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Looking for investment funds in Europe? Cyprus is your top choice!
That place is Cyprus.
The island is such a beauty
that it's where Aphrodite, the Greek goddess of love, was born from the foam of
the sea in Paphos, her main center of worship.
One of the many famous folk
tales in Cyprus is the story of Saint Mamus, a Christian who the Romans jailed
for tax evasion. Nevertheless, when the Romans saw him rescuing a sheep by
taming a wild lion; they were so impressed that decided to let him go.
Cyprus has its own Patron
Saint of zero-tax since agent times, and it continues to be true to its legends.
This country is not only a
top tax planning destination but also has some of the best investment funds
offerings in Europe.
If you are a family office
or have an exclusive pool of investors that want to invest in different
vehicles without excessive regulation, quick setup but with robust legislation,
reduced management costs, and gaining entry to the EU, Cyprus is your place.
An Alternative Investment
Fund (AIF from now on) in Cyprus provides you with:
- Flexibility,
as you can segregate your AIF into sub-funds and transfer of units between
investors, which allows varied expansion and investment strategies.
- No
restrictions regarding the type of investments.
- The
possibility of self-management.
- One
of the lowest corporate tax rates in the EU (12.5 %).
- No
capital gains or dividend tax.
- More
than 65 double taxation treaties.
- Cost-effectiveness.
- Sound
regulatory framework
About Cyprus
Cyprus is a full EU member,
and it's the third-largest island in the Mediterranean. It has a privileged
geopolitical location that puts it a short fly awayaway from all European,
North African and Middle Eastern capitals.
The island enjoys 340 days
of sunshine, and it's been a top Mediterranean cruise destination for decades
thanks to its otherworldly beaches and archeological sites.
And the lure of the island
has only increased with the construction of villas, yacht clubs, water sports
attractions, and the safekeeping of its historical sites.
But Cyprus is way more than
a fun, beautiful, and cultured place. The spirit of Saint Mamus still dwells in
Cyprus. Its inhabitants consider effective tax planning a sacred duty, and the
island offers a wide array of tax incentives for individuals and companies who
decide to reside in Cyprus.
This has made Cyprus the EU
country with the largest expat community, which comprises almost a quarter of
its population, whith a strong presence of British, Russians, and Middle
Easterners.
If you truly believe in
freedom and want to achieve your financial and personal goals, Cyprus is the
place you're looking for.
And, particularly, you're
looking at a Cypriot fund. Our experts in Cyprus can help you establish a fund,
name a manager, register with the CySEC (Cyprus Securities and Exchange
Commission), and quickly open a bank account with a robust Cypriot bank.
The AIF fund is ideal for
investors all over the world as it will benefit from Cyprus' strong double
taxation network and will offer swift access to the European market.
The fund management industry
in Cyprus has grown exponentially. The volume of funds and assets break records
each year, almost tripling managed assets in Cyprus from €2.1b in 2012 to €7.7b
in 2018. Its strategic location makes it a middle point between Western and
Eastern Europe, North Africa, and the Middle East, attracting dozens of funds
from all these regions.
Cyprus is probably the most
emerging fund and asset management market in the EU. The European investment
fund market is of €725b and has €12 trillion in assets under management. Many
investors from all over the world want to gain entry into the European market
and know that Cyprus is one of the easiest and most reputable ways to do so.
Also, establishing a fund in
Cyprus is relatively simple and straightforward. It gives you the peace of mind
of knowing the fund is well-regulated in a reputable jurisdiction, which has
attracted plenty of investors from China, India, Russia, and Japan who use
Cyprus as their entryway to the European market.
Why Cyprus? Five reasons to set up an investment
fund in the home of Aphrodite
Terrific tax system
Cyprus offers one of the
lowest corporate tax rates in the EU, at a meager 12.5 %. Furthermore, the tax
system is territorial, meaning you only pay taxes on your Cyprus-sourced
income. There are no capital gains or dividend distribution taxes.
Also, the island has one of
the most beneficial non-dom regimes, which offers a 50 % tax reduction for
incomes over €100k and a full defense tax exemption for 17 years. Moreover, to
attract fund managers, Cyprus introduced a special 8 % tax rate on the variable
employment remuneration of fund managers for ten years, as long as their
taxable income exceeds €10k. If foreigners decide to relocate in Cyprus, they will
also benefit from:
- The
above-mentioned non-dom regime.
- 20
% of the taxable remuneration is tax-exempt for five years if it's less than
€100k.
- The
non-taxable threshold is €19.5k, one of the highest in the EU.
