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Business in
Cyprus

Tax Facts

1

Cyprus Tax Residency

Cyprus tax residency gives the opportunity to businessmen, professionals, and high-net-worth individuals to benefit from Cyprus Income tax advantages on worldwide personal income.

2

Non-domiciled Rules in Cyprus

Non domiciled status in Cyprus is an excellent way to become Tax resident in the EU and minimise personal tax on worldwide income.

3

Cyprus IP Box Regime

On 14 October 2016, the House of Representatives passed amendments to the Income Tax Law to align the current Cyprus IP tax legislation with the provisions of Action 5 of the OECD’s Base Erosion and Profit Shifting (BEPS) project. The amendments apply retroactively, as from 1 July 2016.

4

Management and Control

​The Residence of a Company is based on the effective passing of “management and control” test as included in the Tax Department’s application form for the issuance of a Tax Residency Certificate.

5

Notional Interest Deduction

As of 1 January 2015, Cyprus tax resident companies (as well as foreign companies with permanent establishments in Cyprus), which carry on a business, are entitled to claim a NID on their equity capital introduced on or after 1 January 2015.

Cyprus is an attractive destination for foreign investors as it provides a transparent and efficient tax system as well as a reliable commercial and legal framework, that is aligned with EU and international regulations.

 

As a member of the EU and part of the Eurozone community, Cyprus qualifies as a stable destination for foreign investors and gives access to a growing double tax treaty network worldwide.

 

Below, we have summarised the key benefits utilised when incorporating your business in Cyprus:

 

  • Corporate tax rate of 12.5% which is one of the lowest rates in Europe.

  • Access to EU directives and double tax agreements with over 60 countries.

  • Dividend income exemption from corporation tax and zero or low withholding tax on profits from foreign subsidiaries.

  • No capital gains tax on gains arising from the disposal of securities such as shares or bonds.

  • No withholding tax on payments to non-residents (dividends, royalties and interest).

  • Attractive group relief and carried forward losses legislation. 

  • Attractive Cyprus IP tax regime that achieves an effective tax rate of as low as 2.5%.

  • Zero tax on foreign exchange (FX) gains, with the exemption of FX gains arising from trading foreign currencies and related derivatives.

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