The CEO of asset management company Generation Partners LTD, Sergey Kartashov (SergejsKartasovs), expressed his views on the progress of Cyprus as a European IT hub. The island has welcomed many companies from Europe and other parts of the world in the past few years. Generation Partners is based in Cyprus so it knows well about the local jurisdiction. Sergey Kartashov shared the factors behind the success of the island in terms of attracting relocation of the business.
The CEO of asset management company Generation Partners LTD, Sergey Kartashov (Sergejs Kartasovs), expressed his views on the progress of Cyprus as a European IT hub. The island has welcomed many companies from Europe and other parts of the world in the past few years. Generation Partners is based in Cyprus so it knows well about the local jurisdiction. Sergey Kartashov shared the factors behind the success of the island in terms of attracting relocation of the business.
The IP-Box Regime and Tax Haven
Cyprus is considered as a tax haven by financial experts. The island offers one of the lowest (12.5%) income tax rates across the European Union (EU) to the businesses. It is also one of the few countries in the EU that have implemented the IP-Box regime. The main purpose of the IP-Box is to provide tax relief to the businesses that deal with intellectual property.
The country has made agreements with various countries to avoid double taxation. The companies have to pay only 19% in value-added tax. There is no VAT for the products and services purchased by the non-EU residents. Moreover, there is no tax on transferring dividends from a Cyprus-based company to any foreign account. Under the IP-Box, the intellectual property companies have to pay tax on only a part of their profit. “The tax on earning in this area is often dropped to 2.5%, or sometimes even zero,” noted Sergey Kartashov. The CEO of Generation Partners said that Cyprus offered the best business conditions to IT businesses.
What companies should relocate to Cyprus?
No doubt, Cyprus is a beneficial jurisdiction for all businesses. However, Sergey Kartashov (Sergejs Kartasovs) advised, “Moving to the island is comfortable when the business has already been formed or it has a significant starting capital.” The company registration fee lies between 2000-3000 euros in Cyprus. Moreover, a company must have to obtain permission to hire foreign employees. A company can only get hiring permission if it will have at least 171000 euros on its business account. However, comparing to most other European countries, Cyprus is a tax haven for IT companies.
Some companies find it difficult to open a bank account in Cyprus. The country is working hard on getting rid of its reputation as a country for offshore companies. So, the government of Cyprus has applied strict policies related to the bank accounts. A business account holder must have to declare its sources of income in the account opening application. These steps are taken by the Cyprus officials to fight against money laundering and corruption. “On the one hand, this is not a pleasant procedure. On the other hand, this is the right step towards a completely new reputation of Cyprus,” explained CEO Generation Partners.
Ireland, Great Britain, Malta, Estonia, Belgium, Hungary, the Netherlands, Spain, France, and Luxembourg are the major competitors of Cyprus at the moment. These countries are also trying to attract the relocation of companies. However, Cyprus is currently positioning ahead of them due to its collective offerings to operate a business with freedom. It is very easy for companies to get registered there with not too much capital. The reporting process is also very simple and accessible. Last but not least, the tax benefit is the most attractive feature of the island. According to the Kartashov’s prediction, Cyprus will be the largest IT hub in Europe if it will continue its progress like this.