Cyprus has become a destination of choice for High-Net-Worth Individuals (HNWIs) and family offices due to several reasons, including a highly favorable tax system, a strategic geographic location, a business-friendly environment, and a very high quality of life.

A Highly Favorable Tax System

One of the primary reasons why Cyprus is a popular destination for HNWIs and family offices is its favorable tax system. Cyprus has one of the lowest corporate tax rates in the European Union, currently standing at 12.5%, making it an attractive location for businesses looking to minimize their tax liabilities. Moreover, Cyprus offers a wide range of incentives to businesses, including tax exemptions and deductions.

Double Tax Treaties

Cyprus has an extensive network of double tax treaties with over 60 countries, including Russia, China, and India. These treaties provide for reduced withholding tax rates on dividends, interest, and royalties. The treaties also provide for the elimination of double taxation on income earned in both Cyprus and the treaty partner country, providing a favorable tax treatment for cross-border investments.

Furthermore, Cyprus has a favorable tax system for intellectual property (IP) assets, with a reduced tax rate of 2.5% on income derived from approved IP assets.

Moreover, Cyprus has a non-domicile regime for individuals, which provides significant tax benefits for individuals who are not considered tax residents of Cyprus. Under this regime, foreign income and gains are exempt from taxation in Cyprus.

Business-Friendly Environment

Cyprus is renowned for its business-friendly environment. It offers a streamlined company registration process, allowing businesses to be set up quickly and efficiently. Furthermore, the government provides efficient services, including a fast-track process for the issuance of work permits for non-EU nationals.

Cyprus has a highly skilled and multilingual workforce, with a high level of education and training. The country also offers a competitive cost of living, making it an attractive location for businesses and entrepreneurs.

Strategic Location

Cyprus is strategically located at the crossroads of Europe, Asia, and Africa, making it an ideal location for business and investment opportunities. The country benefits from excellent air and sea connections, making it easily accessible from major cities worldwide.

Cyprus is a member of the European Union, providing access to the European market of over 500 million consumers. Furthermore, the country has close ties with the Middle East and North Africa, providing opportunities for businesses looking to expand into these markets.

High Quality of Life

Cyprus offers a high quality of life, with excellent healthcare, education, and leisure facilities. The island has a warm Mediterranean climate, beautiful beaches, and a rich cultural heritage, making it an attractive location for families and individuals seeking a high standard of living.

Cyprus has a well-developed healthcare system, with both public and private healthcare providers. The country has one of the highest numbers of doctors per capita in the world, and the healthcare system ranks among the best in Europe.

Education is also a priority in Cyprus, with a well-established education system offering high-quality education from primary school to university level. The country has a large number of private international schools, providing an education in English or other languages.

Cyprus is also a popular tourist destination, with a thriving hospitality industry. The island has a wide range of leisure facilities, including golf courses, marinas, and luxury spas. The country also has a rich cultural heritage, with a range of museums, archaeological sites, and traditional villages.

Conclusion

Cyprus is a popular destination for HNWIs and family offices due to its favourable tax system, strategic location, business-friendly environment, and high quality of life. The country’s tax incentives, including its low corporate tax rate and extensive network of double tax treaties, provide significant benefits for businesses and investors.

Credit: Angelos Paphitis @ Mondaq