Cyprus is a popular jurisdiction for financing companies mainly due to favourable taxation system, the significant number of Double Tax treaties and the use of the EU directives that significantly reduces the tax burden on such companies.
The main advantages are:
- Small margin on back to back loans is required and taxed at 10%
- Profits are reduced in countries with higher corporation tax rates
- No withholding taxes on payments of interest outside Cyprus
- Benefit from wide Cyprus Double Tax Treaties
- Benefit from interest and royalties directive
- Benefit from parent subsidiary directive