54
55
The Republic of Cyprus is an island country in the Eastern Mediterranean Sea and the third largest and third most populous island in the Mediterranean. Importantly for investors it has been a member state of the European Union from 2004.
Choosing Cy p r u s
Cyprus is small in relation to most other European nations with a population well under 1 million. The main commercial cities, which are only 45 minutes apart by car, are Nicosia (the capital) and Limassol. Cypriot–Russian relations between the Republic of Cyprus and the Russian Federation began in 1960 when the USSR established diplomatic relations with the newly independent Republic of Cyprus. Cooperation between both countries has increased since the 1990s and the fall of the USSR.
A Developed Banking System
Cyprus offers a developed banking system and very competitive personal and corporate tax regime for foreign nationals who are thinking of using Cyprus as a tax base and it is notable that co-operation with Russian regions such as Tatarstan, St. Petersburg and Krasnodar Region is growing. As well as Cypriot banks (the largest of which is the Bank of Cyprus) there are branches or administrative offices from banks in Greece, Latvia, France, Russian and the Ukraine.
01
Benefits
Cyprus offers the benefits of English common law which businesses often consider to be more flexible when drawing up contracts. Cyprus offers an advanced and flexible tax system for holding company and trading company structures which cannot be replicated easily anywhere else in Europe and enjoys one of the lowest corporation tax rates in the EU of 12.5%.
02
Recent Influential Legislation
Cyprus is a member of the European Economic Area and the European Union having enacted MiFID into its local legislation in 2007
There have been two recent pieces of legislation that influence the way in which financial companies operating in Europe conduct business. The first is the Insurance Mediation Directive (IMD), the second, and larger more significant piece of legislation is known as MiFID which stands for the Markets In Financial Instruments Directive. MiFID is followed by the 30 countries in the European Economic Area (being the 27 countries of the EU plus Iceland, Liechtenstein and Norway) and provides a standardized regulatory framework for financial services firms operating in the EU. Importantly, it allows one firm to “passport” its services into another country as long as it holds the relevant MiFID license. Cyprus is a member of the European Economic Area and the European Union having enacted MiFID into its local legislation in 2007 which means that Cypriot based FX brokeragees (as well as other types of investment firms) can offer their services to citizens of any other EEA country. The regulator responsible for ensuring that MiFID is implemented correctly in Cyprus is the Cyprus Securities and Exchange Commission based in Nicosia, known as CySEC. Due in part to its low corporate tax rates and European Union membership many financial companies are attracted to Cyprus and the island boasts a large financial sector. As well as brokerage firms there are many companies based in Cyprus which specialize in company maintenance & administration services, such as Eltoma which also has an office in Moscow. There are also specialist firms such as MAP S PLATIS based in Limassol that offer a range of necessary financial services including helping organizations obtain the necessary MiFID license to offer financial services in Cyprus. The attraction of Cyprus means that FX brokerages, investment firms and offshore formation and maintenance companies are able to recruit the multilingual and financially qualified
“
03
The attraction of Cyprus means that FX brokerages, investment firms and offshore formation and maintenance companies are able to recruit the multilingual and financially qualified staff
staff that they need such as investment specialists, traders, risk managers and anti-money laundering and compliance officers.
04
The Future
The recent banking crisis has done little to dent Cyprus’s appeal for many different types of businesses looking to establish a base in Europe, especially financial services companies, with new forex brokers applying for licenses every month. As long as Cyprus continues to offer competitive rates of corporation tax and remains a member of the European Union the island is likely to remain a favoured location for forex brokers and other corporate entities. The author of this article, Dr. Darryl Brock, is Head of Investment Advice at FM Investment Services, a Cyprus Investment Firm licensed by CySEC specializing in the provision of tax efficient investment advice to individual and corporate clients.