Tax Advisory & Wealth Architecture

In most cases yes, but the reasoning has changed. The argument was never only the rate: it is the EU membership, the treaty network, the participation exemption on dividends and on the disposal of securities, the absence of withholding tax on outbound dividends to non-residents, the reformed personal regime and the fact that banks and counterparties recognise the jurisdiction. What the reform does remove is the ability to justify a structure by rate alone. If a structure was built purely for 12.5%, it needs re-modelling — and sometimes the honest answer is that a different jurisdiction now fits better.

From 1 January 2026 a company incorporated under Cyprus law is treated as Cyprus tax resident unless a double tax treaty allocates residency elsewhere. Previously residency depended solely on management and control, which meant a Cyprus company managed abroad could be tax resident nowhere. That gap is closed. The practical consequence is that groups running Cyprus companies with foreign boards need to check whether they now have a dual-residency question and, if so, resolve it under the relevant treaty rather than leave it undeclared.

The rate follows the year the profits were earned, not the year of payment. Dividends paid to Cyprus tax resident and domiciled individuals out of profits earned up to 31 December 2025 remain subject to defence contribution at 17% where the dividend is received on or before 31 December 2031. Profits earned from 1 January 2026 attract 5%. Distribution sequencing therefore has real value, and it should be modelled before a dividend is declared rather than explained afterwards.

Yes. An individual who is Cyprus tax resident but not domiciled in Cyprus remains outside defence contribution on dividends, interest and rents. The seventeen-year rule continues to apply, and the reform added an extension: individuals who have been Cyprus tax resident for 17 of the preceding 20 years may extend the exemption for up to two further five-year periods against an upfront payment of €250,000 per period. Whether that is worthwhile is arithmetic, and it is worth doing well before the seventeenth year rather than in it.

There is no universal number, and any adviser who gives one without knowing the facts is guessing. The test is functional: can the entity demonstrate that the decisions attributed to it were taken by people with the authority and capability to take them, in the place claimed? For a passive holding company that can be modest — resident directors who genuinely decide, board meetings held and minuted in Cyprus, local records and banking. For an entity earning trading or service income, it means people, premises and costs proportionate to the profit being reported. We size it to the function and document it as it is built, not retrospectively.

Yes, and the earlier the better. Pre-sale work typically covers the treatment of the disposal at shareholder level, the availability of the participation exemption on securities, cleaning up intra-group balances and historic filings that will surface in due diligence, the tax warranties and indemnities in the sale agreement, and the personal position of each selling shareholder. Twelve months of lead time usually changes the outcome materially; three weeks rarely does.

Yes, plainly, and we will not implement it. Our test is whether the position can be explained to a tax authority, a bank and a future buyer with the same set of facts. Arrangements that depend on nobody looking closely tend to be discovered at the worst possible moment — during due diligence, during a bank review, or after an information exchange — when the cost of unwinding them is highest and the options are fewest.