Tax Haven or Tax Burden – A Closer Look at Cyprus2 min read

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Introduction

12.5% corporate tax; wow, that means Cyprus is a good country to start or move my business to! Well… yes, but also maybe not. Have you thought about laws, regulations, banking, and labour availability? What about bureaucracy? Cyprus has long been considered a destination, a haven for all businesses, and an escape from reality with a wide range of double taxation treaties, various tax incentives, and more. We will delve into the deep end and uncover what it really is, a tax haven or a bust, a hollow, a tax burden through an advantage and disadvantage comparison.

Advantages

• Low Corporate Tax Rate: Yes, it is 12.5%, which is one of the lowest in the EU
• Double Taxation Treaties: With over 60 double taxation agreements, Cyprus can help businesses avoid being taxed twice
• EU membership: As an EU member, Cyprus offers businesses access to the European market, which is a fantastic opportunity
• Strategic Location: Positioned at the crossroads of Europe, Asia, and Africa, Cyprus provides excellent access to key markets

Disadvantages

• Reputation Risks: Controversies with tax evasion, money laundering, and Russian connections make you wonder, is it really what it is? Why did Amazon decide not to move its headquarters to Cyprus, and why do all other companies have their headquarters in Ireland instead?
• Bureaucracy: Do you need a paper or help with double taxation? Okay, submit five forms, wait a month for no answer, go in person, stand in line for a couple of hours, and maybe you will sort it out.
• Talent Shortage: Being a small island, if you have to hire locally, the talent pool is relatively small compared to a city such as Rome or Berlin.
• Banking Challenges: The local banks in Cyprus have faced significant challenges, and the local ones are pretty outdated with high fees, which make business more difficult

Conclusion

Although this isn’t a comprehensive guide or the key to your door of questions, it should help you think outside the box, the norm, and what ‘experts’ who want you to move your business to Cyprus for a fee tell you. Think for yourself what’s best, and make sure to consider whatever needs your business might need, such as permits, logistics, and more!