Taxation

Cyprus maintains its competitiveness as an international business centre and enhances its attractiveness as a suitable jurisdiction for holding companies by introducing the following tax system and advantages:

  • The uniform corporate tax is 10% which is the lowest in the EU
  • Cyprus tax-resident companies are exempt in respect of dividends received from other Cyprus resident companies.
  • Interest income is taxed at the corporate tax rate of 10% arising from, or closely connected to, the ordinary activities of the company.
  • Tax losses can be carried forward and set off against future profits indefinitely; applicable for losses incurred in 1997 and thereafter.
  • Profits of permanent establishments abroad are not subject to income tax in Cyprus, given that less than 50% of their activities result in investment income and that the foreign tax suffered is not significantly lower than the tax payable in Cyprus.
  • Cyprus has over 32 double tax treaties, covering 40 countries.
  • Profits gained from the sale of securities are exempt from tax for all companies.
  • Transfers of assets and liabilities between companies in the course of reorganization, such as mergers, demergers, transfer of activities or exchange of shares, are not subject to tax.
  • Tax relief of foreign tax paid is granted in Cyprus even in the absence of a double tax treaty, provided sufficient evidence is submitted that foreign tax was indeed paid.   Hence Cyprus turns into a lucrative hub for establishing holding companies.
  • Individual tax resident is an individual who stays in the Republic for 183 days in the year of assessment.  Cyprus tax residents are taxed on income earned both in Cyprus and abroad. On the contrary, non-tax residents are taxed on income earned only from Cyprus sources.
  • VAT is imposed on the supplies of goods and services, as well as on imports to Cyprus.  The standard rate has been set to 15%; the lowest rate permitted in the EU.
  • Cyprus is also considered to be among the most competitive shipping centers in the world in terms of registration fees and taxes.
  • Income and gains of a Cyprus International Trust, derived from sources outside Cyprus are exempt from any tax imposed in Cyprus with certain conditions.

Source: Ministry of Commerce, Industry and Tourism

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