Sergey Kartashov(SergejsKartasovs), the CEO of Generation Partners LTD, gave his opinion on Cyprus as a European IT capital in the future. Generation Partners is an asset management company based in Cyprus. According to Sergey Kartashov, many companies have relocated from Europe and post-Soviet states to Cyprus in the last few years.
The CEO of Generation Partners explains the reasons behind the attraction of the island for relocating IT businesses. In terms of registering and maintaining a business in Europe, Cyprus is one of the best jurisdictions in the region. There are three main factors in this regard including a simple registration system, a simplified reporting system, and a flexible taxation system. The income tax rate in Cyprus is just 12.5% while the value-added tax (VAT) is just 19%. There is no VAT for products that are purchased by non-EU residents.
Sergey Kartashov noted, “Cyprus is one of the few countries that have introduced the IP-Box regime.” Cyprus provides the best conditions to operate an IT company. There is almost zero tax on earnings on this island in some conditions. Normally, the companies only have to pay a 2.5% tax on earnings here. The state gathers tax from the IT companies only on a part of the profit. That is why Cyprus is known as a tax haven.
In the last five years, many large companies relocated to the island from Europe and other parts of the world. More companies are coming to Cyprus every year. It is happening due to the new tax and bureaucratic systems implemented in the country. It is a costly process to set up a business for a startup. Sergey Kartashov (Sergejs Kartasovs) advised that the companies having good initial capital should relocate to Cyprus. The startups having 1000 Euros as the authorized capital can register a company in Cyprus. However, a company must have 171000 Euros on its company’s account to hire foreign employees.
Everything is not simple here in Cyprus for the businesses. It is a hard and lengthy process for a businessman. The country has recently imposed anti-money laundering and deoffshorization procedures to prevent money laundering and profit hiding activities. The bank account applicants must have to show their sources of income and reputation to open an account in a local bank. Generation Partners CEO noted, “This is the right step towards the new reputation of Cyprus.”
Cyprus joined the European Union back in 2004. Since then, the island has been working on getting rid of its offshore reputation. The country implemented an anti-money laundering system in the gradual steps to prevent money laundering and conceal corrupt capital. Sergey Kartashov called it the “hardest step” taken by the government of Cyprus. The anti-money laundering system made Cyprus an attractive location for international companies. In the last five years, the island witnessed the results of this system. “In the future, this strategy may help Cyprus become not ‘one of’, but the largest IT hub in Europe.”
Ireland, Malta, Great Britain, and Estonia are the major competitors of Cyprus in the European region. These countries are also known as promising jurisdictions to attract large businesses. These countries have great tax flexibility and bureaucratic transparency. Belgium, Hungary, Spain, Luxembourg, France, and the Netherlands also have IP-Box regime. They are also competing well with Cyprus in the IT sector. However, Cyprus is the most favorable location in Europe if all parameters are analyzed together.