There are two types of private funds that can be set up in Cyprus:
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Alternative Investment Funds (AIF) without limitation as to the number of investors (public)
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Alternative Investment Funds (AIF) with limitation as to the number of investors (private)
The EU Directives on financial markets have encouraged fund managers, custodians, administrators and promoters who want to benefit from cross border EU opportunities, raise funds intra EU and maximize returns for investors at low cost and enhanced tax efficiency to transfer their funds and operations to Cyprus. It is a credible alternative to onshore fund jurisdictions such as Luxemburg, Ireland, Malta and the UK and offshore jurisdictions such as the Cayman or BVI.
Main advantages of Cyprus private funds:
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competitive setting up and ongoing costs structures and funds in the EU
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favourable tax regime in the EU, especially for non-Cyprus residents
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combination of reasonable regulations, flexibility and tax incentives
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EU Member State compliant with EU laws
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developed infrastructure, highly qualified professionals and minimum formalities
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wide and efficient network of legal, accounting and banking services
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hedge fund and hedge fund managers location
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AIFS, ICIS, UCITS can be listed on Cyprus stock exchange (CSE) and other recognized EU stock exchanges
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redomiciliation in and out is possible
AIFs may be structures as variable or fixed capital companies or as limited partnerships. In addition, unlimited AIFs may be structured as a mutual fund.
The key new features of the Cyprus’ fund regime are:
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the AIF Law introduces a single regulator
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the law introduces new structuring options which were the main limitation of the previous legislation, including multiple investment compartments
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provides the ability to set up an AIF taking the contractual form of a Common Fund
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allows the cross investment between sub-funds
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provides the ability to set up an AIF marketed to professional investors and/or well informed investors
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allows the public offering of shares of AIFs Opting for registration an AIF as an AIFM (or self-managed AIF) under the AIFMD allows investment firms to passport their services across EU.
Why Set Up Your AIF in Cyprus
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EU Member State and compliant with EU laws and regulations
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mature business centre with developed infrastructure and highly qualified professionals
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minimum formalities
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wide and efficient network of legal, accounting and banking services
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competitive setting up and ongoing costs structures and funds in the EU
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favourable tax regime in the EU, especially for non- residents
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combination of effective regulations, flexibility and incentives
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hedge fund and hedge fund managers location
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AIFS, ICIS, UCITS can be listed on CSE and other recognized EU stock exchanges
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redomiciliation in and out is possible
Cyprus based AIFMs and AIFs will benefit from low tax burdens levied on Cyprus based corporations. Further, non-Cypriot investors in Cyprus AIFs will, at the time of a redemption or distribution of a Cyprus AIF, benefit from an extensive double tax treaty network.
Taxation of investors
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There are no Cypriot taxes for investors in a Cypriot fund on the disposal or redemption of fund units/shares
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There are no withholding taxes on distributions made to non-Cypriot investors by a Cypriot fund
Taxation of funds
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A fund is exempt from tax on the disposal of its investments in fund units, shares, other equity securities and bonds
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A fund is exempt from tax on distributions received from investments in funds and shares held either directly or via special purpose vehicles
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Interest income derived by a fund is subject to 12,5% income tax (net of deductible expenses and foreign tax credits are available)
Our services
Licensing
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Examining and advising on the alternative forms that the fund can take in order to best suit your needs
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Incorporation of the entity
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Preparation of the application package and submission to the Regulator
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Assistance on replying to any queries or providing additional information/clarifications
Administration
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Fund Accounting, Management Reporting, NAV and preparation of financial statements in accordance with International Financial Reporting Standards
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Unitholder Dealing and Registration (ie processing share transfers, subscriptions and redemptions etc)
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Regulatory reporting
If you are interested in setting up a fund, please contact us at info@oneworldweb.net for an initial consultation with one of our expert advisors.