Flexibility
AIFs can be divided into
subfunds, can include different assets, and units can be transferred between
investors. All this provides you with enhanced flexibility and possibilities
for your investment strategy to a point that is rare in most of the EU.
Simplicity
The AIFs are simple to
arrange, manage, and operate and are cost-conscious.
Passporting rights
Your Cypriot fund comes with
EU passporting rights, which means you can market and sell them in any other EU
member country without additional application or licensing process, which
reduces time, stress, paperwork, and money. If you intend to expand your fund
business across Europe, Cyprus is the best entryway.
Modern regulatory
framework
Cyprus comes with full
compliance with the EU directives and has a first-level, robust yet flexible
regulatory framework. All this amounts to straightforward legal procedures,
easiness to monitor your investments, and full transparency meaning your AIF is
a reliable, steady investment. The legal framework is generally pro-business
and meant to protect investors.
What is an alternative investment fund?
AIFs are a type of
investment fund that is not included in the European Directive on Undertakings
for Collective Investment in Transferable Securities (UCITS). Thus, AIFs
include hedge funds, funds of hedge funds, private equity, real estate funds,
and venture capital funds.
In simpler terms, an AIF is
a fund created for non-traditional investment vehicles such as real estate,
rare commodities, and such.
The Cypriot Parliament
passed a new AIF law in 2018 that improved Cyprus as a fund jurisdiction giving
it a competitive legal framework as it created a new form of AIF, the
Registered Alternative Investment Fund. The CYSEC regulates and supervises the
financial market and has an excellent reputation as a fair regulatory entity
thanks to its first level legislation.
The 2018 law added the
Registered AIF (RAIF) to the two types of AIF that already existed: Unlimited
(UAIF) and Limited (LAIF).
Let's explain each one of
them:
Limited AIFs:
These funds can have a maximum of 75 professional and/or well-informed
investors.They don't have investment restrictions and can be both internally or
externally managed.
Unlimited AIFs:
They have an unlimited number of investors. However, they also have investment
restrictions. They can also be internally or externally managed.
Registered AIFs:
They are the newest type of AIF. They can only be externally managed but are
cheaper and easier to set up and manage than both limited and unlimited AIFs.
They also allow an unlimited number of investors with fewer restrictions than
unlimited AIFs.
All these funds have three
types of investors:
Professional investor:
This investor checks all the boxes regarding compliance requirements that
demonstrate he has the experience and knowledge to make the decisions about the
investment fund.
Well-informed investor:
This investor doesn't fill the criteria but establishes he's aware of any risks
regarding the investment. He must invest a minimum of $125k.
Retail investor: An
investor that doesn't meet the criteria for professional or well-informed
investor.
The RAIF has one terrific
benefit: the registration process is reduced from 3-4 months, as with the UAIF
and LAIF, to a mere 2-3 weeks. How? Because RAIFs can be registered by AIF
managers duly licensed by the CySEC, meaning they don't need any extra authorization
and reduces registration costs. Moreover, they can be both open or close-ended
and have no minimum share capital requirements.
This makes the Cyprus RAIF a
terrific opportunity for family offices and other unregulated investors from a
legal, regulatory, fiscal, and investment perspective. It offers solid
protection as it requires the appointment of an AIF manager for regulatory
compliance, and you can structure your AIF under an LC, which has separate
legal personality and offers limited liability.
Cyprus has become one of the
best fund jurisdictions in the EU because there are no investment type
restrictions. Moreover, they are incredibly flexible as they can 1) Be
self-managed, 2) Set up subfunds, 3) Become a part of a larger fund. All these
allow different expansions and investment strategies. And, on top of that, you
have a friendly tax system that offers benefits for funds such as:
- No
capital gains tax on revenues from the sale and management of securities.
- No
capital dividend tax.
- No
deemed dividend distribution tax for non-resident investors.
- A
special 8 % tax rate on the variable employment remuneration of fund managers for
tenyears, if their taxable income exceeds €10k.
