A Cypriot Company can be established to function as Group Treasury for related companies whether or not set up in Cyprus. This enables a group of companies to have the flexibility in their financing processes. A Group Treasury Company is a crucial factor in international tax planning in any group company structure.

The set up of such a company provides numerous advantages:

• Fair tax treatment which results in low corporate tax rate on interest income received;
• Cyprus does not apply any withholding taxes on dividends distributions out of Cyprus to non-residents;
• No capital duty, no thin cap/ debt to equity rules, no CFC rules;
• Extensive treaty network;
• Applicability of all EU Directives;
• No thin capitulation rules in Cyprus;
• No CFC legislation;
• No withholding taxes in Cyprus on outbound payments of interest to non-residents;
• No need to obtain Advanced Revenue Ruling of Status to benefit from tax refund.

Low Tax Rate
Interest receivable by a Cypriot Company acting as Group Treasury is considered as trading income if such interest:

• is derived, directly or indirectly, from trade or business;
• has suffered any foreign tax; or
• has suffered foreign tax, directly, by way of withholding, or otherwise, at a rate of tax which is at least 5%.

Financing of Cyprus Treasury Company

The financing of the Cypriot Group Treasury Company may or may not rely on the ownership structure acquired for the Group Treasury Company. Some options include:

• Funds from each shareholder directly to the Group Treasury Company;
• From each shareholder personally to their personal holding company which will progress loans to the Group Treasury Company;
• From profits of other related companies or subsidiaries eventually being owned by the same structures;
• Through third party loans.