Why Cyprus?

Cyprus offers unique tax opportunities to international business investors

  • One of the lower corporate tax rate in the EU
  • A network of favourable double tax treaties
  • Access to EU Directives
  • No withholding tax on dividends and interest paid (non tax residents of Cyprus) – subject to anti-abuse and low-tax jurisdictions exemptions
  • No withholding tax on almost all royalties
  • No capital gains on profits from the sale of shares, securities, bonds and units
  • No tax on foreign dividends and interest received
  • No tax on foreign Permanent Establishments (PE)
  • Attractive IP Box regime for qualifying intellectual property income
  • Notional Interest Deduction (NID) allows Cyprus tax resident companies to claim a tax deduction on new equity introduced into the business

 MAIN FEATURES OF CYPRUS TAX SYSTEM

Cyprus’ tax system is in full compliance with EU requirements and also within the OECD requirement against harmful tax practices. The main features of the Cyprus Corporation tax are as follows:

Basis of Taxation

Under the new Income Tax Law, all distinctions between local and international business companies have been removed. The taxation of companies is now based on residence. All companies that are tax resident in Cyprus are taxed on their worldwide income accrued or arising from sources both within and outside Cyprus. Non-resident companies are taxed in Cyprus only on income derived from a permanent establishment or immovable property in Cyprus. A company is resident of Cyprus if it is managed and controlled in Cyprus. Registration or incorporation in Cyprus is not sufficient to render a company liable to tax in Cyprus.

Network of double tax treaties

A comprehensive network of double taxation treaties remains a key pillar of Cyprus’s position as an international business and investment hub. Cyprus has concluded tax treaties with over 65 countries, with additional treaties under negotiation or awaiting ratification. Most treaties follow the OECD Model Convention and are designed to eliminate or reduce double taxation on cross-border income such as dividends, interest, and royalties. This treaty network enhances Cyprus’s attractiveness for international structuring by providing greater tax certainty and, in many cases, reducing or eliminating withholding taxes on cross-border payments between treaty jurisdictions.