Tax & International Tax Law

Papantoniou & Papantoniou LLC > Tax & International Tax Law

Tax & International Tax Law

 

Papantoniou & Papantoniou LLC is a key player in the provision of efficient services on Tax Law. The firm advices on all the fields of taxation in areas such as Corporate Tax, Income Tax, Property Tax, Trusts and etc. Moreover, the firm also provides services and advice on International Tax Planning by assisting clients to utilize a cost- efficient tax structure through a Cyprus Company and through the set up of International Trusts.

 

Since the ratification of its New Tax Legislation in 2003 (which aims to conform to European Union law and the European Union code of conduct) and the abolition of the “offshore regime”, Cyprus has succeeded on assembling a simplified, effective, and translucent tax system that is fully approved by the European Union and the OECD. As a consequence, Cyprus became a stable tax-competitive jurisdiction with a favorable and tax-efficient planning system for entities in the EU and outside the EU. Therefore, Cyprus now is a respectable EU, non-offshore, non-tax haven jurisdiction.

 

Therefore, in light of the above, a Cyprus Holding Company can be used very effectively for international tax planning purposes, through the use of the tax incentives and the treaties for the avoidance of double taxation. Also, the Cyprus Holding Company may be used as an investment vehicle through several kinds of companies such as Holding companies, Finance companies, Royalty companies and the Financial Services companies.

The firm advices on all the fields of taxation in areas such as Corporate Tax, Income Tax, Property Tax, Trusts and etc. Moreover.

There is no withholding tax on the payment of dividends, interest and royalties from Cyprus to non-residents of Cyprus.

The main features of the tax reform and the tax advantages on forming a Cyprus Company are the following:

 

  • The taxable income of all Cypriot companies is taxed at the rate of 10%.
  • Dividend income from abroad to Cyprus is wholly exempt from corporation tax provided the direct holding is at least one per cent (1%) of the share capital of the overseas company. This exemption will not apply if the company paying the dividend engages in more than fifty per cent (50%) of its activities in producing investment income and the foreign tax burden on the income of the company paying the dividends is substantially lower than that in Cyprus.
  • There is no withholding tax on the payment of dividends, interest and royalties from Cyprus to non-residents of Cyprus.
  • Mergers, Takeovers and other Re-Organizations can take place within groups without tax consequence.
  • Dividend income and profits from the sale of securities are exempt from corporation tax.
  • With 2 exceptions, profits from a permanent establishment abroad are exempt from corporation tax.
  • There are no time restrictions on the carrying forward of tax losses.

 

Double Tax Treaties (DTTs):

 

Cyprus is the only member of the EU that has signed the highest number of Double Tax Treaties with other countries. The main purpose of the DTTs is to avoid the double taxation of income earned in any of the two contracting countries. The existence of these treaties, combined with the low tax paid by a Cyprus company offer the possibilities for a cost-effective international tax planning.

 

The beneficial effect of DTTs is done through the tax sparing provisions whereby tax is credited against the tax that must be paid in the contracting state. The DTTs also includes provisions on reducing withholding taxes for dividends, interest and royalties.

 

The table provided shows the countries with which Cyprus has concluded a double tax treaty. Tax Treatment of Dividends, Interest and Royalties