Cyprus is considered as one of the most well established and rapidly growing fund jurisdiction in Europe with total Assets Under Management (AUM) reaching EUR 11,1 billion. Additionally, Cyprus’ corporate tax rate is one of the lowest in the European Union, with a rate of just 12.5%. This rate is even lower for certain types of investment funds, making Cyprus an attractive option for Israeli investors. Cyprus is a member of the European Union, and as such has access to the EU’s internal market, which is beneficial for Israeli businesses. Additionally, Cyprus has a favourable regulatory environment, with a well-developed and regulated financial system.
The Israeli asset management industry has seen a significant increase in the number of asset management firms in recent years. This is due to the growing importance of the technology and innovation sector in Israel. In addition, the country’s strategic location and strong ties to the EU have made it an attractive destination for international investors. The Israeli government has also taken steps to encourage asset management firms to set up shop in Israel. These include tax incentives, grants, and access to government funding. Furthermore, the country has also made it easier for asset managers to obtain licenses and launch new products. The asset management industry in Israel is expected to continue to grow in the years ahead, due to the strong demand from both domestic and international investors.
Israeli fund managers choose to use Cyprus for a number of reasons. Cyprus offers a European-regulated banking environment, which provides access to the European market, and also provides a secure and cost-effective platform for international fund operations. As mentioned above, Cyprus is also a member of the European Union, which is beneficial to investors looking to access the European market. Geographical proximity between two countries enable Israeli fund managers to come and work in Cyprus. Finally, Cyprus has a well-developed infrastructure and a skilled workforce, both of which are attractive to fund managers.
The Alternative Investment Funds Law 2018 as well as the AIFM Law, set out the legal framework for the establishment and operation of collective investment schemes and Alternative Investment Funds in Cyprus. The two laws provide the necessary legal and regulatory framework for the setting up and operation of Funds, while ensuring investor protection and capital preservation. The laws also provide the necessary flexibility for tailor-made solutions and the ability to cater for the specific needs of the investors.
In conclusion, Cyprus is an attractive jurisdiction for the setting up and operation of Investment Funds, due to its regulatory and legal framework, attractive tax regime, as well as its geographical proximity to Israel. The fund sector’s professionals in both countries have established a strong relationship, which will continue to grow and help promote the mutual interests of both countries. All this, combined with the EU passporting rights, constitutes Cyprus the ideal choice for setting up and managing Alternative Investment Funds.
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