International Companies in the TRNC

The TRNC offers various advantages to facilitate the growth of international finance and trade for investors. Key benefits include:

Confidentiality

Activities of international businesses in the TRNC are conducted under strict confidentiality.

Duty-Free Products

Office equipment and other items brought into the TRNC by international companies are exempt from customs duties.

Location

The TRNC's strategic location near Europe, Asia, and Africa provides a significant advantage.

Corporate Tax

International companies are subject to a corporate tax rate of 1% on their net profits.

Dividend Payments

Dividends paid to shareholders by international companies in the TRNC are exempt from income tax.

Company Incorporation Procedure

For more information about the company incorporation procedure, please [click here].

The establishment and operation of International Business Companies (IBCs) in the TRNC are similar to those of registered local private and public companies. IBCs require at least two shareholders and must have at least one director, who can be either local or foreign.

International Business Companies are governed by the TRNC International Business Companies Law No. 38/2005. As the TRNC intensifies efforts to become an international trade and finance center, legislation that provides the necessary economic infrastructure for full EU membership also focuses on regulating the establishment and operations of international business companies. This law allows businesses that operate outside their main countries to benefit from tax advantages in the TRNC while utilizing a well-educated workforce for various international activities.

Consequently, the TRNC offers an alternative for many international businesses by adopting legislation similar to that of EU member states, particularly regarding the international company regulations practiced by the Republic of Cyprus and Malta. Compared to the taxes imposed by these countries, the TRNC’s tax rates for such companies are significantly lower.

International companies operating in the TRNC must engage in activities directed abroad as required by law. These companies benefit from exemption from taxes applicable to local companies and are subject to a corporate tax of 1% on their annual net profits. This rate makes the TRNC's corporate tax one of the lowest within the EU.

Here are some beneficial points regarding International Business Companies:

• Foreign individuals
• Foreign legal entities
• TRNC citizens residing abroad

A non-refundable application fee of €500 is required for IBC applications. This fee may be adjusted by the Council of Ministers by 50%. IBCs cannot request loans from the government or banks and investment companies operating in the TRNC; however, they can borrow from banks established under the International Banking Units Law in the TRNC.

IBCs operate without adhering to the Income Tax Law, Exchange Control Law, or Corporate Tax Law regulations. They are taxed at a rate of 1% on the determined tax base, regardless of the tax rates specified in the Corporate Tax and Income Tax Laws. This tax must be paid to the Revenue and Tax Department within five months following each accounting period. No taxes, fees, or charges are levied on transactions that IBCs conduct abroad, unless stated otherwise in other laws.

IBCs may open various accounts, including deposit accounts, with banks operating in the TRNC. The income tax withholding on interest income earned from amounts deposited in these accounts cannot exceed 1%. This withholding tax constitutes the final tax on IBCs' interest income, and no refunds or offsets are available in case of losses. There is no tax on dividend distributions made by IBCs. Additionally, interest paid to individuals and legal entities operating outside the TRNC is not subject to withholding tax.