Cyprus is an ideal place for holding company location.
The following factors are important when deciding the location of a holding company:
Dividends received from subsidiaries are exempt from profit tax.
Dividends paid to non-residents are exempt from withholding tax.
There is no tax liability when a holding company disposes shares in subsidiary or associated company.
There is no controlled foreign company rule. There is no income tax on consolidated profit in hands of a Cyprus holding company. This simply means that a profit centre could be in Singapore or Hong Kong (both jurisdictions are applying territorial taxation principle where non-Singapore or non-Hong Kong source income is not a subject to income tax in Singapore or Hong Kong), or even a “tax haven” like Belize where all profit is earned but consolidated in the hand of Cyprus company and show in consolidated profit a loss account and balance sheet without incurring any tax liability in Cyprus.
Cyprus officially joined the European Union from the 1st of May, 2004.
Annual audit cost of a Cyprus holding company is 25%-30% lower than in continental Europe.