Cyprus offers the full spectrum of legislative framework to all fund products (UCITS and non UCITS).
It provides fund managers to structure as Alternative Investments Fund Manager, as presented in the relevant EU directive, or a MiFID compliant Investment Firm, both offering, EU passporting ability.
Cyprus is a well regulated EU member state, combines tax efficient features of a modern financial centre with the necessary infrastructure for the funds' industry.
It has a UK based legal system, independent judiciary and friendly business environment.
There is a low cost base, efficient and investor friendly government authorities with minimal red tape.
No withholding tax applies on distributions to investors and no taxation of capital gains.
The service provided by the Investment Manager of the fund are not subject to VAT, hence the value base of the fund is not eroded with a non-recoverable cost.
The company legal form for a Fund can take advantage of the double tax treaty network of Cyprus.
We can help with all aspects of setting up a fund. This includes developing your market entry strategy, regulatory, accounting, tax, legal and operational advice on initial fund set up. We can compile on your behalf the application forms that need to be submitted to the Regulator. During the process, our experienced team will advice you on how better to structure your operations and will assist with the preparation of all necessary documents to be included in the application package. Upon submission, we will project manage the licensing procecss with the Regulator until the license is granted.
Private investors may choose to set up an AIF with limited number of investors. It can take one of the following legal forms:
Fixed or Variable capital company
Limited Liability Partnership
The number of investors in the Fund may not exceed 75 and they need to be well-informed/professional investors.
An AIF can be self-managed (only in the case of a company) or appoint a management company (i.e. an investment firm).
The Law allows the establishment of an AIF limited number of investors with various different investment compartments, each one of which will have its own investment policy. However, the limitation on the number of investors is applicable to the whole scheme.
In case the total assets of the fund are less than €5 million or the fund has up to 5 investors or the assets are not eligible for safekeeping (e.g. real estate), then the fund may be exempted from the requirement to apppoint a custodian.
The main benefits of AIF with limited number of investors are:
no restrictions imposed by the Regulator regarding the type of investments within the Fund.
minimum running costs, as there is no requirement to appoint an external manager or custodian in certain circumstances.
there is no defined minimum capital requirement
no onerous ongoing reporting requirement to the Regulator
low set up and maintenance costs
For all Cypriot funds, a number of service providers must be approved by CySEC as part of the application process, including:
A depository/ custodian from an EU member state or a third country.
A regulated external auditor from Cyprus
A regulated management company; and
Board of directors
The Funds landscape is changing with more regulatory pressure, calls for transparency, erratic markets and increased competition. PwC has a multi-disciplinary team of specialists who can assist you in all aspects of setting up a Fund, the licensing process and the ongoing compliance of the Fund. We have the knowledge and experience to assist you with your audit, tax and advisory needs across all the main types of funds including UCITS, hedge funds, private equity, money market funds, real estate/property funds, Islamic compliant funds and more. Using our specialist Funds group and our extensive global network, we can tailor our approach to suit your particular fund type and provide market insights and experience that are second to none.
Setting up a fund
Trust is an important factor in gaining and sustaining the confidence for your investors. Using our experience and proven track record we can provide the comfort to you and your investors.
We have a dedicated group of tax professionals, focused on international and local tax issues facing fund managers. We have a wealth of resources and expertise to assist you in addressing the various tax challenges such as:
- Investor tax reporting
- International tax consulting services
- Withholding taxes review
- Financial transactions taxes
- Transfer pricing
- EU withholding tax reclaims
- Tax compliance services
- VAT services
Fund Administration and regulatory assistance
Keeping up to date with the regulatory environment is essential. We can provide you with clear guidance on what you need to do to be compliant and help you to identify the impact of these regulations on your business, your processes and your people.
In cases where we do not act as your auditors, we could provide you with full range of administration services to the Fund. We have developed systems and procedures to ensure that our fund administration is executed in an efficient and cost effective manner. Our services include:
- Fund Accounting, Management Reporting and Net Assets Valuations including preparation of financial statements in accordance with the International Financial Reporting Standards, cash management, etc.
- Investor dealing and registration, including processing share transfers, subscriptions and redemptions, ensuring the fund is administered within the terms of the offering memorandum and the requirements of the Regulator
- Compliance and Regulatory reporting
- Statutory and Secretarial Services, including the provision of boardroom facilities and statutory secretary, completion of statutory returns etc.
Brexit - Is Cyprus the Alternative for the Alternative Funds Managers?
Partner, Head of Fund Services