The Central Bank of Cyprus recently issued a circular which clarifies dubious and vague information regarding shell companies and entities in Cyprus and advises banks and service providers on how to deal with them. As Cyprus remains an attractive jurisdiction for registering offshore entities, the circular's revised definition of 'shell companies' will assist banks when opening accounts for international businesses and corporate service providers.
Typically, a parent's main concern is being able to pay for their children's education and ensuring the best start for them when they grow up and want to purchase property or launch their own business. One way to accomplish these goals is to set up a Cyprus investment trust (CIT), which allows a trustee to manage its assets for the good of the beneficiaries. Setting up a CIT for children is easy and allows parents to tailor a trust to fit their unique circumstances.
Cyprus international trusts, which are subject to the International Trusts (Amendment) Law 1992, provide a significant number of tax advantages and can be used as part of an international tax planning strategy. In order to estimate the tax that should be imposed on a trust, its specifications, purpose and any other relevant circumstances must be considered.
Cyprus saw its highest increase in gross domestic product in almost a decade in the first quarter of 2017. The dark days of the 2013 financial crisis appear to be in the past and foreign investment remains at the heart of government strategy, aided by factors such as the citizenship-by-investment programme, which will help to attract private investment in the property, retail and pharmaceutical sectors.
Foreign tax residents in Cyprus are exempt from taxation on their worldwide dividend and passive interest income. Parliament recently approved a bill granting tax resident status to individuals who spend at least 60 days a year in Cyprus, under certain conditions. Individuals who do not qualify as Cyprus tax residents under the 183-day rule now have the opportunity to consider the 60-day rule, which took effect on January 1 2017.
Cyprus international trusts (CITs), also known as Cyprus offshore trusts, are regulated by the International Trusts Law, which complements the Trustees Law. CITs provide multiple benefits – such as anonymity, asset protection, flexibility and taxation incentives and benefits – which high-net-worth individuals around the world can use within the framework of their tax planning and investment strategies.
In order to provide high-net-worth individuals with additional incentives to relocate to Cyprus or continue conducting their business operations or investments in Cyprus, the government introduced non-domicile rules for the purposes of the Special Defence Contribution Tax Law. As a result, an individual may be resident, but not domiciled, in Cyprus. Tax residents who are not domiciled in Cyprus are exempted from the special defence contribution tax.