Cyprus’ recently revised taxation framework makes it the only citizenship-by-investment program in Europe to offer non-domiciled investors tax free profits, reports MENA FM. Will this new tax regime and business incentives attract more foreign direct investment (FDI) into the country?
Henley & Partners, the global leaders in residence and citizenship planning for wealthy individuals and families, announced that Cyprus’ Citizenship-by-Investment Program continues to be one of the leading citizenship-by-investment programs in 2015, according to its recent Global Residence and Citizenship Program (GRCP) Report.
This announcement comes after the President of the Republic of Cyprus, Mr Nicos Anastasiades, announced a number of key revisions to the taxation framework of Cyprus and its economy during his speech at the 54th Annual General Assembly of the Institute of Certified Public Accountants of Cyprus. These changes allow Cyprus to offer investors tax free profits until the end of 2016, making it the only country in Europe to do so.
Cyprus continues to be a leading destination for individuals seeking alternative residence or citizenship. Of the leading citizenship-by-investment programs reviewed in the Henley & Partners’ GRCP Report, Cyprus’ program ranked top in terms of Reputation, Quality of Life, Visa Free Access, Processing Time (currently between three to four months), Compliance, Investment Requirements, Residence Requirements, Relocation Flexibility, Physical Visit required and Transparency.
Henley & Partners’ annual GRCP Report uses scientific methodology to systematically analyse the leading residence-by-investment programs and citizenship-by-investment programs available throughout the world. It features expert commentary from leading figures in the investor immigration industry, including an immigration and citizenship lawyer, economist, country risk expert and Professor.
Comments Dominik Zunkovic, Manager of Henley & Partners Middle East in Dubai, “The Cyprus Citizenship-by-Investment Program has seen a substantial growth in demand by 100 per cent from the MENA region in the past six to eight months. The recent changes to Cyprus’ Tax Laws will further enhance its position as a top business and financial centre. As a major business hub for international trade, the island also offers good quality of life for its residents, excellent healthcare system, advanced infrastructure and diverse options for education. A Cypriot passport furthermore provides access to the 28 European Union member states – all of which makes it a highly attractive destination for investors or high net worth individuals (HNWIs) considering an alternative citizenship or residence.”
The Cyprus Tax Update has introduced the status of a ‘non-domicile’ individual, targeting high-level business executives and HNWIs. This revision exempts such persons from the Special Defence Contribution Tax, which is currently 30 per cent on Interest Income and 17 per cent on Dividend Income. In addition, there has been a reduction of transfer fees on real estate transactions by 50 per cent until the end of 2016.
The recent changes also exempts investors from capital gains tax on any real estate transaction, provided that the acquisition is between the date of entry into force of the law and 31 December 2016. It also includes the consolidation and modernization of immovable property tax and transfer fees and notional interest deduction on fresh capital injected into Cyprus companies.
Adds Zunkovic, “With Cyprus now offering an even more advantageous tax regime and numerous other business incentives, we expect to see increased demand from HNWIs, investors and entrepreneurs. This move by the government will further streamline the island nation’s tax system, boost the property sector and ultimately drive more foreign direct investment.”
Going forward, a number of additional measures are being planned and will be discussed by the Cyprus Parliament later in 2015. These proposals include neutral tax treatment for foreign currency exchange differences (forex) which do not relate to trading in forex, an extension of the arm’s length principle to include arm’s length downwards adjustments and an extension of the period of the employment income exemption for expatriates earning over EUR 100.000 from five to ten years.