As well as access to the EU, Cyprus offers significant tax advantages

As well as access to the EU, Cyprus offers significant tax advantages.

Funding is probably the number one most crucial issue facing most businesses today. The EU provides funding in the form of loans and grants for a broad range of projects and programs covering areas such as education, health, consumer protection, environmental protection and humanitarian aid. Funding is managed according to strict rules which help to ensure that there is tight control over how funds are used and that funds are spent in a transparent and accountable manner.

EU funding is complex, since there are many different types of programs managed by different bodies. Over 76 per cent of the EU budget is managed by the Member States. This includes the structural funds - which finance regional policy, social and training programs, as well as agriculture (including support for farmers).

There are two main types of funding:-

Grants for specific projects, usually following a public announcement known as a 'call for proposals'. Part of the funding comes from the EU, part from other sources.

Public contracts to buy services, goods or works to ensure the operations of EU institutions or programs. Contracts are awarded through calls for tenders (public procurement) and cover a range of areas: studies, technical assistance and training; consultancy, conference organisation, IT equipment purchases, etc.

Even though as a group, the 28 EU Commissioners have the ultimate political responsibility for ensuring that EU funds are spent properly, nonetheless, because most EU funding is managed at country level, national governments are responsible for conducting checks and annual audits.

The Beneficiaries of the funding include small businesses, NGOs, Young people, Researchers, and Farmers.

Israel presents a unique blend of Academic Excellence, Scientific Innovation and Entrepreneurial Experience in basic and applied research through to the various stages of product development.

Israel's seven universities as well as many colleges and government research centers are leading international academic institutions in such areas as computer science and engineering, electronics and the sciences.

Research and Development is a massive industry in Israel. According to the 2001 statistics, expenditure in Israel on R&D represented 4.5% of GDP, compared with 1.6% in the UK, 2.3% in the US, 3% in Japan and 4.1% in Sweden.

The European Union and Israel share a long common history, marked by growing interdependence and cooperation. Both share values of democracy, a respect for freedom and rule of law and are committed to an open international economic system based on market principles. Israeli political, industrial, commercial and scientific leaders maintain close links to Europe. Over five decades of trade, cultural exchanges, political cooperation and a developed system of agreements have cemented these relations.

The EU’s dedication to Israeli innovation is evident for instance by the ISERD or The Israel – Europe R&D Directorate which is a government body that focuses on the participation of Israeli entities in R&D ventures within the European Research Area.

Other bodies of EU-Israel relations are the EU-Israel Association Council and EU-Israel Association Committee, which hold annual meetings to review the bilateral relationship, and to discuss points of common interest, be it in regional political or economic issues, trade, educational or cultural matters, transport and telecommunications or scientific and technological cooperation.

From the above it is clear that Israeli involvement in EU research and development policies is desired and indeed expected.

Within this framework, Cyprus has an important role to play in bringing the EU closer to Israel. Geographically it is on the far eastern edge of the European Union and only a 40 minute flight from Israel. It also has one of the lowest corporate tax rates in the European Union, making it an ideal destination for corporate set up. In addition to this, it has the lowest IP Box tax throughout the European Union at under 3% effective tax. Furthermore, company set up and business maintenance fees are considerably lower in Cyprus, in comparison with other EU jurisdictions. It also boasts a wide network of double tax treaties with EU and non-EU countries and friendly political and economic ties to some of the richest Middle Eastern countries. In fact, only recently Cyprus has signed bilateral agreements with Bahrain on tax as well as other matters.

As a full member of the European Union, Cyprus enjoys the benefit of receiving EU funding for EU nationals living and working in Cyprus, and this also includes companies registered there. A notable example of an EU initiative that is currently available is a program focused on renewable energy sources, R&D, information and communication technologies, upgrading technology in industrial services, solid waste, liquid waste, cultural and social services for €100.000,00. A further initiative on R&D currently available is a loan for a maximum of €25M, for research and development projects in all sectors.

In summary, Cyprus as a vehicle offers unique opportunities to Israeli business seeking funding and fiscal efficiency. The opportunities afforded to EU nationals vary depending on the sector and the type of investment they are seeking, but all in all, the exploration of the Cyprus option should be left open and indeed explored.

Yaniv Habari is the founder of Y. Habari & Co. LLC, a boutique corporate and commercial law firm based in Cyprus.

Published by Globes [online], Israel business news - www.globes-online.com - on May 7, 2015


Date 7/05/2015
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