NEW XXX Company Setup ???

It used to be (or it is still?) a tax haven in EU.

Good question.

I don't think it's a tax haven anymore, but they're still laxer than most EU countries I believe.

Most of the business is done in USA and EU, they're the locations that make the most sense for creating a porn company. If you do a lot of worldwide wires as a porn company, your bank may kick you out. But if you're an USA company doing bank transfers inside USA, or an EU company doing EU transfers, and some between USA and EU, then you're "in the system" and less likely to have issues.
Some of the biggest companies have both US and EU entities.

Cyprus is in the EU with full access to the EU banking and tax system, they speak English, and corporate taxes are low.
I think it's a primary target for business owners who are not in the EU/US but some other country, and they want a legit company inside one of those locations. Cyprus is a place that's welcoming.

Also these trends are self-reinforcing I think. There are already porn companies in Cyprus, operating for years (I'm guessing) without issues. And lawyers / accountants that take care of them. Newcomers see this, and consider it a safer and simpler path than establishing a company in some random other country - even if the taxes may be even lower over there.

For EU or US nationals, I think generally it's way better to just create the company where you are. There are lots of implications and tax issues with owning a foreign company. This is something you should discuss with a local tax advisor, because those selling foreign company creation services want your money and downplay these issues.

There are probably many other interesting facts regarding taxes, IP licensing, and holding companies, I'm curious about the other answers!

Thanks for the insight & indepth response!! I'll setup here in the US & if I see the traffic ballooning from oversees down the road, I'll setup up a Euro parent company I suppose.