Cyprus has always been an ideal location for holding companies. Cyprus is most commonly used as an intermediate holding company location in the following circumstances:
For international or domestic groups investing outside Cyprus, aiming at tax exempt dividend income streams.
To hold subsidiaries that have scope for significant capital appreciation and with the intention of being disposed in the future, as such disposals are not taxable in Cyprus.
To benefit from the favourable withholding tax provisions of the Cyprus double tax treaties network.
Where it may be important to achieve a tax free unwind of the holding company at some stage in the future.
To avail of the easy exit strategy under Cyprus law which allows payment of dividend, interest and royalties (in most cases) without payment of withholding tax.
To establish a finance company, whereby the Cyprus company will provide finance to other group companies.
To hold intellectual property and license such property to third parties and other group companies.