The Attractive Cyprus Tax System

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Cyprus has a simple and transparent tax system with one of the lowest corporate tax rates in the EU and multiple exemptions for both corporations and individuals.

The main characteristics of the Cyprus tax system are outlined below:

 

  • Low corporate income tax rate of 12.5%
  • EU & OECD Compliant
  • Access to EU directives (e.g. Parent-Subsidiary)
  • Extensive double tax treaty network with over 60 countries
  • 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 reorganization rules based on the EU Mergers Directive allow for tax-neutral group restructuring
  • Attractive Intellectual Property regime in line with “modified nexus approach” (OECD Action 5)
  • 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.

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