ECONOMIC BACKGROUND

• Cyprus has a record of thriving economic performance reflected in rapid growth, near full employment and external and internal stability.
• Joining the Euro zone was a major accomplishment for the Cypriot economy, resulting in such benefits as a higher degree of price stability, lower interest rates, reduction of currency conversion costs and exchange rate risks and increased competition through greater price transparency.

Tax system

Zero to Low tax rate regime. Taxable profits are taxed at the rate of 10% for all Cyprus companies, as there is no more distinction between local companies and IBCs. Still it is the lower tax rate in Europe and the nearby countries.

• Double tax treaties have been concluded with more than 40 countries. By using the provisions of these treaties and with the relatively low taxation in Cyprus, it is possible to achieve very significant tax reduction in both countries.
• There is no withholding tax on payment of dividends, interest and royalties to non-resident individuals or to non-resident corporate shareholders.
• Capital gains realized on immovable property held outside Cyprus are outside the scope of Cyprus capital gains tax.
• VAT is lower than the other European countries at 15%.
• No inheritance taxes.

Leagal system

The island of Cyprus became a British colony when Turkey occupied and then ceded Cyprus to the English Government. Cyprus was under British rule from 1878 until 1960, when the island acquired its independency. As a result of British rule, the English legal system was introduced in Cyprus and many laws were enacted in an effort to import the doctrines of common law and equity into Cyprus.

Cyprus inherited many elements of its legal system from the United Kingdom, including the presumption of innocence, the right to due process and the right to appeal. Throughout Cyprus, the right to a fair public trial is provided for in law and generally accorded in practice. Defendants have the right to be present at their trial, to be represented by counsel at public expense for those who cannot afford this, to confront witnesses and to present evidence in their own defence. Most laws are officially translated into English.

Most criminal and civil cases begin in district courts, from which appeals are made to the Supreme Court. No special courts exist for security or political offences. One major difference between the English and the Cypriot legal system is that under the latter, there is a written Constitution, which is the supreme law of the country. The human rights aspect of the Constitution is based on the European Convention of Human Rights and its application is based on US and European Constitutional Law Principles.

The Supreme Court, which pronounces final judgment on administrative law matters, follows the French Droit Administratif principles.

Since 1 May 2004, Cyprus has been a full member of the European Union and as a result European Law supersedes Cyprus Law in case of any conflict. The Republic of Cyprus is also a signatory to many international treaties and conventions.

ACCESS AND TRANSPORT

Air

• Cyprus has has two international airports in Larnaca and Paphos.
• Larnaca Airport is often used as a hub by passengers travelling between Europe and the Middles East and Cyprus’ status as a major tourist destination means that numbers have steadily risen to over 5 million passengers a year.
• New modern Larnaca airport became fully operational in November 2009 and can accommodate 7.5 million pax per year.

Sea

• The main harbors of the island are Limassol harbour and Larnaca harbour, which service cargo, passenger and cruise ships.
• A smaller cargo dock also exists at Vasilikos, near Zygi (a small town between Larnaca and Limassol). Smaller vessels and private yachts can dock at marinas in Cyprus.
• Both Larnaca and Limassol are cruise ship called in Cyprus, although Limassol receives more vessels. There are passenger facilities at both ports, also used by ferries taking people to the Middle East.
• Cyprus is keen to develop as a bigger cruise hub in the Mediterranean and is enjoying increasing success. More cruise lines are now venturing through the Suez Canal to the Red Sea and the Gulf

INVESTING IN CYPRUS

1. Strategic location at the crossroads of three continents, providing an ideal base markets for expansion into new markets.
2. Member of the European Union serving as Europe’s Middle Eastern outpost and a gateway for the movement of goods inside and outside the European borders.
3. Favourable taxation including 10% corporation tax and low personal income tax.
4. A prosperous and resilient economy enjoying long-term stability and growth, and relatively high per capita income.
5. Liberal FDI policy allowing 100% participation in almost all sectors of the economy.
6. Skilled workforce highly qualified and multilingual with one of the highest percentage of university degree holders in the world.
7. Double tax treaties with over 40 countries.
8. Bilateral investment agreements with 19 countries
9. Excellent Infrastructure providing easy access by air and sea, and serving as an important telecommunications hub in the region.
10. Low set up and operating costs including rental costs, salaries and social insurance contribution.
11. Simplified administrative procedures for acquiring necessary permits-company registration may be completed within 4 days.
12. Efficient legal, accounting and banking services.
13. A great place to live and work with pleasant climate, agreeable topography, high standard of living and with one of the lowest crime rates within the European Union.
14. Strong growing tourist industry; more than 2.000.000 visitors every year.
15. Attractive property market and a popular option not only for investors but for first and second home owners.

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