Cyprus is an economically advantageous jurisdiction with a favorable tax climate for agricultural holding companies. The island nation provides parent companies with a robust investment portfolio and the opportunity to participate in large grants worth millions to facilitate rapid development. Experts at the international law firm Maira Consult have examined why Cyprus is a good choice for an agricultural holding company and also provide services ranging from company registration to opening bank accounts for agricultural companies in Cyprus to the implementation of bold business ideas.
Agriculture on the island accounts for up to 1.18% of Cyprus’s GDP. Currently, there are 1,200 companies registered in the Registry that operate in agribusiness. According to Cypriot statistics, more than 34,000 small farms are engaged in livestock and crop production.
Cyprus as a European jurisdiction for agricultural companies
As a member of the European Union, Cyprus is an excellent location for an agricultural holding, with the following regulations in effect:
BEPS, CRS, and ATAD directives.
Legislation based on English law.
Regulations allowing ownership of companies located in other countries.
Legal provisions for minimizing the tax burden.
Independent courts that protect the rights of entrepreneurs and corporate interests.
Streamlined bureaucracy (quick business registration, opening accounts for agricultural companies in Cyprus without lengthy bank approvals).
The ability to manage a holding company remotely.
The right to file reports remotely.
Agricultural companies are registered in Cyprus, a jurisdiction that is not included on any “blacklist” of countries or offshore jurisdictions.
5 reasons to choose Cyprus for an agricultural holding company
Registering agricultural companies in Cyprus comes with many advantages that highlight the key benefits of choosing Cyprus for an agricultural holding.
Advantages of the Cypriot Jurisdiction | Key Features |
| The island has one of the lowest tax rates in the EU - just 15% on profits. Competitive taxation reduces the tax burden on the holding company and frees up funds for development. |
| Thanks to the exemption from tax on dividends received from a subsidiary, as well as the absence of taxation on distributed profits, a significant increase in working capital and rapid development of the agricultural business are achieved. |
| Cyprus is particularly suitable for an agricultural holding company with foreign shareholders, as no taxes are withheld upon the payment of dividends (withholding tax - 0%). |
| In the event of an exit from an investment (sale of securities or shares), the capital received is fully exempt from taxes. |
| 65 agreements signed with Cyprus allow for cross-border cooperation (operations and transactions) without double taxation, thereby successfully implementing the holding company’s tax optimization plans. |
The agricultural sector in Cyprus is supported by government programs, financial assistance, and grants aimed at developing new eco-friendly innovations, modernization, and business initiatives.
The lawyers at Maira Consult advise agricultural entrepreneurs that funding and subsidies can be obtained by submitting an application to CAPO.
Tax Incentives for the Use of Intellectual Property
One of the undeniable advantages of registering agricultural companies in Cyprus is the IP Box tax incentive. A reduced corporate tax rate of up to 3% (income tax) is achieved through the use of intellectual property in the agricultural enterprise’s operations. Thanks to this incentive, up to 80% of the company’s profits are exempt from tax (the remaining 20% are subject to the standard tax rate of 15%).
When can the IP Box regime be used:
if an agricultural holding holds a patent for innovations in the development of new varieties and crops, the production of unique fertilizers, or the application of new biotechnologies, etc.;
when utilizing know-how developments for farming, crop production, irrigation, and waste management;
in the event of implementing IT systems, software, and automation in livestock and crop production, microbiology, processing, and storage;
provided that an R&D center is established within the holding company.
The preferential rate applies to corporations that are officially registered as agricultural companies in Cyprus and employ agronomists and other relevant specialists.
To qualify for the reduced rate, the regulatory authority must be provided with documentary evidence of ongoing tests, experiments, and laboratory studies, as well as proof of payroll expenses for these specialists.
Starting an Agricultural Company in Cyprus: A Step-by-Step Guide
One of the advantageous conditions for why it is worth choose Cyprus for an agricultural holding is the speed with which it can be established. The duration of the registration process - from submitting documents to opening accounts for an agricultural company in Cyprus (EUROBANK CYPRUS, BANK OF CYPRUS) and obtaining a tax ID number takes up to 4 weeks.
For an agricultural holding company, the best option is to establish a limited liability company (Ltd). This structure, analogous to a Ukrainian limited liability company in the international agricultural business sector, allows a foreigner to be the owner, act as a shareholder, and serve as a director. Registering an agricultural company in Cyprus does not require the owner to have Cypriot citizenship (residency) or a residence permit.
There are 5 steps to setting up an agricultural holding company.
Stages | Description of steps |
| You must come up with a company name, which is checked for uniqueness in the Registry. The Registry also handles name reservations. |
| The required incorporation documents include:
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| The prepared package of statutory documents is submitted to the DRCIP online using the Cyprus eFiling service. Additionally, completed forms HE1, HE2, and HE3 must be submitted. |
| Cyprus imposes an important requirement on agricultural holding companies: obtaining a license to conduct agribusiness. To do this, the holding company must register with the Cyprus Ministry of Agriculture, which will issue quotas for land and water use. Additionally, permits will be required for the use of land and natural resources, as well as for the disposal of waste materials. |
| To engage in agricultural activities, you must obtain a VAT taxpayer number and a TIC code. |
The final step in establishing a business in the agricultural sector is bank registration - opening a corporate account into which the holding company’s declared authorized capital is deposited.
The ability to scale the business, protection against tax risks, secure use of intellectual property, the ability to attract investment, and full EU membership status - these are the reasons why Cyprus is the ideal choice for an agricultural holding company. You can obtain all the information regarding opening accounts for an agricultural company in Cyprus, company registration, document preparation, and reporting from the lawyers at Maira Consult.
