The Cyprus crisis and its international tax regime: what multinationals should know
Cyprus has been a member of the European Union (EU) since 2004. The country has long been known for its low corporate income tax rate and absence of withholding taxes on payments of interest, dividends and royalties paid to non-residents. This attractive tax environment, coupled with an extensive network of double tax treaties and favourable corporate laws and freedom of capital within the EU, has made Cyprus a centre for multinationals establishing holding companies, investment funds, trusts and other special-purpose entities.
The financial stress in Cyprus is different from that in other EU countries. It does not stem from a sovereign debt crisis and deep government deficits. Rather, the financial crisis arose from the investments that a number of Cypriot financial institutions made in Greek bonds and other assets with severely depressed valuations. In an effort to stabilise these banks, the Eurogroup of finance ministers, along with the International Monetary Fund, has agreed to a €10bn package of assistance for Cyprus. As part of the package, the Central Bank of Cyprus placed significant withdrawal restrictions on depositors, which are gradually being relaxed by decrees issued on a weekly basis by the Central Bank of Cyprus. In a recent relaxation, the restrictive measures for branches and subsidiaries of qualifying foreign banks in Cyprus were lifted completely, with the result that these banks are now fully exempt from the capital controls in connection with transactions of their international business clients…
If you are registered and logged in to the site, click on the link below to read the rest of the DLA Piper briefing. If not, please register or sign in with your details below.
Sign in or Register to continue reading this article
It's quick, easy and free!
It takes just 5 minutes to register. Answer a few simple questions and once completed you’ll have instant access.Register now
Why register to The Lawyer
In-depth, expert analysis into the stories behind the headlines from our leading team of journalists.
Identify the major players and business opportunities within a particular region through our series of free, special reports.
Receive your pick of The Lawyer's daily and weekly email newsletters, tailored by practice area, region and job function.
More relevant to you
To continue providing the best analysis, insight and news across the legal market we are collecting some information about who you are, what you do and where you work to improve The Lawyer and make it more relevant to you.
News from DLA Piper
News from The Lawyer
Briefings from DLA Piper
A well-known British performing artist was granted permission to take his case to the Supreme Court, where he will appeal the Court of Appeal’s decision in OPO v MLA & STL.
The increased focus of national data protection authorities on the processing of personal data through mobile apps was again confirmed in an open letter from a group of data protection authorities.
Analysis from The Lawyer
Regulators are ramping up the pressure in the aftermath of recession, leaving firms to compete for compliance and restructuring work
Shearman & Sterling is making its presence felt in the City, squaring up to magic circle firms and looking to muscle in on key relationships. Private equity house Bridgepoint is one outfit that has had its head turned by the US firm.