International holding companies
International holding companies are parent corporations, established with the sole purpose of owning at least 75% of the voting stocks of other companies, in order not only to control its board of directors, but also to get tax consolidation benefits, such as free dividends. This is why international holding companies, much like trading companies , are among the most popular forms of using an International (offshore) corporation to mitigate taxation.
When choosing on a jurisdiction to headquarter a holding company, there are a lot of factors that need to be taken under consideration, both tax and non-tax related. Cyprus, being a reputable International (offshore) business center, is an excellent location for the establishment of international holding companies, due to the benefits it offers.
The benefits of a Cyprus holding company
Cyprus is justifiably regarded as a tax advantageous holding jurisdiction and this is why it’s popular amongst foreign entrepreneurs and investors. Let’s see only few of the reasons.
- Cyprus is a full member of the EU and imposes the lowest company tax in Europe, set at 10%
- Tax exemption on payments of dividends, interest rates and royalties
- Tax exemption on dividends received from overseas
- Tax exemption on profits gained from dealing of securities
- No capital gains tax from sales of immovable assets within Cyprus
- Cyprus is part of a network that participates in Double Taxation Treaties, together with 41 more countries, while it’s in negotiations with many others
- Corporate and capital gains tax exemption on profits gained from mergers, acquisitions, transfer of assets or exchange of shares
- Tax losses from 1997 and on can be carried indefinitely and used against future profits
- Group losses relief when the holding company owns at least 75% of the share capital of the subsidiary or other companies