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Cyprus Tax System - Summary of Benefits

 

A. COMPANIES

Cyprus Tax Resident Companies as subject to Corporation Tax Rate at 12.5%; one of the lowest in European Union and there is no distinction between local and international companies.

  • Dividend income received from abroad is exempt (subject to conditions);
  • No Capital Gains Tax (except from the sale of immovable property situated in Cyprus);
  • No Immovable Property Taxes (abolished since 1 January 2017)
  • Taxable losses carried forward for up to 5 years;
  • Capital gains on sale of qualified securities: 100% exemption;
  • Gains relating to foreign exchange differences (forex) exempt from tax (subject to conditions)
  • No withholding tax on outward payments (Dividends-Interest-Royalties) to non-Cyprus tax residents (companies or       individuals);
  • Foreign Permanent Establishment profits exempt (subject to conditions);
  • Tax free corporate re-domiciliation permitted;
  • Possibility for establishing an SE (European Company);
  • Applicability of all EU directives;
  • Advance ruling practice exists;
  • Extensive Double Tax Treaty network;
  • Other Tax Credits and Incentives include:
  • Notional interest deduction New equity introduced to a company as of 1 January 2015 in the form of paid-up share capital or share premium may be eligible for an annual deduction for tax purposes.
  • Generous exemptions from tax of income related to Intellectual Property;
  • Exemption from capital gains tax on Cyprus immovable property acquired in the period 16 July 2015 to 31 December 2016 will be exempt from capital gains tax upon a future disposal.
B. INDIVIDUALS

Cyprus tax resident individuals are subject to tax on their worldwide income at a progressive rate, between 20% to 35%, for income above EUR 19,500.

Non-Cyprus tax resident individuals are taxed only on certain types of income accrued or derived from sources in Cyprus, at the same tax rates as Cyprus tax residents.

Non-Cyprus tax resident individuals commencing employment in Cyprus

  • Remuneration from any employment exercised in Cyprus by an individual who was not a resident of Cyprus before the commencement of the employment is subject to 20% exemption (restricted to EUR 8,550 p.a.)
  • Individuals with annual remuneration in Cyprus, above EUR 100,000 are allowed a 50% exemption for a period of 10 years if:
    • They were not residents of Cyprus before the commencement of the employment, and
    • Commence their employment as from 1 January 2012 (*exemption applies)
  • For employments commencing during or after 2012, the exemption applies for a period of 5 years starting from the tax year following the year of commencement of the employment with the last eligible tax year being 2020. 

 

 

 

 

Last updated February 2018

 

 

 

Cyprus: Interesting developments for International Tax Planning for both Companies and Individuals

Charoula Mesaritis discusses the latest developments that Cyprus can offer international business and high net worth individuals at a recent presentation in Paris. 

At the recently held UHY International Annual Meeting in Paris, France, in  October, Charoula Mesaritis, Manager of Tax & Corporate Services at Cosmoserve and UHY Cyprus,  made a very useful contribution to the Tax Session in a presentation which illustrated both the long established benefits that Cyprus offers for international tax planning for corporate entities and groups, as well as introducing some very interesting recent developments which are of benefit to individuals.

Charoula explained that the tax system of Cyprus is in full compliance with EU requirements and also within the OECD requirements against harmful tax practices. The Cyprus Holding Company is a well established regime that has been around for the last 15 years and which has proved to be very popular and successful. Although there is no legal definition of a Cyprus Holding Company,  liberal interpretation allows a combination of activities to be carried out by companies which also act as vehicles for holding investments in group and other companies.

 

“ In a nutshell,  the income from activities arising from Role of a Cyprus holding company is essentially tax free in Cyprus” explains Charoula (pictured). “Furthermore, Cyprus has concluded over 60 double tax treaties with other jurisdictions worldwide, and with corporate income tax on other income at  one of lowest in Europe at 12.5%, this makes for Interesting possibilities for international tax planning structures using Cyprus”

Charoula was also keen to emphasise two recent developments which make Cyprus very attractive for individuals :

  • Non Domiciled Tax Residents
  • 60 day rule for Tax Residents (alternative to 183 days – subject to conditions) making establishing tax residency in Cyprus much easier.

“It is also worth mentioning that other recently introduced schemes offering Permanent Immigration Permits (Residence) by Investment  and Cypriot  Citizenship by Investment, combined with the recent changes relating to non domiciled tax residents, offer a fantastic opportunity to individuals seeking to reduce their tax on worldwide income”  Charoula added.

 

For more information, please contact Charoula Mesaritis  at   This e-mail address is being protected from spambots. You need JavaScript enabled to view it or This e-mail address is being protected from spambots. You need JavaScript enabled to view it  

 

Protecting Our Environment

In light of the well documented troubles surrounding the environment, CosmoServe have decided to act.   We believe that changes to the way we work are vital if we want to do our bit for the current state our environment finds itself in.  Therefore, we have formed the Cosmo-Friendly Guide, which will allow our office to turn green.

We would like you to read the open letter, Protect Our Environment, from our Chairman.

Let's all act now!

 

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