CYPRUS TAX SYSTEM

Cyprus offers one of the most attractive tax systems in Europe. As a member of the EU, Cyprus regulatory regime is in full compliance with the requirements of the EU and OECD, with one of the lowest corporate tax rates in the Europe and multiple exemptions for corporates and individuals.

With the correct advanced planning, those who choose to become tax residents of Cyprus are able to minimise and even eliminate tax on income. Being a non-domiciled tax resident in Cyprus also provides additional tax benefits.

KEY BENEFITS OF THE CYPRUS TAX SYSTEM

  • CORPORATE TAXATION
  • Low corporate income tax rate of 12.5%
  • Extensive double tax treaty network (over 60 countries)
  • No tax on dividend income (subject to conditions)
  • No tax on profits from disposal of shares, bonds and other financial instruments
  • No tax on Foreign exchange (FX) gains, except those arising from trading in FX
  • No tax on profits of overseas permanent establishments (PEs)
  • No withholding tax on payments of dividends to foreign investors and on royalties for use outside of Cyprus
  • Notional interest deduction (NID) from their taxable income, upon the introduction of new equity in the form of paid up share capital or share premium which can potentially reduce the effective tax rate to as low as 2.5%
  • Unilateral tax credit relief for taxes paid abroad
  • Capital gains tax (CGT) only applies on profits arising from the disposal of Cyprus immovable property
  • The new intellectual property (IP) box regime qualifying companies can claim a tax deduction of up to 80% of their net profit resulting from the exploitation or disposal of intellectual property
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  • EU & OECD Compliant
  • Access to EU directives
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  • Company re-organisation rules based on the EU Mergers Directive
  • No exit tax rules
  • No Controlled Foreign Company (CFC) rules
  • INDIVIDUAL TAX
  • No tax on dividends and interest for non-domiciled individuals
  • No tax or gains arising from the disposal of investments
  • No withholding tax on income (royalty, rental, pension, etc.) received from abroad
  • 50% tax exemption on employment income exceeding €100,000 per annum
  • No capital gain tax (CGT) arising from the disposal of non-Cypriot real estate
  • No tax on retirement gratuity and special tax regime on foreign pension income
  • No estate duty, wealth tax, gift tax or inheritance tax in Cyprus

TAX RESIDENCY QUALIFICATION REQUIREMENTS

The 183-day Rule

In order for an individual to be considered a tax resident of Cyprus, he/she needs to be physically present in Cyprus for more that 183 days of the calendar year.

The 60-day rule

The “60-day rule” applies to individuals who meets all of the following requirements within the tax year:

  • Reside in Cyprus for at least 60 days per annum
  • Have obtained a Permanent Residency of the Republic of Cyprus
  • Do not reside in any other single state for more than 183 days
  • Are not tax resident in any other country
  • Have a place of the permanent residency in Cyprus

Qualifying applicants are issued a Residency Certificate and Tax Identification Number.

DOMICILE OR NON-DOMICILE

A tax resident individual will be treated as domiciled in Cyprus if they are either:

  • Domiciled by origin (born to a Cypriot-domiciled father)
  • Have been a Cyprus tax resident for at least 17 of the previous 20 years

All other tax residents are deemed as Non-Domiciled.

CONTACT US

HKCY is a specialist property development company, based in Cyprus, known for innovative residential and commercial properties.

ADDRESS:

12 Arch. Makariou III, Zavos Christelina Tower, Office 101, 4000 Limassol, Cyprus

Phone:

free call: 

+357 25 32 42 52

8000 88 28 (Cyprus only)

E-mail:

hello@hkcyproperties.com

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