The safe and sound option
The Corporate Tax System in Cyprus
Cyprus has one of the most attractive tax regimes. In addition to being fully compliant with EU and International regulations, the tax system in Cyprus attributes its worldwide recognition to its large network of double tax treaties with more than 50 countries. Furthermore Cyprus’s association to the OECD guarantees its adherence to the internationally agreed tax standards. Other advantages include the fact that the Cyprus corporation tax is at the favourable flat rate of 12,5%, which is among the lowest in the EU. Also, significant fiscal benefits exist for IP, royalties, dividends and interests and many more, all of which allow foreign investors to gain a competitive advantage on their overseas ventures.
The following Business activities are ideally suited to the Cyprus tax environment and include:
- Holding companies
- Finance companies
- IP companies
- Investment Funds
- Trading/Value-Chain-Transformation companies
Highlights
- Foreign sourced dividends are exempt from tax under easily met conditions.
- Disposals of shares and other qualifying titles (such as corporate bonds) are exempt from tax provided the disposed company does not hold any immovable property in Cyprus.
- Generally no withholding taxes on payments from Cyprus.
- Profits of a foreign Permanent Establishments (PE) are exempt from taxation in Cyprus, under easily met conditions.
- The Cyprus IP tax regime can be utilized to achieve an effective tax rate of low 2,5% or even lower.
12,5 % |
Dividends |
53 |
Cyprus Legal System
Financial Reporting Considerations
Reporting framework for Cyprus entities
International Financial Reporting Standards as adopted by the European Union (“EU IFRS”) constitutes local Generally Accepted Accounting Principles (“GAAP”) in Cyprus and also forms the basis for the computation of taxable income for all Cyprus tax resident entities. Therefore, Cyprus registered entities need only maintain one set of financial information for financial reporting and tax purposes alike, based on a reporting framework widely accepted by investors, financiers and analysts across the globe.
For more information on the above issues please contact us