Cyprus tax legislation & advantages
- ‘Largely Compliant’ upgraded OECD Global Forum rating EU & OECD, CRS, EOI, BEPS, FATCA Compliant / Access to EU directives
- One of the lowest corporate income tax rates in the EU at 12, 5%
- Dividend participation exemption
- Exemption from tax on profits from disposal of securities (shares, bonds, debentures)
- No withholding taxes.
- No succession taxes.
- Low taxation of capital gains (except for disposal of real estate in Cyprus or shares of company holding real estate in Cyprus)
- No Thin Capitalization rules
- No Controlled Foreign Company (CFC) rules
- Notional Interest Deduction (NID) on investment in Cypriot companies
- Tax favorable IP Box regime
- Tax favorable regime for for individuals with employment exceeding Euro 100.000 per annum: 50% tax exemption from personal income which applies for the first 10 years of employment in Cyprus and applies to persons who were not tax resident of Cyprus for any 3 out of the last 5 tax years prior to the commencement of employment in Cyprus (including the previous tax year).
- Tax favorable regime for individuals with employment in Cyprus below Euro 100.000 per annum relocated to Cyprus to support the operations of the company, there is an exemption of 20% of the employment income in Cyprus of a person (who was not tax resident of Cyprus during the previous tax year), up to a maximum of €8.550 per annum, which applies for the first 10 years of employment in Cyprus. This exemption regime applies until the year 2020.
- Start-up legislation (Pending Parliament approval) Cyprus provides tax incentives for investing in innovative Start-ups and SMEs. The qualifying investors are the following:
- Existing innovative Enterprises: R&D costs represent at least 10% of its total operating costs in at least one of the three previous years
- New innovative Enterprises (Start-ups): Assessment based on business plan