Offshore Banking in Cyprus

Summary: An examination of offshore banking in Cyprus looking at the advantages and disadvantages of the jurisdiction

Cyprus is one of the least taxed nations in the world and has the lowest tax rates out of the 25 EU member states meaning that it is an incredibly attractive onshore/offshore centre for business and banking purposes.  Additionally, the fact that it is actually an EU member means that those who choose offshore banking in Cyprus are choosing a reputable and well regulated jurisdiction.

Cyprus is not the perfect location for everyone however, because it has signed up to meet the exacting requirements of the EU Savings Tax Directive for example – and so in this article we examine the many pros as well as the few cons of banking offshore in Cyprus so that our readers can determine whether the jurisdiction can offer them the solution that they require.

At the time of writing Cyprus is about to drop its Cyprus Pound currency in favour of the Euro (scheduled for January 2008) and it is still bringing in regulations and rulings that the EU demanded it adopt as part of the commitment it signed up to when it became a fully fledged member – what this means is that Cyprus is still a nation in transition in terms of its business and banking environment, therefore it is always wise to take up-to-date taxation and financial advice before embarking on any new offshore banking ventures to ensure your proposed solution can and will still work for you in the future.

That said – what is it about ‘Cyprus offshore’ that makes it so appealing to so many and why have over 17,000 offshore companies - or IBCs as they are referred to in Cyprus – chosen this jurisdiction for incorporation for example?

Cyprus has banking and legal structures based on the British model, it is a well regulated jurisdiction home to highly regarded –AA rated banks like the Bank of Cyprus for example, it is a nation aware of the importance of its banking business therefore it does not make opening an account difficult, clients’ privacy and security are highly respected, interest payable on certain account types can be extremely attractive, accounts can be 100% tax free depending on the residency of the account holder and offshore companies can hold offshore bank accounts in Cyprus allowing for even greater privacy.

On top of all of this – pensioners who decide to relocate to Cyprus only ever pay a maximum of 5% income tax, expatriates resident in Cyprus need not pay any tax on income derived outside of Cyprus and the nation is committed to remaining as attractive as possible in terms of the taxation it charges and the business environment it houses so that it can become a significant financial centre for the region.

All in all Cyprus manages to be one of the most flexible offshore banking centres in the world at the same time as remaining a highly respected offshore banking centre.  Few other locations in the world manage to strike this balance because those that are respected are usually restrictive and those that are highly flexible are considered unstable or unreliable.

The downside of banking offshore in Cyprus – well, if you’re affected by the EU Savings Tax Directive you will not be able to escape its remit in Cyprus, but that’s about the only downside therefore if you’re looking for a safe and tax efficient haven for your personal or business transactions why not consider Cyprus?  If you require information about opening an offshore bank account in Cyprus contact us - we will assist you by putting you in touch with our strategic partners who specialise in Cyprus offshore.

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