Cyprus Tax Resident Companies as subject to Corporation Tax Rate of 12.5%; one of the lowest in 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 EUR19,500.
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 normal rates)
Note: Since 1 March 2019, the above types of income are subject to GeSY contributions, (increased to 2.65% as of 1 July 2020), restricted to a maximum of EUR180,000 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)