Now that things have settled down, the Russians who unwillingly helped pay for Cyprus’ bailout last year are ready to forgive and forget.

The banking system has been drastically overhauled. But the tax haven part less so.

“People are still interested because the legal and tax system remains much more stable than in Russia, and they think that the threat of another haircut is remote,” said Costas Erotocritou, the vice president of the Russian Business Association here, and a lawyer whose firm specializes in setting up offshore accounts.

The haircut he referred to was the Cypriot government’s move last spring to seize vast sums, much of it deposits from wealthy Russians, at the nation’s biggest banks….

But the one rebounding business is foreign incorporation. Cyprus is once again a favorite tax haven, even after international bailout officials forced the government to nudge the corporate tax rate up to 12.5 percent, from 10 percent. That is still the lowest in the euro zone, on par with Ireland and well below Germany’s 29.5 percent and France’s 33.3 percent.

The registration of what are mostly shell companies created to shelter income was 1,454 in January alone. That is more than double the nadir of last spring, after the bailout, and even slightly more than were registered in December 2012, before the collapse.

Russians Return to Cyprus, a Favorite Tax Haven [NYT]

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  1. Posted by Ivan Vladimirovich | February 18, 2014 at 10:00 PM

    Fool me once, shame on you. Try to haircut me again and some lucky Cyprus diplomat somewhere in Paris will drink polonium tea.

    - Russian Investor Relations Rep.

  2. Posted by A.G | February 19, 2014 at 4:22 AM

    If Russians believe that once they move their money into a Cypriot Bank it will stay safe they are delusional. The account will be empty and their statement may show money in the account but it will be somewhere being spent in a casino in the north by either bank workers or cypriot politicians.

    A.G. Cypriotious