Cyprus companies can be used very efficiently for group financing activities as Cyprus has no thin capitalization rules or withholding tax on interest. A Cyprus financing company can provide subsidiaries interest bearing loans using the wide double tax treaty network of Cyprus. This can result in a double dip effect provided the financing is undertaken from a tax efficient location i.e., the interest will be tax deductible in the operating location and will be tax free in the recipient jurisdiction. Any margin remaining in the Cyprus company will be subject to income tax at the rate of 10%.