Head Quarter Relocation to Cyprus – Tax Benefits
Dividends paid out to the Ultimate Beneficial Owners (UBOs) of the Head Quarters (HQ) are tax free in Cyprus and maybe taxed at locally at the UBOs place of tax residence.
i.e Dividends paid to an Austrian Tax Resident will be tax free in Cyprus and possibly subject to income tax in Austria (this depends from the enforceable double tax treaty of Cyprus and other Contracting State)
In order to determine the full advantage we need to know the tax residency of each UBO of the group and liaise with their local tax advisers.
Dividends received from group subsidiaries or other companies are tax-free (subject to conditions).
Profits and Losses
Lowest corporation tax in Europe of 12.5%
Corporation Tax Rate – 12.5% and the vast majority of expenses are allowable for tax calculation purposes.
Head Quarters profits will be enjoying a 12.5% corporation tax rate much lower than their counterpart subsidiaries.
Losses incurred by subsidiaries within the group could be surrender to profitable jurisdictions (subject to group relief provisions).
Double Tax Treaty Network
As Cyprus has entered into more than 40 double tax treaties with various countries, Liberty group transactions will enjoy lower taxes and no withholding taxes in Cyprus, if such taxes apply.
Refer to “Double Tax Treaty Network” which includes all double tax treaties signed by Cyprus.
Disposal of Shares (of subsidiary)
Disposal of shares of any group subsidiary holding is entirely tax free in Cyprus as long as the subsidiary does not own property in Cyprus.
Cyprus enjoys significantly lower overhead costs and advantageous tax system than any other European Member State. At present these benefits are enjoyed by hundreds of overseas head quarters which established or transferred their operations to Cyprus.
Why not being one of them?