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China Desk

Cyprus has maintained its position as a leading international business centre which through its array of high caliber services and business friendly environment builds bridges connecting countries and businesses across the globe.

Its favorable geographical location at the crossroads of three continents- Europe, Africa and Asia- enables Cyprus to be a natural business hub for Chinese citizens. Thus, not only does it pose an attractive gateway into Europe by virtue of both its geographical location and EU Membership, but it also offers attractive opportunities for investment for Chinese citizens into the CIS countries, Africa and Middle East.

There are various reasons why Cyprus can be the preferred destination for Chinese clients conducting business as these are summarized below.


Cyprus joined the European Union in 2004 and its financial and regulatory environment is in line with the EU acquis. Further, it participates in the European Union’s internal market where the principles of free movement of goods, services and capital apply.

In particular, the EU principle of freedom of establishment and the freedom to provide cross border services has enhanced Cyprus’ reputation as an international business center as it can act as a gateway to Europe by the extensive usage of cross border business licenses in various fields that utilize the regulatory advantages concerning doing business in the European Union.


Cyprus offers attractive investor migration programs whereby the Cyprus Citizenship can be granted to high net worth individuals that are willing to invest in the Cyprus economy. Successful applicants for the Cyprus Citizenship enjoy unlimited free movement rights to the rest of the European Union.

Also subject to the Alien and Immigration Rules, the Cyprus Minister of Interior has decided that permanent residence permits will be granted to applicants that are citizens of countries outside the European Union provided certain requirements are met. The applications can be submitted by the applicant personally, by post or by the applicant’s agent. The Civil Registry and Migration Department assesses applications on a fast track basis and subsequently forwards the applications to the Minister of Interior for approval.


Cyprus’ adoption of the Euro as its unit of currency on the 1st of January 2008 further documents its commitment to preserve low inflation, low interest rates and growth.

The Cyprus economy is heavily based on professional services with three sectors (banking, insurance and securities) dominating the market.

Latest Developments in Cyprus Economy: Cyprus has recently been the focus of international media and worldwide energy giants when important discoveries of natural gas in the Cyprus waters were announced in 2011, a factor that is expected to result in the increase of direct financial investments in Cyprus. Naturally, the said discoveries have aroused interest from the world's leading energy firms as regards the licensing rounds.


Corporate Tax: The corporate tax rate is 12.5% on trading profits and this constitutes one of the lowest corporate income tax rates in the European Union; Business profits of non-resident companies are tax free.

Double Tax Treaties: Cyprus is a signatory to over 45 Double Tax Treaties with other countries including China, India, the majority of European Union countries, Canada, India and the C.I.S countries (Russia being the most popular one). The said Double Tax Treaties provide for lower or no withholding taxes on the income arising in the said countries which is earned by a person that is a Cyprus tax resident;

Withholding tax: There are no withholding taxes on payments to non tax resident persons (either individuals or companies) in respect of dividends and interest.

Transfer Pricing: The only transfer pricing provision in Cyprus’ tax legislation is included in the Income Tax Law and requires transaction between related parties to be made on an “arm’s length” basis. Cyprus’ tax legislation is in line with the OECD model when interpreting the notion of an “arm’s length” basis.

Capital Gains Tax: There is no capital gains tax imposed except in cases of disposal of immovable property which is situated in Cyprus or disposal of shares in a company that owns such immovable property which are not publicly traded.

Thin capitalization rules: There are no thin capitalization rules in Cyprus Tax legislation. Interest suffered on loans used for the acquisition of assets not used in the business is not tax deductible.

Controlled foreign company rules: There are no controlled foreign company rules in Cyprus Tax legislation; Cyprus companies are not subject to controlled foreign company rules.

Wealth Tax: Cyprus does not impose any tax on wealth.

Company reorganization: Tax legislation in Cyprus provides for a fully exempted reorganization of companies. The definition of reorganization may include any division, partial division, merger, transfer of assets, exchange of shares and redomiciliations.


The legal system in Cyprus is a mixture of both common law and civil law systems with common law being applicable in most areas. Cyprus’ accession to the European Union brought its legal system in line with applicable EU directives while the EU regulations are generally directly enforceable in Cyprus.

For example the Cyprus Company Law is very similar to the Company Law of Hong Kong and in various provision almost identical.

The stable and predictable legal environment and court system combined with the highly skilled legal workforce have been offering superior quality services to which in turn contributes to maximized investor confidence.


The most common route for conducting business in or via Cyprus is by setting up a Cyprus Company in the form of a limited liability company. Alternative legal structures can also be selected through establishing in Cyprus: branches, partnerships and trusts or choosing to re-domicile an existing foreign company to Cyprus.

Also, as regards funds, Cyprus offers prospective investors with two distinct structures for the establishment of funds as legal entities in the Republic: (a) International Collective Investment Schemes (ICISs), and (b) Open Ended Undertakings for Collective Investments in Transferable Securities.


The above illustrate how attractive is for doing business via Cyprus. For any further information please contact our Head of the International Corporate Department Ms Stella Kammitsi at skammitsi@cplaw.com.cy.