What are the tax advantages of registering a company in Cyprus?

Cyprus has become a popular international business centre, having the lowest corporate tax regime in Europe. Both local companies and International Business Companies are taxed at the same corporation tax rate of 10%. Cyprus offers a beneficial low tax rate and is considered to be a prestigious country to register your international business, having nothing to do with suspicious “tax-havens”.

  • Withholding taxes
    There are no withholding taxes on payments to non tax resident persons (companies or individuals) in respect of dividends interest and royalties. 
  • Dividends
    Any income received from dividends by a Cyprus resident International Business Company is exempt from tax in Cyprus (under certain conditions).
    Dividends paid from one Cyprus tax resident company to another are exempt from any tax in Cyprus.
  • Tax Losses 
    Tax losses can be carried forward indefinitely to be set-off against future profits until they are extinguished. Losses incurred from businesses carried outside Cyprus are allowed as a deduction against other taxable profits generated by the Cyprus Company. 
  • Group Relief
    Group relief is allowed for at least 75% group structures and is applicable only on yearly results if claimants are Cyprus tax resident companies and are members of the same group for the whole tax years.   
  • Royalties
    Gross amounts of Royalties from sources within Cyprus by a company which is not tax resident of Cyprus are liable to 10% withholding tax at source if the intangible property right, however is granted to a Cyprus Company for use outside Cyprus, then there is no withholding tax and the corporate rate of 10% is applied only on the profit margin left in the Cyprus company.
  • Tax Residency
    A company is considered to be tax resident in Cyprus if the management and control is exercised in Cyprus
  • Corporate tax
    Trading profits are taxed at the rate of ten percent (10%), one of the lowest corporate income tax rates in Europe.
  • Interest income
    Active Interest income (interest income effectively collected with the carrying on of a trade. or business of the company) is subject to corporate income tax rate of 10%, as regular trading income. 
     
    Passive interest income (income not collected to a trade or business) is exempt from corporate income tax that is taxed under Special Contribution for defence at ten percent (10%) on a gross basis. 
  • Foreign Permanent Establishments
    The profit of a Foreign Permanent Establishment (PE) of a Cyprus Company is exempt from corporation tax if one of the following two conditions is satisfied:
  1. The PE must not engage more than 50% directly or indirectly, in activities which lead to passive income,
    Or,
  2. The foreign tax burden is imposed on the PE must not be substantially lower than that in Cyprus
  • Trading in Securities
    Any income from trading in securities is completely exempt from corporate tax.

    The term ‘securities’ includes but is not limited to: ordinary and preference shares, options on titles, debentures, bonds, short positions on titles, futures/forwards on titles, swaps on titles, depository receipts on titles, rights of claims on bonds and debentures, index participations (only if they result on titles), repurchase agreements or repro on titles, participations in companies, units in open-end or closed-end collective investment schemes such as mutual funds, International collective Investment Schemes and undertakings for collective investments in transferable securities. 
  • Capital Gain Tax
    Capital gains are not included in the ordinary profits of a business, but instead are taxed separately under the Capital Gains Tax Law. Capital Gains from the sale of immovable property situated in Cyprus as well as for the sale of shares in companies other than quoted shares) in which the underlying asset is immovable property situated in Cyprus are taxed at a flat rate of twenty percent after allowing for indixation. 

    Capital gains that arise from the disposal of immovable property held outside Cyprus or shares in companies which may have as an underlying asset immovable property held outside Cyprus, are completely exempt from Capital Gain Tax. 
  • Inheritance or Estate Taxes 
    There are no Inheritance or Estate Taxes 
  • Wealth taxes
    Cyprus imposes no tax on wealth
 
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