Mergers And Acquisitions (Re-Organizations)

Cyprus adopted the European Union Mergers Directive which allows the companies to engage into an approved reorganization scheme.

Under an approved reorganization scheme the companies can obtain tax benefits which otherwise they would not – these are to be exempted from the following tax liabilities:

1. Income Tax
2. Special Defence Contribution
3. Capital Gains Tax
4. Value added Tax
5. Land Transfer Fees
6. Stamp duty

Approved Reorganizations schemes by the Tax Department in Cyprus include the following:

1. Merger
2. Division
3. Partial division
4. Transfer of assets
5. Exchange of shares
6. Transfer of registered office

1. Merger means an act by which:

• one or more companies, upon dissolution without going into liquidation, transfers all its assets and liabilities to another pre-existing company against a compensation to the previous shareholders such as; shares in the capital of the other company and, where appropriate, against payment