Finance Company

The low corporate tax of Cyprus at 12.5% is the foundation for the formation of finance incorporations in Cyprus since when a foreign company is financed by a Cypriot establishment benefits the interest fee on a rate higher than the 12.5% tax that is applied in Cyprus. The capital of the Cyprus company can be equity or debt.

There is no limitation on the percentage that is made through debt. In case is made through debt is worth noting that a lower profit margin is accepted (profit margin is the difference between the interest rate the CY company charges and the rate the company is charged). Then the profit can be distributed abroad without any withholding tax or re-invested in Cyprus.