Holding Company Structure
Cyprus has become the most popular holding company jurisdiction in Europe and
amongst the most popular in the world.
A Cypriot Holding Company enjoys the following tax advantages:
- Full exemption from tax on dividend income received
- No withholding tax on dividends paid to the ultimate shareholders of the Holding Company
- Full tax exemption on the profits from the sale of shares or other securities
- Full tax exemption on the profits from the sale of its shareholdings in the subsidiary companies.
- Use of wide double tax treaty agreements with over 50 countries which provide for reduced withholding taxes on dividends received from treaty countries.
- Unilateral tax credit relief irrespective of the existence of a double tax treaty
- No substance requirements, no debt-equity restrictions, no minimum holding period and no thin capitalization rules.
- Use of EC Directives
Strategic tax planning
- A Cyprus Holding Company is set up by a non-resident investor / ultimate shareholder;
- The Cyprus Holding Company may acquire controlling interest in the equity of subsidiary companies registered and tax resident in various countries worldwide;
- Dividends received by the Cyprus Holding Company from subsidiaries registered in EU countries, for example Germany, will be received gross, i.e. without deducting withholding tax at source;
- Dividends received by the Cyprus Holding Company from subsidiaries registered in countries with Double Tax Treaties, for example Belarus, Russia, will be received after deducting reduced withholding taxes;
- Dividends received by the Cyprus Holding Company from subsidiaries registered in countries with zero tax, for example Belize, Seychelles will be received gross, i.e. without deducting withholding tax at source.
- Dividend income, irrespective of its source of origin, is exempt from tax in the Cyprus Holding Company;
- Similarly, dividends paid out to the Investor / ultimate shareholder by the Cyprus Holding Company are paid gross without any deduction of withholding taxes;
- Therefore, the profit distribution from the various operating locations in the form of dividends to the Investor / ultimate shareholder will result in zero or minimal taxation.