Sergey Kartashov: Cyprus has got rid of its offshore reputation

Sergey Kartashov (Sergejs Kartasovs), the chief executive officer of Generation Partners LTD, talked about the new reputation of Cyprus in the field of IT business. In the past few years, Cyprus has succeeded to attract many large companies due to various reasons. Generation Partners CEO discussed the rise of Cyprus as a European IT hub.

Sergey Kartashov (Sergejs Kartasovs), the chief executive officer of Generation Partners LTD, talked about the new reputation of Cyprus in the field of IT business. In the past few years, Cyprus has succeeded to attract many large companies due to various reasons. Generation Partners CEO discussed the rise of Cyprus as a European IT hub.

Freedom and IP-Box Regime
Cyprus is among the few countries in the European Union that introduced the IP-Box regime to provide tax benefits to the companies, especially in the field of information technology. The island holds a simple company registration system, an accessible reporting system, and a flexible taxation system. These are the crucial factors in the success of Cyprus to attract many companies to relocate to the island.

Cyprus has signed agreements with various countries to avoid double taxation. Ukraine is one of those countries that have signed such an agreement with Cyprus. Generation Partners has a huge experience of working under the local jurisdiction of the island. The company noted that many large international companies had relocated to Cyprus in the past few years. The IP-Box regime allows the companies to pay taxes only on a part of their profit. The companies must have to ensure their physical presence on the island to acquire such benefits.

Taxation
The income tax rate in Cyprus is just 12.5%. It is one of the lowest corporate tax rates in the EU. On the sale of products or services to the non-EU residents, the companies do not have to pay any tax under VAT. However, the companies are required to pay a 19% VAT on the sales of the products or services to the EU-residents. There is no tax on the transference of dividends from Cyprus-based company to any other financial entity or abroad. Sergey Kartashov noted, “The tax on earnings in this area can be as low as 2.5%, or even zero sometimes.”

Relocation Tips
Sergey Kartashov advised that the startups could relocate to the island if they had good initial capital. The companies should relocate to Cyprus if their business has been fully formed. Initial costs are quite high in this region to set up a new business. “It is better to move to the island only when the business is already well-formed,” noted CEO Generation Partners. A company is required to have at least 171000 on its company account to hire foreign workers.

Anti-Money Laundering Legislation
The government of Cyprus has gradually implemented the anti-money laundering legislation to fight against corruption and illegal money transference. It is an effort to build a new reputation of the island in the European business. The country has succeeded in providing favorable business conditions to the companies, especially in the field of IT. “This is a huge step that has made Cyprus attractive to large international companies and investors,” noted Kartashov.

A Couple of Drawbacks
Let’s talk about some difficulties faced by the companies on the island. The first difficulty is opening a bank account. The companies have to go through a lengthy process to open an account in a local bank. The second difficulty is giving a name to a company. In Cyprus, you must have to create a completely different name for your company as compared to other companies working on the island.

Competitors of Cyprus
Cyprus is riding ahead of its competitors in terms of providing favorable business conditions. Ireland, Great Britain, Malta, and Estonia are not much behind in this regard. The income tax rate in Ireland is equal to the income tax rate in Cyprus.