The Advantages of Establishing AIF in Cyprus

Tax Benefits

Cyprus offers substantial savings on tax associated with AIFs

EU Access

Cyprus is an EU member state thus giving you access to Passporting

Lower Costs

AIF costs in Cyprus are one-third lower than those of competitive jurisdictions

EU Citizenship

AIF can be used by 3rd country investors to obtain Cyprus citizenship

The advantages

There is a number of advantages to establish a Cy AIF, mainly those are categorised into the tax benefits and non-tax benefits

Tax Advantages

There are no specific sections or modes in the Cyprus tax for AIFs. Provided that an AIF is set up as a limited company and is managed and control in Cyprus, then this will be taxed as any other Cyprus based company. This gives rise to the following tax benefits:

  • Tax exemption from the profit on a sale of shares and other financial instruments
  • Exempt from tax on foreign dividend income received
  • No withholding tax on payments of interest and dividends to non-residents
  • No stamp duties exist on the redemption-subscription-repurchase or transfer of units
  • A wide network of Double Tax Treaty
  • Most AIFs will generate exempt tax form of income in case where AIF is formed as a company

Other Advantages

Besides the tax advantages, there are numerous other benefits that are achieved by setting up an Alternative Investment Fund in Cyprus, which offer operational advantages crucial towards a successful operation of an AIF within the European Union.

  • Cyprus is an EU member state compliant with EU laws & regulations. An EU and OECD approved Tax regime.
  • Cyprus is a Eurozone member state
  • A Cyprus-based fund can be marketed in the EU without any other license (passporting)
  • An extensive network of legal, accounting and financial services
  • Significant cost benefits in setting up and managing a Cyprus-based fund structure (roughly estimated at one-third of the cost of other competitive jurisdictions).
  • Fully harmonized and modern fund legislation for AIF
  • The option of listing in stock exchanges of recognized markets
  • AIF may also be used by third-country investors, to apply for Cyprus citizenship.

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