Tax benefits, wealth planning and asset protection

Cyprus is not only a competitive jurisdiction for international businesses, High Net Worth Individuals (HNWIs) and innovative startups. It is also an excellent choice for business restructuring and relocation, and for personal succession, wealth planning and asset protection for a number of compelling reasons, including tax efficiency, legal flexibility and a strategic geographic location. Located at a crossroads between Europe, Asia and Africa, Cyprus offers a unique gateway for companies with regional and international interests.

As a member of the European Union since 2004, it grants seamless access to the EU Single Market while adhering to and implementing the full breadth of EU legislation. This combination makes Cyprus a natural choice for businesses seeking a well-regulated yet accessible base of operations Cyprus is widely recognised for its favourable tax regime, long regarded as one of the most attractive in the EU. Although the corporate tax rate is set to increase from 12.5% to 15% in line with global trends, proposed new tax reforms in 2025 are designed to counterbalance this rise. These reforms include alternative tax reliefs and incentives aimed at preserving the island’s appeal to international investors.

Some key tax benefits already include no withholding tax on dividends, interest, or royalties under qualifying conditions, an exemption for capital gains tax on the sale of securities, no inheritance tax (ideal for wealth succession) and a robust network of over 60 double tax treaties to facilitate cross-border business and investment. Regarding trusts and wealth planning, Cyprus International Trusts (CITs) serve as versatile vehicles for asset protection, estate planning and tax optimisation. Governed by flexible legislation rooted in English common law, CITs offer clarity and reliability. They are not only useful for succession planning and asset shielding but also serve educational, medical, charitable and other personal objectives. Trusts in Cyprus can hold a wide array of assets – from real estate and investments to intellectual property and fine art – regardless of jurisdiction, making them an attractive choice for global asset management.

Cyprus also offers an efficient, cost-effective environment for setting up and maintaining corporate entities. The jurisdiction boasts a well-established ecosystem of professional services, offering expert fiduciary and administrative support. A few of the highlights include, access to the IP Box regime, which features and effective tax rate as low as 2.5% on qualifying income, a favourable holding company regime that enables tax-efficient repatriation of profits, and continued support for the notional interest deduction (NID) and IP Box, which reinforces Cyprus as a hub for innovation and business financing. Additionally, recent reforms bring a revised corporate reorganisation framework, simplifying mergers, acquisitions and structural changes – especially useful for family business divisions and international expansions. The introduction of a modernised Employee Stock Option (ESO) regime also positions Cyprus competitively. Gains from ESOs are taxed at a flat 15% if shares are held for three years, significantly outperforming similar regimes in Ireland, France, the Netherlands and Estonia. This is particularly attractive for startups and high-growth technology firms.

Cyprus continues to attract foreign executives, entrepreneurs and investors through a blend of fiscal and lifestyle benefits. The Non-Domicile (Non-Dom) regime exempts eligible residents from the Special Defence Contribution (SDC) on dividend and interest income for up to 17 years. Proposed reforms suggest the introduction of an annual fee to extend this benefit beyond the initial period. A competitive personal income tax regime for foreign professionals further enhances its attractiveness.

There are also high standards of living, a multilingual population, and a well-developed infrastructure for education and healthcare, all of which make relocation seamless for families and individuals alike, while more limited citizenship and residency-by-investment pathways also remain available. Cyprus’ corporate legislation, closely aligned with English principles, provides an ideal setting for business restructuring and succession planning. Companies can easily re-domicile to or from Cyprus, enabling strategic flexibility.

Legal predictability is assured through a reliable judicial system. The recent establishment of Commercial and Maritime Courts, along with initiatives to promote arbitration and mediation, reflects Cyprus’ ambition to become a regional hub for dispute resolution. The island is also emerging as a preferred destination for headquartering, particularly among tech-driven enterprises and startups seeking a dynamic and cost-effective European base. Cyprus complies fully with international standards, including OECD, FATF, and EU directives, ensuring transparency and regulatory integrity. No longer perceived as a tax haven, the country maintains its status as a compliant low-tax jurisdiction, steering clear of international blacklists and enhancing its global credibility. Rather than a shift away from its core strengths, the recent reforms represent a strategic recalibration to meet modern economic and regulatory demands while preserving Cyprus’ pro-business foundation.

• By Nicky Xenofontos, Advocate, TEP, Chair, STEP Cyprus

This article was first published in the special publication Doing Business in Cyprus. To view it, click here. To read the entire publication, click here.