Cyprus and Poland: A Company Formation Comparison
Both countries boast a favourable tax regime for foreign investors and are successful in attracting inward investment.
Poland offers a range of investment incentives, tax benefits and financial assistance to foreign investors setting up a company there.There are also beneficial aspects such as a huge consumer market and great geographical location to take advantage of. The Polish economy is said to be developing faster than Western Europe which also makes the country a stable investment.
Cyprus is another EU country that offers a hugely beneficial location in Europe and a strong economy. Other advantages that investors in Cyprus can benefit from include the favourable tax regime, great climate, developed infrastructure, and multilingual inhabitants. The tax benefits in Cyprus are a huge draw for investors. The country has the lowest Corporate Tax rate in the world at just 10%, and this is not selective so applies to every company trading on the island. Cypriot Personal Income Tax is not quite as beneficial but at 35% is not overly detrimental to personal income.
The most common business entities used in Poland are:
- 1.Limited Liability Company (Sp. z o.o)
- 2.Joint Stock Company (S.A.)
- 4.Sole Proprietor
In Cyprus the most common business entities are:
- 1.Limited Company
Availability of Staff
The recruitment sector in Cyprus has a well-educated and skilled labour pool to work with, despite the success of the economy creating high employment throughout the country. One of the most beneficial aspects of employing local Cypriot staff is that staff wages are significantly less than the EU average.
Poland’s economy has also been booming recently, with considerable economic development over the past few years. However, unemployment is still relatively high in the country at a rate of just under 20%. Some young academics have moved to Western Europe to take advantage of EU membership, but the workforce is still large and widely available.
The government in Poland have worked hard to create a welcoming business environment and it is now one of the most liberal economic environments in Europe. This is advantageous to foreign investors and the government have taken steps to ease the regulations on companies, for example by lowering the Corporate Tax by 8% and allowing the free repatriation of capital and profits. However, there are strict rules regulating the legal and accounting laws.
The Cypriot government has gone the opposite way to Poland, tightening up regulations from when the country was a previously lax offshore haven. However, the country is still facilitative to businesses. Corporate Tax is the lowest in Europe and Withholding Taxes are also low. Much of Cyprus’ regulations with legalities, accounting and company formation follow the EU directives and so are similar to those throughout Europe.
The modern international banking facilities in Cyprus support its important regional investment. This means that all the major international banks are represented there, and there is a range of local commercial banks as well. The Bank of Cyprus regulates all the banking in the country.
Poland also hosts many of the major international banks, with representative branches in the capital of Warsaw. The local Polish banks are strong and provide a range of facilities for foreign investors setting up a company in the country. Opening a bank account can be complex if you are a non-domicile however.
The financial incentives foreign investors can take advantage of in Poland include 25% grants for new companies, enhanced 50% grants for companies in Special Economic Zones, and benefits through EU-funded schemes.
Cyprus does not have any specific financial incentives like Poland, but its low taxes and favourable business regime are beneficial enough to encourage investment. In addition, the Larnaca free trade zone offers exemption from customs charges, grants and loans are available for companies in certain traditional economic and high-tech business sectors, and expatriate workers qualify for Personal Income Tax concessions.