Why Cyprus should be the location of choice for family offices
Cyprus is emerging as a compelling destination for family offices, but what sets it apart from other well-established hubs? From a strategic location to an evolving financial services sector, there are several key advantages that investors should be aware of.
Though Switzerland, Monaco and the UAE have long been preferred destinations for family offices, geopolitical tensions, evolving tax regulations and increasing compliance costs are prompting both high-net-worth (HNW) and ultra-high-net-worth (UHNW) families to look elsewhere. With its EU membership, stable legal system and double tax treaty network, Cyprus is fast becoming a secure and tax-efficient alternative. The island’s non-domicile tax regime and lack of inheritance or capital gains taxes (except on Cypriot real estate) also make it ideal for wealth preservation.
Cyprus offers a 12.5% corporate tax rate as well as exemptions on dividends, interest and royalties. There is no specific legislation governing family offices in Cyprus; they usually operate through general entities such as private limited liability companies and/or Cyprus International Trusts. Trusts and holding companies ensure discretion and tax efficiency, while adherence to anti-money laundering (AML) and counter-terrorism financing (CFT) regulations, including the UBO register, drives compliance and transparency. Plus, Cyprus’s extensive double tax treaty network (comprising over 60 countries) minimises cross-border tax liabilities.
Investors and their families can also take advantage of the Cyprus Permanent Residency Programme (PRP) – including the EU Blue Card – which provides a streamlined path to permanent residency. Benefits include lifetime residency status, inclusion of spouse and dependants (children up to the age of 25), path to EU citizenship, various tax advantages and mobility within the EU. But beyond the technical regulations, knowing the setup options and how to manage them is key.
Family office structures in Cyprus
Setting up a family office in Cyprus is straightforward, but careful planning is essential. On average, the entire process will take about four to 12 weeks from initial setup to full operational readiness.
Cyprus offers various family office types:
Single-Family Office (SFO)
An SFO is typically used by UHNW families with assets over €20 million. SFOs offer the highest level of control and customisation in managing wealth, but setup costs and operational expenses can be substantial.
Multi-Family Office (MFO)
An MFO provides shared services to multiple families through a single, independent company. By sharing resources, MFOs provide a cost-effective alternative for families with less complex needs. Families can access specialised expertise and a range of investment opportunities.
Virtual Family Office (VFO)
A virtual family office is an outsourced model where external experts manage a family’s wealth, legal and personal affairs remotely. It offers tailored support without the need for a dedicated in-house team, reducing overhead by providing services on demand.
Corporate Family Office (CFO)
A corporate family office manages the financial, investment and administrative affairs of a business-owning family, often integrating family wealth and corporate assets. It centralises financial, investment and administrative functions, aligning personal and corporate goals. While CFOs improve coordination and reduce duplication, costs can be high depending on the family’s complexity and needs.
With these structures in mind, how can investors approach setting up a family office?
How to set up a family office in Cyprus
From legal setup to philanthropic considerations, there are several key steps to get right:
1. Define objectives and scope early on
Clarify the purpose of your family office – investment management, estate planning, philanthropy, succession or a mixture of all of these – and decide on a suitable model. This will shape your legal structure, staffing and governance framework.
2. Choose the right legal structure
Common options include:
- Private limited company: offers flexibility and limited liability
- Trusts or foundations: useful for estate planning and confidentiality
- Hybrid models: combine corporate and fiduciary elements for complex needs
3. Engage local experts to design tax-efficient structures
Work with local tax advisors and lawyers to optimise your structure, whether through a private limited company, trust or foundation. Make sure that your structure is compliant and that formalities and nuances are addressed.
4. Recruit multilingual professionals
Cyprus’s international appeal means your team should include professionals fluent in English and other relevant languages, with experience in cross-border wealth management, compliance, accounting, payroll and family governance.
5. Establish governance and succession frameworks
Define clear roles for family members and advisors. Consider forming a family council or board, drafting a family constitution, and implementing succession plans to ensure continuity across generations.
6. Leverage local organisations and bodies
Tap into Cyprus’s supportive ecosystem:
- The Business Facilitation Unit (BFU) and the Business Support Centre (BSC) offer fast-track company registration, licencing and immigration support for non-EU staff
- Invest Cyprus provides strategic guidance and promotional support
- The Cyprus Family Office Association (CYFOA) offers policy advocacy, education and networking for family offices
7. Ensure compliance and administrative support
Partner with corporate service providers for ongoing compliance, accounting and reporting. This allows your family office to focus on strategic wealth management while meeting regulatory obligations.
8. Integrate wealth management and philanthropy
Coordinate with investment managers and philanthropic advisors to align financial strategies with family values. Cyprus’s legal framework supports charitable foundations and legacy planning.
The challenges of setting up a family office in Cyprus
While Cyprus is an attractive jurisdiction for family offices, success depends on careful planning, expert advice and ongoing governance to navigate key challenges effectively. Families must ensure that they choose a legal and organisational structure that supports their needs, or risk operational difficulties further down the line. Though Cyprus has a well-established legal framework, changing rules might present challenges – families should partner with local advisors to maintain regulatory compliance.
To ensure effective oversight and clear strategic direction, families must establish robust governance frameworks, decision-making protocols and risk management systems. It’s also essential to recruit highly skilled professionals – whether in investment, legal, tax, or administrative roles – to strengthen the growth and performance of your family office.
Unlocking new market opportunities
Cyprus stands out as a strategic gateway for family offices, offering a unique blend of EU access, regulatory clarity and operational flexibility – perfectly suited for preserving wealth and managing cross-border investments. The island is emerging as a smart and stable choice for family offices, especially in times of geopolitical uncertainty. Families seeking stability, efficiency and comprehensive legacy planning should consider Cyprus a jurisdiction of choice.
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