Chesterfield (London) - Headquarters
207 Old Marylebone Road
London
NW1 5QP
Tel: +44 (0) 203 771 3853
Fax: +44 (0) 203 771 3856
Email: sales@groupchesterfield.com

Cyprus Fund Management

Fund management assists in investment in various jurisdictions. Cyprus Funds or International Collective Investment Schemes (ICIS) as they are known are governed by the International Collective Investment Scheme Law 47(I) of 1999. Over the last few years Cyprus has become a very popular jurisdiction within Europe for Funds. This is mainly due to recent changes in the Cyprus tax legislation and regulatory framework in an effort by the Cyprus government to increase Cyprus’s attractiveness as a fund friendly jurisdiction.

These can be structured in the form of a private limited company, in this case all of the numerous advantages available to Cyprus companies through the Cyprus tax regime would apply to the Fund. – Check this article for more details of the advantages of a Cyprus company

There are many tax advantages to a Cyprus Fund some of which are as follows;

  • Exemption from tax on profits from disposal of shares and other financial instruments
  • Exemption from tax on foreign dividends (providing these meet certain conditions)
  • No withholding tax on interest and dividend payments made to non residents
  • Dividends distributed by a Cyprus Fund to Cyprus tax residents are subject to 3% special defense contribution (compared to 20% that applies to dividends from normal limited liability companies to Cyprus tax residents)
  • No withholding tax on redemption of units
  • Possible to obtain a Tax Residency Certificate
  • Tax credits are available as per any double tax treaties held by Cyprus, which currently holds in excess of 40 double tax treaties with more under negotiation
  • With Cyprus Funds it is possible that the income is exempt and hence not subject to Cyprus tax

Cyprus is an attractive jurisdiction for Funds not only because of the numerous tax advantages, but also because it has other advantages to offer. Most Fund Jurisdictions within Europe impose various asset diversification requirements, however Cyprus has no asset diversification rules. It also has no investment or formal leveraging restrictions.

Cyprus Funds can take many forms such as the following;

International Fixed Capital Company

  • This is incorporated under Cyprus Law
  • Its share capital cannot vary 
  • Its assets holders are non-Cypriot
  • The minimum capital required to set this up is $100,000

International Variable Capital Company

  • This is incorporated under Cyprus Law
  • Its share capital varies
  • Its asset holders are non-Cypriot
  • The share capital of the company is equal to the net asset value of the shares of the company at any time
  • Should have a minimum of 2-4 investors each investing a minimum of €50,000

International Unit Trust Scheme

  • This is created under the International Trust Law
  • The assets are owned by the trustee in fiduciary for the trust beneficiaries
  • In ternational Investment Limited Partnership
  • Registered under the Partnership Law
  • There must be a general partner appointed who manages the Fund and is responsible for the assets and liabilities
  • This can have corporate entities as partners
The International Variable Capital Company is the most common Fund formed in Cyprus. The Cyprus Securities and Exchange Commission (CySEC) is the regulatory body for Cyprus Funds. Regulated funds require compliance and administrative procedures such as audited accounts. There is the option of a Private Non Regulated Fund. Even if the business complies as a non regulated entity it is always prudent in practice to have a non regulated fund that is operated with the procedures of a regulated fund. This would provide structure to the fund whilst protecting from and reducing restrictions.

Setting up a Cyprus Fund is a complex matter, but Chesterfield are on hand to assist in this area. An established bank, whether in Cyprus or another reputable jurisdiction needs to be appointed as the custodian bearing responsibility for holding the assets. Chesterfield have a good relationship with several banks in Cyprus aswell as others worldwide and can make the arrangements for the custodian.

Email a friend

Licensed & Developed by UiBS>®