Sergey Kartashov (SergejsKartasovs), the chief executive officer of asset management company Generation Partners, expressed his views on the future of Cyprus as a center of the European IT business. A rise in the relocation of companies from Europe to Cyprus has been witnessed by Generation Partners in the past few years.
Sergey Kartashov (Sergejs Kartasovs), the chief executive officer of asset management company Generation Partners, expressed his views on the future of Cyprus as a center of the European IT business. A rise in the relocation of companies from Europe to Cyprus has been witnessed by Generation Partners in the past few years.
Sergey Kartashov talked about the reasons behind the success of the island in terms of attracting companies for relocation business, especially IT companies.
Cyprus with huge tax benefits
The first and foremost reason behind the success of Cyprus to attract foreign companies to relocate to the island is tax benefits. Cyprus is offering one of the lowest corporate tax rates in the European Union (EU) to the companies. Similarly, it is a tax-free country for sending dividends from a Cypriot company to any foreign account. The income tax rate is a mere 12.5% on the island. The value-added taxation system is very interesting in Cyprus. A company is required to pay only 19% VAT on the sales of its products and services to the EU customers. There is no VAT on the products and services sold to non-EU customers.
In the EU, Cyprus is one of the few countries that have implemented the IP-Box regime. IP-Box is highly beneficial for IT companies. If they comply with the IP-Box guidelines, they can easily get huge tax cuts. In Cyprus, the tax on earnings is as low as 2.5% or even zero sometimes. The IT companies only have to pay tax on a part of the profits. Sergey Kartashov (Sergejs Kartasovs) explained, “Within its framework, only part of the profit from the creation or modernization of intellectual property products falls under the state duty.” The business conditions in Cyprus are highly favorable for IT companies, noted Generation Partners CEO.
Tips about Relocation given by Sergey Kartashov
Sergey Kartashov, an IT businessman, gave some tips related to the relocation of the business to the island. In the past five years, many international companies relocated to Cyprus from Europe and various other parts of the world. The main attractive features of the island are its tax and bureaucratic systems. He said, “Moving to the island is more comfortable when the business has already been formed or it has a significant start-up capital.”
A company must have at least 171,000 euros on its account to hire foreign workers on the island. The company registration cost lies between 2000-3000 euros. A company should relocate to the island with its entire offices. Kartashov said, “Such a company in most cases pays for itself in the future.” He said that the startups could easily move to Cyprus as the authorized capital was just 1000 euros on the island.
A New Reputation of Cyprus
Cyprus is building a new reputation as a country for IT companies. In the past, it was reputed as a country for offshore companies. Since joining the EU, the main aim of the government of Cyprus is to fight against money laundering and corrupt capital. That is why it has gradually implemented the anti-money laundering legislation. A company has to pass declare its source of income before getting an account in a local bank account. The Generation Partners CEO explained, “This is the right step towards a completely new reputation of Cyprus.”
The main competitors of the island in Europe are Great Britain, Ireland, Malta, and Estonia. However, Cyprus is positioning ahead of its competitors and continuously improving its business environment.