Cyprus Holding Company Formation
Reduced tax and Increased Net income
How to Use a Cyprus Holding Company:
A Cyprus Holding company is a legal entity that can be used by investors to own properties, other assets, or make investments anywhere. The functions of Holding companies cab be:
- Receiving dividends, interest or royalties
- Making investments in other companies (holding shares in subsidiary or associated undertakings)
- To finance investment undertakings by supplying the companies that they hold shares in with funds
Tax losses of one company in the Group can be set off against the Profits of another group company if the companies are both tax resident in Cyprus and the holding company has at least a 75 % of the share capital of the subsidiary, or each company is at least 75 % subsidiary of the other company.
The set off of losses can be made against profits of the same tax year or carried forward to be set off against future profits
Group Structure Illustration
The amount paid as dividends by the subsidiary to the Holding Company will vary according to the tax rates of the country of incorporation of the subsidiary and the provisions of the Double Tax Treaty.
The receipt of dividends by an International Cyprus Holding company can be completely tax free as Dividend income is exempt from corporation tax in Cyprus, and Dividend income may be exempt from Special contribution for Defence under certain conditions. The reimbursement of dividends to the beneficial owners has a 0% withholding tax regime when the beneficial owner is not tax resident in Cyprus.
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