an International Investor's Point of View
corporate division of Kinanis LLC. She provides legal advice in relation
to all corporate law matters, with particular expertise and experience
in taxation, mergers and acquisitions, corporate finance, corporate
reorganization, general legal advice and commercial law.
12 Egypt Street
1097 Nicosia
Cyprus
+357 22 55 88 88 Phone
+357 22 75 97 77 Fax
corporate1@kinanis.com
www.kinanis.com
feature in its development into an inter-
national business center. In combination
with the island's excellent infrastructure,
a legal system based on English com-
mon law, high quality of life and low cost
of living, shared with its well-educated
labor force, good industrial relations and
munificent tax incentives, Cyprus is now
deemed and ranked as an ideal business
center.
Holding company
vehicle to hold investments in a subsid-
iary or associate company. Their primary
income derived from their holding activi-
ties is dividend income and profits from
the disposal of their investments, mainly
shares.
Matters relating to the holding activi-
ties, which are set out in this article, are
considered to be the main criteria for the
selection of a prime location to set up a
holding company in conjunction with the
Such matters for setting up a holding
company include:
be exempted from or subject to low
withholding tax rates relying on any
applicable foreign legislation or any
applicable double tax treaty. Fur-
ther, any dividend income received
by the holding company must either
be exempted from or subject to low
corporate income tax rates in the
holding company's jurisdiction. Also,
outgoing dividends paid by the hold-
ing company to its ultimate share-
holders must either be exempted
from or subject to low withholding
tax rates. Equally, profits realized by
the holding company on the sale of
shares in the subsidiary must either
be exempted from or subject to a low
rate of capital gains tax.
lar location is suitable for a hold-
ing company to be established may
flexible re-organization rules, group
relief and possibility of losses to be
carried forward; the existence of Con-
trolled Foreign Company (CFC) rules;
the existence of thin capitalization
provisions and the ability to obtain
interest deduction as an expense in
full; the possibility of re-domiciliation
to other jurisdictions and the possi-
bility of listing in international stock
exchanges. Moreover, additional con-
siderations may include any favorable
provisions regarding the taxation of
interest and royalties, whether any
withholding taxes are payable on
interest and royalties, whether there
is any obligation of the company to
be registered with the VAT authori-
ties of the particular jurisdiction, the
taxation of assets which have been
distributed and applicable liquida-
tion provisions, tax rates in respect
on other such income and lastly, any
stamp duty law that may apply.
ations, jurisdictions which provide some
or all of the above criteria at low tax rates
are considered to be prime locations for
such holding companies Cyprus being
one of these prime locations.