The Cyprus Holding Company
A Cyprus Holding company is a legal entity that can be used by investors to own properties or make investments anywhere in the world.

Cyprus Holding companies can be used to:

• Receive dividends, interest or royalties
• Make investments in other companies (hold shares in subsidiary or associated undertakings)
Finance investment undertakings by supplying the companies that they hold shares in with funds.

 

Advantages of a Cyprus Holding Company

Losses carried forward

The tax loss incurred during a tax year and which can not be set off against other income is carried forward and set off against future profits indefinitely.

Tax losses of one company in the Group can be set off against the Profits of another group company if:

• the companies are both tax resident in Cyprus and
• the holding company has at least a 75 % of the share capital of the subsidiary, or
• each company is at least 75 % subsidiary of the other company

The set off of losses can be made against profits of the same tax year or carried forward to be set off against future profits.

 

Basic Group Structure Illustration

The amount paid as dividends by the subsidiary to the Holding Company will vary according to the tax rates of the country of incorporation of the subsidiary and the provisions of the Double Tax Treaty.

The receipt of dividends by an International Cyprus Holding company can be completely tax free as Dividend income is exempt from corporation tax in Cyprus, and Dividend income may be exempt from Special contribution for Defence under certain conditions.

The reimbursement of dividends to the beneficial owners has a 0% withholding tax regime when the beneficial owner is not tax resident in Cyprus.

The results with regard to the taxation on income and gains are:

• No / Reduced taxation on dividend income
• No taxation on sale of shares investments
• No withholding tax on dividend distributions

For an illustration of a Holding Company Structure please International Tax Planning Structure section.

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