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