are:
- various types of shares;
- real estate;
- intellectual property rights.
The holding company can also decide to move the assets from one subsidiary to another, which is why if you decide to set up such an enterprise here, you can rely on our local advisors.
Management requirements for a Cypriot holding company
When it comes to the officers that need to be appointed upon the establishment of a holding company, the most important aspect to consider is that it requires at least one director who does not need to be a Cypriot resident. However, foreign investors opening such companies in Cyprus will find it easy if they want to appoint a director from their home countries, as it is easy to obtain a work and residence permit as a non-EU or non-EEA citizen. For this purpose, you can rely on our specialists who can complete all the formalities related to obtaining residency in Cyprus. However, we are also at your disposal with nominee services, through which you can appoint a nominee director.
Dividend payments through holding companies in Cyprus
As a European Union member state, Cyprus is quite appealing when it comes to the holding company regime which is integrated with the EU Parent-Subsidiary Directive. According to this regulation, a holding based in Cyprus is entitled to dividend payments from its subsidiary at a 0% tax rate when its subsidiaries are located in other EU countries, and they qualify for the intra-EU investment options.
When this option is not available, the holding company can access Cyprus’ double tax treaties with countries it has such protocols in place.
If you want to create a holding company in Cyprus and need assistance, you can rely on our local specialists who are at your disposal with quick business incorporation services.
Holding company taxation in Cyprus
Any resident holding companies in Cyprus are subject to the normal taxation rate on their worldwide income. Companies are considered residents in Cyprus if their management and control offices are located in Cyprus. Non-resident companies are only taxed on their income produced in Cyprus. The corporate tax rate in Cyprus is 12.5%.
Cypriot holding companies are not subject to any special taxation regime, however, the dividends and capital gains are usually exempt from tax. Dividends received by a company residing in Cyprus are exempt from corporate tax. You can receive more details about the taxation of a holding company in Cyprus from our Cypriot company formation team.
Please watch a short presentation on the holding company in Cyprus:
Advantages of a holding company – presented by our Cyprus company formation experts
Holding companies in Cyprus benefit from an exemption from the withholding tax on payment of dividends, interest, and royalties. Cyprus has signed more than 45 double tax treaties with other countries.
Cyprus is an important business hub and a business destination that enjoys a favorable tax regime and legal system. The country is one of the most sought-after holding companies’ destinations.
Why choose Cyprus to set up a holding company in?
Cyprus is one of the most appealing countries to do business in Europe with an open regime for foreign investments. Moreover, it is possible to re-domicile a foreign company to Cyprus provided that the legislation of the country of origin allows it, thus leading to nearly no interruptions in the activities of the enterprise.
The business start-up and maintenance costs are some of the lowest in Europe, which makes it quite attractive when running complex operations through holding companies. The advanced banking system also offers quick access to financial institutions all over the world.
From a taxation point of view, Cyprus does not impose capital gains taxes on the disposal of assets and has set in place simple Notional Interest Deduction rules.
Other aspects that make Cyprus a great location to open a holding company are:
- when deriving income from intellectual property rights, the taxes range between 0 and 2.5%;
- the extended network of double tax treaties which is currently made of 65 countries;
- the exemption for registering for VAT at EU level (the standard VAT rate is 19%);
- group reliefs of up to 75% on tax loss for the current year are also available with subsidiaries in EU countries.
Our company formation consultants in Cyprus can assist you if you decide to open and register a company in Cyprus. Please contact our representatives in Nicosia for more information and other specialized services, like accounting services in Cyprus.