Taxation of Companies in Cyprus
The worldwide income of an international business company is taxable in Cyprus, provided that its management and control is exercised in Cyprus. Based on a recent regulation, a company that is registered in Cyprus and is not a tax resident in another country, will also be subject to Cyprus taxes.
Corporation tax
International business companies are taxed at 12.50% on their worldwide profits, provided that the shareholder is a non-tax resident. The same applies if the shareholder is a tax resident but non-domiciled but in this case there is a limit for a period of 17 tax years. An example of non-domiciled is a person who was born outside Cyprus and obtained domicile of origin from that Country and lived all his life outside Cyprus.
No tax is payable when a Cyprus tax resident company makes payment for dividends, interest and royalties to overseas tax residents.
Other taxes
Please be advised of other taxes and VAT for your particular circumstances.
Double tax treaties
Cyprus has concluded double tax treaty agreements for the avoidance of double taxation of the same income with around 55 countries.
Tax incentives for companies
Various tax incentives exist for companies as follows:
- Deduction from taxable income of Notional interest expense calculated on new capital associated with assets producing taxable income.
- Deduction from taxable income of a certain expense, for companies which own Intellectual Property, mainly developed by the company.
- Deduction from taxable income of an additional 20% expense in relation to certain scientific research and research & development expenses.
- Certain dividends receivable are tax free.
- Gain on disposal of certain titles (eg shares, bonds and other similar financial instruments) are exempt from taxes.
Tax incentives for individuals coming from overseas
Please see the separate caption for the above, where you can find amazing tax incentives for
- Employment income.
- Exceptions for certain other incomes of individuals who become Cyprus tax residents. You may find there that an individual may become Cyprus tax resident by completing certain conditions including staying in Cyprus for only 60 days.
Advice
As the above are not exhaustive, we shall be happy to provide advice and further clarity for your particular circumstances.
Marinos Koullapis FCCA
20th May, 2023