Cyprus Tax

FAVORABLE TAX REGIME

• Uniform corporate tax rate of 12.5%
• Extensive double tax treaty network with over 60 countries
• Dividend income exemption with at least 1% holding in the company paying the dividend
• Attractive Intellectual Property regime with 80% tax exemption of net profit modified nexus approach” (OECD Action 5).
• Access to EU directives (e.g. Parent-Subsidiary)
• Dividend participation exemption (subject to conditions)
• Exemption from tax on gains from the disposal of securities (e.g. shares, bonds)
• Notional interest deduction on equity applies to all taxpayers and all business activities.
• No withholding taxes on interest and dividends.
• No taxation of capital gains (except for disposal of real estate in Cyprus or shares of company holding real estate in Cyprus).
• No succession taxes.
• No Controlled Foreign Company (CFC) rules.
• Tax neutrality on foreign exchange differences unless they arise from trading in currencies or currency derivatives.
• Foreign tax relief on income subject to both Cypriot and overseas tax.
• Exemption on profits of foreign permanent establishments (subject to conditions)
• Company re-organisation rules based on the EU Mergers Directive allow for tax-neutral group restructuring.
• No exit tax rules 
• 50% exemption on employment income exceeding €100,000 per annum for non-residents taking up employment in Cyprus
• No tax on dividends, interest and rental income of non-domiciled individuals

Further Incentives to INVESTORS

• As part of the Government’s efforts to reinforce local investments, a series of additional tax incentives are offered. Please ask to provide you with details.

Further Incentives to INDIVIDUALS

Cyprus offers to individuals, one of the lowest tax regimes in Europe. There are special tax exemptions to expatriates receiving employment in Cyprus and pensioners retiring in the island.

• An expatriate individual relocating to Cyprus is eligible to income tax exemptions on employment income up to 20% – 50% of the remuneration from any employment exercised in Cyprus for 10 years (matter of conditions).
• Remuneration from rendering services outside Cyprus to a non-resident employer or to an overseas permanent establishment of a resident employer for more than 90 days in a tax year is exempt from income tax.
• Low social insurance contributions by employee and employer.
• No tax on dividend and interest income.
• A non-domiciled individual is exempt from tax on dividend and interest income.
• No tax on gains arising from the disposal of investments.
• Tax exemption of gains arising from the disposal of shares, bonds and other similar financial instruments.
• Nil/reduced withholding tax on income received from abroad.
• Nil or reduced withholding tax rates on dividends, interest, royalties and pensions received from abroad based on Cyprus’s DTT.
• No tax on retirement gratuity and special tax regime on foreign pension income.
• Any lump sum received as a retirement gratuity is exempt from tax.
• A Cypriot tax resident individual receiving pension income from services rendered abroad may choose to be taxed at a flat rate of 5%, on amounts exceeding €3.420 per annum.
• Exemption from capital gains tax (CGT) on sale of real estate.
• Gains arising from the disposal of non-Cypriot real estate are exempt from CGT, estate duty, wealth tax, gift tax and inheritance tax.
• There is no estate duty, wealth tax, gift tax or inheritance tax in Cyprus.

F.C.I. LTD provides the solution for Cyprus tax law and Cyprus VAT law compliance

Our services include:

• Tax advisory: International Tax planning structures, Tax review, Tax clearance
• Tax administration: Registration within the Inland Revenue Department, Preparation and submission of annual tax returns, Tax Residency Certificates
• VAT – VIES – INTRASTAT: Registration to VAT, withdrawal from VAT, preparation and submission of VAT, VIES and INTRASTAT reporting.