As Frankfurt, Paris and Dublin compete to become the new hub for financial services post-Brexit, Cyprus is setting its sights on a different race: to become a regional base for British businessman that want a European hub after the UK cuts ties with the EU.
With one of Europe’s lowest corporate tax rate, at 12.5% and a double tax treaty network covering more than 60 countries, the island wants to capitalise its low cost of doing business as companies shift operations outside the UK because of Brexit.
“Cyprus is an excellent choice for companies wishing to maintain an EU base with access to the Eastern Mediterranean region and Asia,” George Campanellas (pictured), director general of Invest Cyprus, told International Investment.
UK-based marine insurance companies, including P&I Clubs (protection and indemnity insurance), and electronic money institutions – both sectors in which Britain is the world leader – are showing interest in Cyprus. Britain’s Electronic Money Association has identified six jurisdictions, including Cyprus, that could enable its members to passport their services into the EU.
Cyprus can also offer mutually beneficial support to the British investment fund sector post-Brexit. By contracting a company in Cyprus, British-based investment managers could maintain their current operations without having to re-locate staff.
They would have a fully-EU compliant platform with a European passport to market their funds in the EU. The UK-based fund manager would also benefit from the Cyprus platform’s pre-existing structure in terms of sharing costs.
The assets under management in Cyprus have tripled since 2013, totaling €3bn last year, with funds registration increasing by 18% year-on-year since 2014.
As a former British colony, Cyprus has a British-based legal system and according to Campanellas, all the key ingredient for a vibrant financial services centre: “skilled staff, many educated at British universities.”
Key stakeholders from Cyprus as well as fund managers, professional service providers, financial institutions and other institutional investors based in the UK are gathering this week in London to talk about the opportunities the country can offer after Brexit.