You can see its main
differences and particularities right here:
|
LAIF |
UAIF |
RAIF |
||
Management Type |
Externally Managed |
Internally Managed |
Externally Managed |
Internally Managed |
Externally Managed |
Legal Forms |
Mutual Fund |
Fixed or
Variable Capital Investment Company |
Mutual Fund |
||
Fixed or
Variable Capital Investment Company |
Limited
Partnership, with or without legal personality |
Fixed or
Variable Capital Investment Company |
|||
Limited
Partnership, with or without legal personality |
|
Limited
Partnership, with or without legal personality |
|||
Physical Office |
The manager's
offices can be used |
Required |
The manager's
offices can be used |
Required |
Not required |
Number of Directors |
Minimum 2 |
Minimum 4 |
Minimum 2 |
Minimum 3 |
Minimum 2 |
(1
ExecutiveDirector) |
(2
ExecutiveDirectors) |
(1
Executive Director) |
(1
Executive Director) |
(1
Executive Director) |
|
Number of Investors |
Unlimited |
No more
than 50 |
Unlimited |
||
Investment Restrictions |
Investment
Restrictions apply depending on the investment strategy and type of investors |
No
requirements or limitations |
Limited
rules mayapply |
||
Capital Requirements |
No initial
requirement, €500,000 within the first 12 months following authorization |
€125,000 initial
requirement, €500,000 within the first 12 months following authorization |
No initial
requirement, €250,000 within the first 12 months following authorization |
€50,000 initial
requirement, €250,000 within the first 12 months following authorization |
No initial
requirement, €500,000 within the first 12 months following authorization |
AssetsUnder Management |
The assets under
management should reach the threshold for AIFM registration set in the AIFM
law being: |
The assets under
management should reach the threshold for AIFM registration set in the AIFM
law being: |
No
limitations |
||
· €100 mil withleverage, or |
· €100 mil withleverage, or |
||||
· €500 mil without
leverage and a lock up period of 5 years |
· €500 mil without
leverage and a lock up period of 5 years |
||||
Portfolio Management |
Bythemanager |
Bythe AIF
board |
Bythemanager |
Bythe AIF
board |
Bythemanager |
Unittransferability |
No
limitations |
Freely if the
number of investors is less than 50 and the potential transferees are
Professional and/or Well - Informed Investors |
Freely if the
potential transferees are Professional and/or Well - Informed Investors |
||
CySEC Application Fees |
€1,800 plus €400
for each additional investment compartment |
€1,300 plus €300
for each additional investment compartment |
€400 plus €100
for each additional investment compartment |
||
CySEC Annual Fees |
€1,800 plus €400
for each additional investment compartment |
€1,300 plus €300
for each additional investment compartment |
€400 plus €100
for each additional investment compartment |
Who
are we, and what can we do for you?
We
have more than two decades working with NTL, a prestigious international
firm,in order to provide family offices, high net worth individuals, and investors
around the world with the best financial, investment, corporate, banking, and
immigration solutions.
Our
core value is freedom. We want to offer you the tools to invest, live, and work
freely and whenever and wherever you want.
We
know Cyprus is one of the best jurisdictions in the EU. It's a perfect entryway
for non-EU investors offering a sound and modern legal framework with fair
rules and terrific tax planning possibilities.
Cyprus
is one of the emergent fund jurisdictions in Europe. Its tax system, regulatory
framework, and flexibility have put it at the top of the list of many
investors.
And
we can help you register and license an AIF in Cyprus.
We
have a top multidisciplinary team on this gorgeous island. That's why we offer
varied financial licensing, Forex, immigration, corporate, and fund services in
Cyprus.
Want
to know more about our services in Cyprus? Check out our Country Focus.
Time frame for setting up a fund
The
estimated timeframe for setting up a fund is as follows:
- Preparation of the
application package: 1-2 months.
- CySEC application
evaluation:
- The maximum response
time is six months.
- The average
assessment and response time is two-three months.
- If the CySEC asks for
additional information, the time may extend somewhere between two weeks and one
month.
- Generally, it takes
around four to five months after submitting to get a response without problems.
- Remember that RAIFs
have a quicker setup process, but they must be registered by duly licensed AIF
managers.
Each
type of fund has a different licensing process and a different application
package.
What we offer
To
know the specifics, please contact us, and we'll help you with:
- Accounting and tax
planning. Choosing the right fund structure for you.
- Preparing a
tailor-made application package with all necessary documents depending on your
needs and the requirements of the CySEC.
- Advice on improving
the application including legal compliance and advising on any clarifications
demanded by the CySEC during the application.
- After authorization,
we offer license maintenance services, notifying you of any regulatory
requirement updates and possible adjustments you may need to your processes and
procedures.
- Collaborating with
all fund primary players.
- Coordinating with
lawyers, auditors, and all necessary service providers.
- Advice on safekeeping
requirements for all your assets.
- Dealing with
regulatory authorities post-licensing.
- Board representation.
- Project and
relationship management.
- Appointing members of
our team as the risk manager, compliance officer, or internal auditor.
Cyprus is one of the best
fund jurisdictions in Europe. It can help you take your asset diversification
strategy to the next level. Want to set up an investment fund in Cyprus? Contact us today
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