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Cyprus Investment Funds

McMillan Cyprus > Articles > Cyprus Investment Funds

McMillan Woods Cyprus can help you obtain:

  • A Cyprus Investment Firm License from the Cyprus Securities and Exchange Commission (CySEC)
  • An EU (European Union) Investment Firm License from any other EU Authority
  • An E-Money (Electronic Money) or Payment Institution License from the Central Bank of Cyprus or any other EU Authority
  • A Fund Manager License (AIFM or UCITS Management Company) as well as a license or registration for Alternative Investment Funds (AIF) or UCITS funds from CySEC or any other EU Authority
  • A Banking License from the Central Bank of Cyprus or any other EU Authority

Cyprus Funds are established under harmonized EU legal framework, and application procedures are undertaken with the Cyprus Securities and Exchange Commission (CySec), the authority in charge of supervision and regulation of investment funds & Fund Managers in Cyprus. In brief, Cyprus laws on investment funds provide for the following:

Cyprus Alternative Investment Funds (AIFs)

Cyprus registered AIFs can be sold on a private placement basis or marketed to professional investors across the EU under the Alternative Investment Fund Managers Directive (AIFMD) passport.AIFs can be structured in one of the following forms:

  • Fixed Capital Investment Company
  • Variable Capital Investment Company
  • Investment Limited Partnership
  • Common Fund (AIF with unlimited number of persons only)

Registered AIFs (‘RAIFs’)
A RAIF is a special type of AIF that is not subject to authorization from CySec but is regulated through its external licensed manager (AIFM).A RAIF can be set up as:

  • A mutual fund
  • An investment Company
  • A partnership

Undertakings for Collective Investment in Transferable Securities (UCITS)
UCITS Funds are collective investment portfolios that invest in transferable securities and/or other liquid financial instruments, which operate on the principle of risk spreading, and provide low investment risk and high level of investor protection.

A UCITS fund may be set up in one of the following legal forms:

  • Common fund (CF)
  • Variable capital investment company (VCIC).

Fund requirementsDepending on the type of fund, there are conditions, requirements and thresholds as per:

  • The licensing requirement
  • The location of the fund
  • The minimum investment capital requirements
  • The minimum number of investors
  • The possibility for unlimited number of investors or requirement of restricted number of investors
  • The maximum volume of manageable assets
  • The services required from the Fund’s Administrator
  • The investors to whom the Fund is addressed, i.e. professional and well-informed investors
  • The establishment type of fund, i.e. money market, loan origination fund, fund of fund, etc.
  • The obligation to appoint a depositary & their location
  • The obligation to appoint a custodian & their location
  • The obligation to appoint a licensed manager & their licensing requirement
  • The obligation to submit audited financial reports to CySec
  • The obligation of compliance (Due Diligence / KYC)
  • The obligation to keep records
  • The possibility for risk-spreading portfolio diversification
  • The possibility of self-management & to which amount or appoint a management company.
  • The possibility to set-up umbrella funds, allowing different sub-funds and share classes
  • The possibility to have multiple compartments if mentioned in its regulatory documents.
  • The possibility to be listed any recognized stock exchange in the EU or a third country.
  • The possibility to use the passporting regime that allows EU cross-border marketing
  • The possibility to market foreign funds in Cyprus
  • The possibility for an AIFM to market a non-EU AIF
  • The possibility to establish a European Management Company for fund Hosting
  • The possibility for non-EU Fund managers to use UCITS/AIFM compliant management company platforms providing EU passporting to market their non-EU funds in the EU

Fund Taxation

  • No capital gains on disposal of securities
  • Notional Interest Deduction (NID) on new equity reducing the effective interest tax
  • No subscription tax on net assets of funds
  • No tax on dividends received
  • No withholding taxes on dividend payments from Cyprus to non-residents
  • No thin capitalization rules
  • No VAT on fund management services to AIF
  • Low corporate tax rate
  • Low operating costs
  • Each AIF compartment taxed as separate tax payer
  • Interest received is taxed at the corporate tax rate
  • Double Tax treaty network
  • Tax favorable re-domiciliation & employment scheme

Foreign Investor Taxation

  • No taxation on redemption of units
  • No deemed dividend distribution tax
  • No withholding taxes on dividend payments from Cyprus to non-residents

Resident non-domiciled Investor Taxation

  • Flat rate tax for individuals with performance based variable remuneration, not applicable to all employees.
  • No withholding taxes on dividends via non-domicile status
  • No taxation on redemption of units
  • No withholding tax if investor is a company

Resident domiciled Investor Taxation

  • Flat rate tax for individuals with performance based variable remuneration, not applicable to all employees.
  • Withholding taxes on dividends for investors with resident & domicile status
  • No taxation on redemption of units
  • No withholding tax if investor is a company


About McMillan Woods Cyprus
Central offices are located in Nicosia Strovolos, Piraeus Street 36.
22 276000
Info@mcmillanwoods.com.cy
www.mcmillanwoods.com.cy

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