LET US SHOW YOU THE WAY ... TO THE TOP
LET US SHOW YOU THE WAY ... TO THE TOP
Those applying to CySEC for a CIF license are required to include an operation manual consisting of company procedures and policies, a business plan, questionnaires answered by the company’s board members, shareholders and managers as well as the company’s organisational structure. The CIF’s board is required to comprise of two executive directors or more as well as two independent directors (non-executive) or more. Also, most of the company’s board must be comprised of Cyprus resident individuals.
The CIF’s management team must be run by two or more reputed and experienced individuals in order to make sure the CIF operations run smoothly and efficiently. One of the individuals should be appointed as the General Management of the CIF, and must reside in Cyprus. The General Manager may also be a member of the executive directors. The CIF’s General Manager must have complete knowledge and oversee all of the activities and services conducted by the CIF.
The approval process of a CIF licence can take up to 6 months. The CySEC evaluates CIF applications and grants licences.
While the United Kingdom has always been considered as the EU’s credit and financial centre for institutions from the West, Cyprus has also gained the reputation as being the EU’s credit and financial hub for institutions set up in the West, such as Russia, Levant and former Soviet Union countries.
Cyprus legislation and regulations have developed and progressed in order to provide services and partner up with credit and financial institutions abroad and meet their needs and requests. In accordance to CIF legislation, physical presence is required on the island in order to be granted a CIF license by the CySEC. However, the CySEC as well as other proficient authorities are open to domestic companies outsourcing the majority of their operation infrastructure to their destination of origin, even in cases where the jurisdiction of origin is not within the EU.
This fact is beneficial to companies already established within the UK after the BREXIT. The majority of companies already set up in the UK may not be capable or willing to move their workforce. Thus, Cyprus provides these companies with the ability to maintain their present operations via carefully organised outsourcing agreements.
Within the first 60 days of a CIF’s company incorporation, the company is required to register with the Cyprus Tax Authorities in order to receive a tax identification number. Provided that the CIF is a Cyprus tax resident, it can benefit from Cyprus’ attractive and beneficial tax regime. In order to be a Cyprus tax resident, a CIF must employ experienced Cyprus resident directors as well as set up physical presence on the island. A CIF is subject to Cyprus corporate income tax. The rate of the corporate income tax is the lowest amongst EU state members, set at 12.5%. Any profits obtained from the sale of securities are not subject to taxation. Apart from the sale of immovable property and/or the sale of shares of immovable property located in Cyprus, no capital gains tax is imposed.
Any dividends obtained from subsidiaries not based in Cyprus are not subject to tax on the condition that some minor requirements are met. The interest obtained by a CIF is considered as active sue to the fact it is linked to the CIF’s usual activities. Therefore, interest income is subject to 12.5% corporate tax in contrast to the 30% defence tax typically inflicted on interest income. Cyprus does not impose withholding tax on interest, royalties and dividends paid to non-resident Cyprus companies. Additionally, if a CIF is liquidated, tax will not imposed in cases where the shareholders of the CIF are not Cyprus residents. Finally, the CIF’s revenues are mostly exempted from VAT in Cyprus.
Besides corporate tax, in order to attract corporate managers to move to Cyprus, the government has introduced a variety of tax exemptions. Individuals whose income amount to more than €100,000 per year will benefit from a 50% deduction in tax during the first decade. This deduction is granted to employees who started working from 1/1/2015 provided that the individual was not a Cyprus resident before they started working and that at least 3 out of 5 years prior to the year of employment he/she was not a Cyprus tax resident. Those who do not earn €100,000 per year as income from their employment and was not a Cyprus resident before the commencement of his/her employment is granted a 20% deduction to their income tax for a five year period.
In 2015 the government of Cyprus introduced a new expat-friendly tax regime, the Resident Non-Domicile. The non-domicile rules exempts individuals who are Cyprus tax residents but not Cyprus domicile from paying the Special Contribution for Defence tax. Thus, non-domiciles are not subject to pay tax on rents, dividends and interest, even though they might be Cyprus tax residents, or their revenue and income derives from within Cyprus.
Cyprus is one of the most UK-friendly destinations within the European state members. Besides the British Isles, Cyprus in the sole EU state that applies the English common legislation. Generally, Cyprus adopts the English law when it comes to contracts, civil wrongdoings as well as commerce.
Furthermore, Cyprus collaborates closely with UK authorities, financial and legal consultants and firms when it comes to creating and adopting new financial services rules. In addition, after Brexit happened, Malta and Cyprus are the only European state members that are members of the Commonwealth, whereby members benefit from special arrangements.