Cyprus and the agreement with Eurogroup
The recent developments with regards to Cyprus’ efforts for financial assistance have resulted in an agreement between Eurogroup (EU/ECB/IMF) and Cyprus. The terms of this agreement are as follows:
the provision of a €10bn financial assistance to the Cyprus Government;
the maintenance of liquidity by the European Central Bank to the Cyprus banking system;
the absorption of the country’s second-largest bank (Laiki Bank) by the country’s biggest bank (Bank of Cyprus);
the bank deposits of up-to €100.000 per legal entity per bank in the above two Cyprus banks will be safeguarded in accordance with the EU principles.
There will be no impact on the other banking institutions operating in Cyprus (including branches of foreign banks).
An increase of the Cyprus corporate tax from 10% to 12,5% will probably be imposed but this will not negatively affect international business in any significant way as corporation tax affects mainly trading income. Most international companies in Cyprus are set up as investment holding companies or group financing companies. Cyprus companies will still benefit from full participation exemption on capital gains, full participation exemption on dividend income, no Cypriot withholding tax on dividends, interest and royalties, no thin cap rules, no CFC rules, no exit charges, effective tax on royalty income of 2,5% (from 2%), interest income being taxed on thin margin only and all the other current positives of the Cyprus tax regime. In addition, even with this corporation tax increase, Cyprus remains one of the lowest corporation tax jurisdictions in the EU.
Our law firm’s assistance
Our law firm understands the impact that this situation may have had on yours and your clients’ business as well as the importance of receiving services of outmost efficiency in a flexible and personalised manner.
As a law firm we may assist and advise on any changes in your corporate structures which can include Cyprus companies as well as companies in any other jurisdiction. This includes the opportunity to discuss preferential fees and payment terms for the change of administration of the Cyprus companies as well as companies of other jurisdictions.
Please do not hesitate to contact us if you require any assistance.
Best Regards,
Alexia and Celia
Directors
info@ca-advocates.com
www.ca-advocates.com
