Cyprus is an emerging player in the funds sector and ideal for those seeking a more cost-effective jurisdiction than the mature EU fund centres.
Could you give a brief overview of Vistra Group?
Vistra is a versatile set of companies providing a uniquely broad range of services and solutions under different brands. Our services span international incorporations to trust, fiduciary, private client services and fund administration through our four business divisions. We have more than 2,800 employees, who service clients in 71 locations across 42 jurisdictions, and we have 206,600 structures under our management – which translates to US$192 billion assets under administration. We are ranked within the four biggest fiduciary service providers in the world, but we are determined to rise up the ranks to the top.
How would you describe your client base and key markets?
The majority are corporate and private clients. Our major business lines are trust and corporate services, alternative investment services, essentially fund services, as well as in the company formation services, especially in Asia, where we have around 20% of the market. We recently added a new business line named international expansion services – basically meaning we take care of the full back-office services for our clients in one or more jurisdictions, and include services such as setting up structures and accounting. This is part of our efforts to diversify our services. As a Group we are based in Europe and Asia, but we also have offices in the US, Canada, India, Mauritius, New Zealand, Samoa, Seychelles, UAE, the Caribbean and Brazil. We are present in all the financial centres, including Cyprus.
What kind of services and operations do you have in Cyprus?
In Cyprus we have an operation with around 40 employees with the main focus traditionally on corporate and private clients. The product we deliver as a company is basically the set-up of tax efficient structures for our clients and the subsequent management, administration and corporate secretarial legal services for the various companies used in those structures. So, essentially our core service is providing directors a registered office address, providing accountancy services, legal and corporate secretarial services and thus ensuring that our clients are fully compliant with all local and international regulations. We are also increasingly involved in fund administration in Cyprus, an aspect I am very enthusiastic about, because I see real growth in this sector in the future. Cyprus’ fund landscape and products are developing fast, and with our Group already heavily involved in fund services in all major fund jurisdictions, our Cyprus office is often used as outsourcing platform for fund administration services. We have all the relevant know-how here and the industry is visually growing locally. However, our main clients continue to use Cyprus for holding and finance purposes. It is still the best and most popular product we have, and there are a lot of great incentives, such as the new IP regulations, the upgraded fund regulation, the notional interest deduction, along with many other excellent tax incentives and the fact that Cyprus is the jurisdiction of choice for non-doms and high earners. Due to growing regulatory demands, it is getting more difficult for many in our industry, but where Vistra has a competitive edge is that we offer, next to being an international service provider, an exceptional wide range of services and knowledge to our clients which helps them stay on top of regulatory and compliance issues, as well as support in providing a wide range of substance services for companies.
What markets is Vistra Cyprus targeting at the moment?
Historically, Cyprus has had a heavy focus on Russia. The focus of Vistra Cyprus, however, has been more diverse. Our portfolio and outlook on sourcing clients lies in various jurisdictions. Of course, we also have clients from the Eastern European region, although new tax rules make the demand for more sophisticated structuring imminent. As mentioned previously we do quite a lot of business via Eastern Europe, countries like the Czech Republic and Poland, and we have some clients also from the Americas, but a large portion of our business is with fellow EU countries. Another rising market for us is Asia, due to our Group’s active presence in that region. We have many channels through which our products are being marketed, and for us it is a bit easier to cut into Asia thanks to our wide international network through the Group.
What sectors in Cyprus are showing the strongest potential for growth?
We already briefly mentioned fund administration, which is a growing product. International investors are increasingly looking at alternative and tax-efficient ideas on how to invest their money and funds is one of them. Cyprus is an emerging player in the funds sector and ideal for those seeking a more cost-effective jurisdiction than the mature EU fund centres. In terms of fund administration, for now I am mainly talking about business process outsourcing from expensive jurisdictions to Cyprus. We offer all the same services, however usually with a more advantageous pricing level. This is an aspect that needs to be marketed internationally, as it is a real advantage for many companies and investors. As for other growing sectors, manufacturing has slightly gone up since 2015, people are spending money again and buying more cars and houses, but the real winner at the moment is tourism, which is skyrocketing. Cyprus is the only place in the region where you can go on safe vacations. The country has amazing coastline, mountains, and towns to visit all year round and there has been substantial investment in upgrading Cyprus’ tourism product.
How would you assess the business operating environment in Cyprus?
Cyprus has many benefits for foreign investors: it is an EU country with English as its business language, a highly educated workforce, and a very competitive framework. The legislation and taxation are very clear-cut, simple, and have no hidden aspects, especially if you compare it to many other low-tax jurisdictions. Also living and working in Cyprus is an advantage in itself – all the incentives are in place and there is much to gain from basing operations on the island. Banks are stable now after 2013, and have their act together with better supervision. Cyprus has come a long way since the crisis, and there is much improvement and development going on. A key challenge the financial sector still has to tackle is improving liquidity and to start giving out loans to the private sector again in order to spur growth.
There is a lot of activity in the Cypriot hydrocarbons industry at the moment, with new exploration by energy giants planned for 2017. What potential do you see in the energy sector at the moment?
Cyprus has already become a hub for hydrocarbon activities, with the exploration gaining momentum and industry players using the island for oil storage due to its convenient regional location. However, it is not only about convenience, but also about the safety and stability Cyprus offers, compared to its Eastern Mediterranean neighbours. Considering all the recent developments, I would definitely recommend investing in the energy sector. The security aspect is not the only benefit, as Cyprus also offers a great and competitive business environment for international business and investments.
What are your expectations for Cyprus over the next few years?
Although the country still faces some challenges, I think 2017 will be a better year. What is imperative is that the government continues developing incentives and reducing bureaucracy and barriers for international business. This is imperative to keep our jurisdiction attractive to investors. Some external factors, such as increasing international regulation, do pose a challenge for our industry in making it more difficult to create tax efficient structures. But as long as there is international business, there will always be a need for our services, and the players that can offer cost-effective service with high standards will be in high demand – so the future looks bright for Vistra.
Gerard, a Dutch national, obtained his law degree at the University of Leiden, The Netherlands, where he specialized in corporate and maritime law. In 1995 he joined a leading law firm in Curaçao (Caribbean) before moving to MeesPierson Trust & Private Banking in 1999, first in Curaçao and later in Amsterdam. In 2006 Gerard joined another global provider of corporate services as managing director of the Dutch operation. Gerard grabbed, in 2010, the opportunity to join Vistra as managing director of Vistra’s Curacao operation. In 2013 Gerard was requested to take up the function of BD director at Vistra Malta after which in 2015 Gerard joined Vistra in Cyprus as managing director.