Cyprus Holding Company for 2022

Updated 26 May 2022

A Cyprus Holding Company is a common private limited liability company. The difference for trading companies is that it only holds shares as a shareholder in other companies in order to take dividends. A holding company pays no taxes! All the dividends received are tax free. This is a unique feature of the Cyprus holding company!

The dividends can originate from any company in any country. They can be dispensed to the shareholder at any time of the fiscal year. The shareholder or UBO will not pay any taxes on them either. That is another humongous benefit of the Cyprus holding company!

A Cyprus holding company registration, also allows for the use of nominee directors and shareholders for full confidentiality and tax residency of the company in Cyprus. Our firm can offer you full nominee services of directors, shareholders and secretaries if you require. In about 5 of days we can register your Cyprus Holding Company, with the Tax Authorities for your TIC number and in 2 days the vat registration number if required will also be secured. A Cyprus company is usually called a Cyprus IBC which means Cyprus International Company.

For more details on how to register a company in Cyprus go to Cyprus IBC . A Cyprus Holding company requires no special license to operate in Cyprus and worldwide in its capacity as a holding company. Also there is rich information in our article of Cyprus Company Formation, for you to read.

Cyprus Holding Company: Advantages in 2022

One of the major advantages of a Cyprus holding company registration, is that distribution of dividends to non-tax resident beneficiaries (UBOs) is done without the need for cutting back withholding tax, irrespective of whether the beneficiaries hold their shares directly as shareholders or just as beneficiaries through nominee shareholders thus securing their anonymity. This is also true irrespective of whether the beneficiaries or shareholders are real persons or corporations.

Another big advantage of the Cyprus Holding Company registration, is that where the shareholders or beneficiaries are not tax resident here, deemed distribution is also not applied, and again this is true for real persons and or corporations. A third very important advantage of the Cyprus holding company registration, is that if a tax resident company pays out dividends to another tax resident company no withholding tax applies except for indirect dividends paid after four years from the end of the tax year in which the profits arose. These provisions are valid for real persons or corporations.

The legislation for the special defense contribution tax provides for the deemed distribution of dividends to real persons or corporations every two years. See more information for the Cyprus holding company registration to understand how simple it is to register a company. A Cyprus holding company is just another Cyprus IBC and therefore its incorporation follows the same procedures and formalities. The only difference is that in the memorandum of association in the section for the activities of the company the first paragraph states that the company will carry out holding activities. See more on Cyprus Company registration.

Finally a Cyprus Holding company can get a very fast Bank Account in Cyprus, as a holding company is considered by the banks a low risk operation.

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Cyprus Holding Company Tax Benefits for 2022

1. It can distribute the profits to their non-resident shareholders entirely tax free. This is one of its major advantages making the corporate tax rate of 12.5% a power tool and a foundation block in your international drive for tax management.
2. A Cyprus Holding Company pays zero tax on the revenues from the sale of securities. This too is a major tax advantage as in many countries this revenue is heavily taxed.
3. Receives dividends at very low or even zero withholding tax rate!
4. No taxes on dividends which it receives as shareholder of other subsidiary companies from abroad!
5. Zero tax on their profits from a permanent establishment abroad.
6. Only 2% corporate tax on their revenues from intellectual property rights.
7. No defense contribution tax which is 30%, on interest income!
8. Many other tax incentives and advantages.

Dividends Received By A Cyprus Holding Company in 2022 Are Not Taxable

Any dividends received by a Cyprus holding company, which is tax resident or non-tax resident which maintains a permanent establishment it the country, are not taxable! There are some exceptions to this rule however:
So if the foreign company paying the dividends engages its activities in more than 50% in investments and the dividends paid are of income of more than 50% from such investments such dividends will be taxable provided that the tax paid on such income abroad, is substantially lower than the Cyprus corporate tax which is 12.5% and is lower than that of many other countries in the EU and outside. If you want to do some reading on the subject and on tax planning just follow this link: Cyprus Tax Planning-Cyprus Taxes.

So if that income is taxed for example at 5% abroad, such income will be taxed under the special defence contribution law. This tax hike however can be compressed in two ways. First by taking refuge in the provisions of the double tax treaty of the third country in question. Tax credit is usually given for any foreign tax paid on the profits of the company which is making the dividend pay-out. Secondly the application of a unilateral tax credit relief, such as tax credit which can be given by Cyprus on any third country withholding tax paid on the dividends paid out. Tax is not paid on any dividends paid out to a tax resident company by some other tax resident company. However dividends paid indirectly after four years from the end of the tax year in which the revenue accrued by the dividend paying company. No special defense contribution tax is paid on dividends coming from dividends on which such tax has already been paid. If you need more technical material on Cyprus Company Incorporation its procedures, costs and other advice follow that link.

Cyprus Holding Company: Dividends at Very Low or Even Zero Tax

1. A rich network of double tax treaties with third countries enables a Cyprus Holding Company to receive dividends from other legal entities local or foreign without having to pay tax on those dividends in respect of the same company or even physical person.
2. The parent-subsidiary directive of the European Union exempts the withholding tax deduction on the dividends and other revenues distributed in the EU by a subsidiary company to the holding company and so it eliminates the double taxation of dividends of the parent companies.
3. A unilateral tax relief is given for any withholding tax paid on the specific revenue abroad, and so the tax bill is lessened.

Other Advantages Of The Cyprus Holding Company

1. It pays no withholding taxes on interest income or revenues from intellectual property (royalties).
2. It can be re-domiciled to a third country, provided the law of that country also allows re-domiciliation of companies from other countries.
3. Our laws allow flexible re-organization, group relief, and the luxury of losses being carried forward indefinitely.
4. It can be listed in any foreign stock exchange.
5. There are no thin capitalization rules.
6. There are also no controlled foreign company rules.
7. It can be incorporated and maintained at lower cost schedules than other jurisdictions.
8. Excellent infrastructures and accounting, legal and banking services.
9. Corporate tax at only 12.5%, one of the lowest tax rates in the EU

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