Cyprus Tax Resident Companies are subject to Corporation Tax Rate of 12.5%; one of the lowest in the European Union and there is no distinction between local and international companies.
- Dividend income received from abroad is exempt (subject to conditions);
- No Capital Gains Tax (except from the sale of immovable property situated in Cyprus);
- No Immovable Property Taxes (abolished since 1 January 2017)
- Taxable losses carried forward for up to 5 years;
- Capital gains on sale of qualified securities: 100% exemption;
- Gains relating to foreign exchange differences (forex) exempt from tax (subject to conditions)
- No withholding tax on outward payments (Dividends-Interest-Royalties) to non-Cyprus tax residents (companies or individuals);
- Foreign Permanent Establishment profits exempt (subject to conditions);
- Tax free corporate re-domiciliation permitted;
- Possibility for establishing an SE (European Company);
- Applicability of all EU directives;
- Advance ruling practice exists;
- Extensive Double Tax Treaty network;
Other Tax Credits and Incentives include:
– Notional interest deduction: New equity introduced to a company as of 1 January 2015 in the form of paid-up share capital or share premium may be eligible for an annual deduction for tax purposes;
– Generous exemptions from tax of income related to Intellectual Property;
– Cyprus immovable property acquired in the period 16 July 2015 to 31 December 2016 will be exempt from capital gains tax upon a future disposal, subject to conditions.
Cyprus tax resident individuals are subject to tax on their worldwide income at a progressive rate, between 20% to 35%, for income above EUR 19,500.
Non-domiciled Cyprus tax resident individuals are able to enjoy a number of tax exemptions:
- No tax on Dividend income
- No tax on Interest income
- Rental income: partly exempt (only subject to Income Tax at normal rates).
Note: Since 1 March 2019, the above types of income are subject to GeSY contributions, (increased to 2.65% as from 1 July 2020), restricted to a maximum of EUR 180,000 income annually.
Non-Cyprus tax resident individuals are taxed only on certain types of income accrued or
derived from sources in Cyprus, at the same tax rates as Cyprus tax residents.
Non-Cyprus tax resident individuals commencing employment in Cyprus:
- Remuneration from any employment exercised in Cyprus by an individual who was not a resident of Cyprus before the commencement of the employment: 20% exemption (restricted to EUR 8,550 p.a.)
- For employments commencing during or after 2012, the exemption applies for a period of 5 years starting from the tax year following the year of commencement of the employment with the last eligible tax year being 2020
- Individuals with annual remuneration in Cyprus, above EUR 100,000 are allowed a 50% exemption for a period of 10 years if:
-They were not residents of Cyprus before the commencement of the employment, and
-Commence their employment as from 1 January 2012 (*exemption applies)
The contents of this publication should be considered to be of a general nature only not referring to any particular business. Before proceeding with any action, please request further advice relating specifically to your business. We will be very pleased to be of assistance.