Industry
Investment vehicles, AIFs and private family structures consolidating holdings under one jurisdiction.
Funds & Family Offices: short answer
Last reviewed
Cyprus combines an EU fund regime supervised by CySEC with a holding company treatment that exempts dividends from qualifying participations and places gains on securities outside the corporate charge. That combination is what makes it work for pooled and private capital alike.
| Dividends from qualifying participations | Exempt in the hands of a Cyprus holding company |
|---|---|
| Gains on disposal of securities | Outside the corporate charge |
| Corporate income tax | 15 percent from 1 January 2026 |
| Fund regimes | AIF, AIFLNP and RAIF, supervised by CySEC |
| Inheritance tax | None |
| Wealth tax | None |
Whatever sits on top, a fund or a family office is a structure for holding things. Cyprus is used here because of what happens to income and gains as they move up that structure.
Dividend income received from a qualifying participation is exempt in the hands of a Cyprus holding company. Gains on the disposal of securities sit outside the corporate charge altogether, rather than being sheltered by an exemption that has to be claimed and defended. There is no withholding tax on dividends paid out to non-residents.
The practical effect is that a Cyprus entity can sit between an investor base and a portfolio without adding a layer of tax at the point of consolidation. That is the whole job of a holding vehicle, and most jurisdictions do part of it.
Add an extensive treaty network and access to the EU directives, and the structure works across the portfolio rather than only where the treaty happens to be favourable.
Cyprus offers a range of alternative investment fund structures supervised by CySEC, from full AIFs through to the registered alternative investment fund, which is not itself authorised but must be managed by an authorised manager. The choice among them turns on investor type, the number of investors and how quickly the vehicle needs to be operational.
Two points matter more to a manager than the taxonomy.
Investor recognition. An EU-domiciled, EU-supervised fund is a familiar object to institutional investors, their lawyers and their operational due diligence teams. That familiarity is worth more in a fundraise than a marginal difference in operating cost.
Proportionate cost. Cyprus is materially cheaper to operate in than Luxembourg or Ireland for funds below the scale at which those centres make sense. For a first or second fund, that difference is the difference between a viable vehicle and one that consumes its own management fee.
A family office arrives with a different problem. Assets accumulated across jurisdictions, held through vehicles created at different times for different reasons, with a succession question nobody has wanted to open.
The Cyprus contribution is consolidation without a tax cost at the point of consolidation, and a personal regime that supports the people who will run it.
Alongside the corporate structure sits the Cyprus International Trust, which is used for succession and asset protection where a corporate holding alone does not answer the question. And for family members who relocate, non-domiciled status places dividends and interest outside the Special Defence Contribution for 17 years.
The result is one jurisdiction covering the vehicle, the trust and the personal position, rather than three sets of advisers reconciling three sets of assumptions.
None of this operates on registration alone.
A fund needs a manager with real capacity, directors who take decisions, and governance that produces records. A holding structure claiming treaty benefits and the participation exemption needs to be directed from Cyprus in fact. Substance is the condition attached to the treatment, and for a family office it is usually the part that has been left informal for years.
Building it is not onerous. Retrofitting it while a transaction is in progress is, which is why it belongs at the start of the exercise.
Cost and proportionality below a certain scale. Cyprus offers EU domicile and EU supervision with an operating cost that suits a first or second fund, where the larger centres are built for vehicles several times the size.
Gains on the disposal of securities sit outside the corporate charge. Cyprus capital gains taxation is confined to gains connected with Cyprus immovable property.
Not usually. Where capital is exclusively the family's own, a holding structure and, where succession is in view, a trust are ordinarily the right instruments. A regulated vehicle becomes relevant when external investors are introduced.
No. Cyprus levies neither inheritance tax nor wealth tax, which is one of the reasons it is used for succession structuring alongside the corporate treatment.
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Entity
A Cyprus Alternative Investment Fund is a collective investment vehicle authorised and supervised by CySEC. Three forms exist: the AIF, the AIF with a limited number of persons, and the registered AIF, which is not itself authorised but must be managed by an authorised manager.
Entity
A Cyprus International Trust is a trust where the settlor and beneficiaries are not Cyprus tax residents in the year before establishment and at least one trustee is resident in Cyprus throughout. It carries strong statutory protection against foreign forced heirship and a long challenge window.
Services
Incorporation of a Cyprus limited company, from name approval to tax registration.
Holding structures using the participation exemption and Cyprus treaty network.
Transfer of an existing foreign company into Cyprus without breaking legal continuity.
Management and control, governance and the evidence file that supports tax residency.
Bring the facts you have. We will map the structural options, what each one requires, and the point at which the trade-offs actually bite.
