{"id":1079,"date":"2020-06-23T09:07:05","date_gmt":"2020-06-23T09:07:05","guid":{"rendered":"https:\/\/aspentrust.com\/?p=1079"},"modified":"2023-01-04T15:53:32","modified_gmt":"2023-01-04T15:53:32","slug":"the-cyprus-holding-company-advantage","status":"publish","type":"post","link":"https:\/\/aspentrust.com\/the-cyprus-holding-company-advantage\/","title":{"rendered":"The Cyprus Holding Company Advantage"},"content":{"rendered":"\n

The Financial Architects at the Aspen Trust Group<\/a> discuss the usefulness of a Cyprus holding company as strategic business opportunities to achieve tax optimization and other benefits for business owners.<\/p>\n\n\n\n

Although their function has changed throughout the years, holding companies have always been crucial components of the business landscape and the world economy. The emergence and adaptations of the concept of holding companies have come a long way from the days of the Theodore Roosevelt administration and Rockefeller\u2019s business establishments.<\/p>\n\n\n\n

Although sometimes thought of negatively as it is associated with lack of transparency and accountability, a holding company can serve as a significant investment vehicle and financial tool<\/a>.<\/p>\n\n\n\n

Some of the largest companies in the world use the holding company structure to establish power consolidation over diverse portfolios. Moreover, many of them are looking into relocating to attractive new markets that allow for greater legal financial incentives, a possibility that emerged, and was backed, by the 2003 United Nations Conference on Trade and Development. It was at this time that a press release was issued analyzing the scope and benefits of using the world market for corporate headquarters<\/a>.<\/p>\n\n\n\n

Following the 2016 Brexit Referendum, many well-known British and European resident companies opted to relocate their headquarters to more favourable tax and business jurisdictions, one of the most prominent being Cyprus. The establishment of a Cyprus Holding company can come with many legal and tax incentives, as well as other locational benefits such as a skilled workforce, high quality-of-life and global connectivity and accessibility.<\/p>\n\n\n\n

From Then to Now: The Concept Behind a Holding Company<\/h2>\n\n\n\n

A holding company, or sometimes referred to as a parent company, owns a substantial amount of stock of other companies and oversees the governance of the Group. The assets which a holding company may oversee include other companies, real estate, intellectual property, and securities. Since a holding company is distinct from the companies under its control, there are legal and financial benefits as well as a layer of protection should these companies grow or fold.<\/p>\n\n\n\n

By the mid-19th<\/sup> century, American corporation laws made it easier for company incorporation, but provisions limited corporations from owning property or conducting business across both state and international borders.<\/p>\n\n\n\n

In 1889, the US state New Jersey was the first to utilize this form of corporate control<\/a> after other forms of organization received criticisms.<\/p>\n\n\n\n

It began when John D. Rockefeller<\/a> circumvented the restrictions by joining forces with other trustees and establishing a trust to manage the control of a single company in each American state. It was not long before other entrepreneurs took to this company structuring system and New Jersey became the first to introduce the Holding Company Act of 1889 in a move to entice companies to the state.<\/p>\n\n\n\n

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Holding companies have come a long way from their humble beginnings. They have become fundamental tools of the modern economy and are almost ubiquitous in all financial sectors. In modern contexts, they may be used strategically for better organisational and financial management of the group or as a safety net of limited liability for volatile industries such as investment banking and real estate.<\/p>\n\n\n\n

Legal Tax Benefits for a Cyprus Holding Company<\/h2>\n\n\n\n

Cyprus is a well-established international hub due to its geographical location (connecting three continents) and the steady rise to the flow of investments<\/a> within and into the country. This Mediterranean jurisdiction<\/a> is an attractive location for the registration of a Cyprus holding company.<\/p>\n\n\n\n

As a member of the European Union, a Cyprus holding company can become an EU parent-subsidiary for foreign companies without the tax burdens of other locales. Further, Cyprus has taken measures to work with the EU and the OECD to establish transparent tax legislation for Cyprus tax residents and resident shareholders.<\/p>\n\n\n\n

Under the Cyprus IP Box regime, companies are finding many tax benefits and increased intellectual property protection which allow them to maximize their financial profits.<\/p>\n\n\n\n

A resident Cyprus holding company is mainly subjected to the corporate tax rate of 12.5% on worldwide income, one of the lowest rates in the EU. To be a resident holding company, the management and operations of the offices must be located in Cyprus. Non-resident holding companies are taxed according to the income produced within the country.<\/p>\n\n\n\n

Yet, there are many tax benefits to registering a Cyprus holding company and relocating the headquarter operations to this jurisdiction<\/a>.<\/p>\n\n\n\n

Other tax advantages of establishing a holding company in Cyprus<\/h2>\n\n\n\n