CORPORATE TAX
TAX RESIDENCY
A company is considered to be tax resident in Cyprus if its management and control is exercised in Cyprus.
Cyprus tax resident companies are taxed on their worldwide income.
Non-Cyprus tax resident companies are taxed only on income generated in Cyprus.
CORPORATION TAX
Corporation tax in Cyprus is levied at a flat rate of 12.5%.
Subject to certain exceptions companies trading in shares / securities pay one of the lowest taxation in Europe on their net profits.
DIVIDENTS FROM FOREIGN INVESTMENTS
Dividend income of a Cyprus company from foreign investments is exempt from tax in Cyprus provided they meet certain conditions.
DIVIDENT PAYMENTS
Dividend payment by a Cyprus company to a foreign shareholder (company or individual) does not suffer any withholding tax.
INTEREST INCOME
Interest earned in the normal course of business of a company is subject to income tax at the rate of 12.5%.
Passive interest income (i.e. interest earned not in the normal course of business of a company) is subject to special defense contribution tax.
TAX LOSSES
The tax loss in Cyprus incurred during the year is carried forward and set off against future profits for a period of five years.
TRADING IN SECURITIES & CAPITAL GAINS TAX
Gains on disposal of qualifying titles are exempt from tax. No holding period or minimum holding requirement.
Capital Gains Tax 20% (CGT) is only imposed on the sale of land and buildings situated in Cyprus or shares in non-listed companies that own such property.
Titles are described as shares, bonds, debentures and similar titles as well as rights thereon.
PERSONAL TAX
- Income from business
- Income from any office or employment
- Dividends and interest
- Rents and royalties
- Pensions and annuities
- Income from any office or employment
- Pensions derived from past employment
- Rent from property
- The gross income derived by an individual from the exercise in Cyprus of any profession or vocation and the remuneration of public entertainers
- Directors’ fees and similar remuneration in their capacity as directors of companies considered to be tax resident companies of Cyprus
THE INCOME TAX RATES FOR INDIVIDUALS ARE PROGRESSIVE AS SEEN FROM THE TABLE BELOW
| Chargeable Income EUR | Rate of Tax % | Cumulative Tax EUR |
|---|---|---|
| Up to - 19.500 | Nil | Nil |
| 19.501 - 28.000 | 20 | 1.700 |
| 28.001 - 36.300 | 25 | 2.075 |
| 36.301 | 30 | 7.110 |
| Over 60.001 | 35 |
EXEMPTIONS
- Profits on disposal of shares or securities (titles).
- Dividends received by a Cypriot tax resident individual are exempt from income tax (whether received from a company located in Cyprus or abroad). Subject to SDC.
- Passive interest received by a Cypriot tax resident individual (i.e. interest not accrued from the ordinary business activities or closely connected to the ordinary business activities) is exempt from income tax.
- Income from employment carried out outside Cyprus is exempted from Cyprus income tax, provided that the employment exercised outside Cyprus exceeds 90 days per tax year.
