In recent years Cyprus has proved itself to be one of the most attractive European international business and financial centres due to its extremely advantageous tax regime, offering the following benefits:
Corporate tax rate: Cyprus has a corporate income tax of 10%. This is the lowest corporate tax rate in the European Union.
Exemption from tax on dividend income: dividend income is exempt from tax irrespective of its source provided that the company paying the dividend either engages directly or indirectly in more than 50% of activities that give raise to non-investment income or the burden on the dividend paying company’s income is not lower than 5%.
No withholding tax is imposed in Cyprus on dividends paid to non-resident shareholders.
No withholding tax is imposed on interest paid from Cyprus as well as on royalties paid form Cyprus in respect of intellectual property exploited outside Cyprus.
No inheritance tax
No income or capital gains tax is imposed on profits and gains derived from the sale of shares and securities, irrespective of whether the profits and gains are considered to be of a revenue or capital nature.
Cyprus tax resident companies are exempt in respect of dividends received from other Cyprus resident companies
Interest income arising from the ordinary activities or closely related to the ordinary activities of the company is taxed at the corporate rate of 10%
Group losses relief without any time restrictions (under certain conditions)
Transfers of assets and liabilities between the companies in the course of reorganization (mergers, demergers, transfer of activates or exchange of shares) are not subject to tax
Profits derived from a permanent establishment maintained abroad are generally exempt from tax in Cyprus.
Non-Cyprus residents are taxed only on income derived in Cyprus. Cyprus tax residents (those who spend 183 days or more in Cyprus) are taxed on income derived in Cyprus and abroad.
Wide network of double tax treaties, currently with 45 countries. Generally, most treaties provide for reduced or nil rates of withholding tax on dividends, interest and royalties paid from the treaty country and the avoidance of double taxation in the case where a resident in one of the treaty countries derives income from the other treaty country.
VAT: the standard rate is 15%, the lowest in the European Union. Depending on its activity, a Cyprus company may be able to register for VAT in Cyprus and recover the VAT incurred.
