The Benefits of an Alternative Investment Fund in Cyprus is that it offers a range of legal, regulatory and tax solutions to address and meet the needs of AIF promoters and investors alike. Services such as setup and acquisition structuring, fund administration, legal, custody and audit are provided in a wide and customized range, and at competitive costs in comparison to other reputable funds jurisdictions. Cyprus has enacted strict Anti-Money Laundering Regulations, in line with EU and international standards.
The below are the main tax advantages enjoyed by an AIF in Cyprus:
- Exemption from tax on profits from disposal of shares and other financial instruments;
- Exemption from tax on foreign dividends received (with some conditions);
- No withholding tax on interest and dividend payments made to non-residents;
- No stamp duties on the subscription, redemption, repurchase or transfer of units;
- Dividends distributed or deemed to be distributed by an AIF to Cyprus tax residents are subject to 3% SDC (compared to 17% that applies to dividends from normal limited liability companies to Cyprus tax residents);
- No withholding tax on redemption of units;
- Can obtain a Tax Residency Certificate;
- Enhanced image and creation of substance. Unlike private companies, an AIF is subject to regulation and monitoring, all Directors are deemed to be “fit and proper”, investment strategies is documented within a Private Offering Memorandum, and a custodian/depositary and investment manager are typically appointed.
- A wide network of Double Tax Treaties is in place with more than 58 countries worldwide, securing tax incentives and encouraging the channeling of funds in other countries with nil or low withholding tax rates;
- In practice most AIFs generate only exempt forms of income, hence are not subject to Cyprus tax.