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Cyprus Company | Tax Law

Cyprus Company Formation and Cyprus Citizenship Packages

€950 – Cyprus Company Formation | €22.500 – Cyprus Citizenship

We are Cyprus Company Formation specialist consultants and Cyprus Citizenship specialists. We provide ALL the Cyprus company formation and company registration and management services as well as Cyprus Residency and Citizenship Services in order to obtain Cyprus Company Tax and Cyprus Residence and Citizenship Advantages. We have an experienced team of Company Formation and Citizenship professionals who are part of the FBS Kotsomitis Global Network. Your Trusted Partner in Cyprus for ALL your Cyprus Company Formation and Cyprus Citizenship Needs.

In this section you will find extensive information about the Cypriot tax system.

Full texts of the Relevant Laws can be downloaded here:

Income Tax Law, 2002 (as amended, 2004)
International Collective Investments Schemes Law 1999 and 2000
International Trusts Law, 1992
Partnership and Business Names Law
Special Contribution for the Defence Laws, 2002 (as amended, 2003)

If you have difficulty in downloading the Tax Treaties/Laws, please contact us. We will send them to you.

The full text of Cyprus’s Tax Treaties can be downloaded here:

Cyprus – AustriaCyprus – Lebanon
Cyprus – Austria Final ProtocolCyprus – Macedonia
Cyprus – BelarusCyprus – Malta
Cyprus – BelgiumCyprus – Mauritius
Cyprus – BulgariaCyprus – Moldova
Cyprus Bulgaria Final ProtocolCyprus – Montenegro
Cyprus – CanadaCyprus – Poland
Cyprus – Peoples Republic of ChinaCyprus – Portugal
Cyprus – CroatiaCyprus – Romania
Cyprus – CzechoslovakiaCyprus – Russian Federation
Cyprus – DenmarkCyprus – Serbia
Cyprus – EgyptCyprus – Singapore
Cyprus – FranceCyprus – Slovenia
Cyprus – France Final ProtocolCyprus – South Africa
Cyprus – GermanyCyprus – South Africa Final Protocol
Cyprus – Germany Final ProtocolCyprus – Sweden
Cyprus – GreeceCyprus – Tajikistan
Cyprus – HungaryCyprus – Syria
Cyprus – Hungary Final ProtocolCyprus – Thailand
Cyprus – IndiaCyprus – Thailand Final Protocol
Cyprus – IrelandCyprus – Turkmenistan
Cyprus – ItalyCyprus – UK
Cyprus – Italy Final ProtocolCyprus – Ukraine
Cyprus – KurkystanCyprus – USA
Cyprus – KuwaitCyprus – Uzbekistan

(updated Jan 2006)

Download here our Company Brochures:

Company Profile & Services (pdf)
Why Cyprus? (pdf)
Investment Holding Structures (pdf)
Cypriot Holding Company Structures (pdf)
International Trading & Other Structures (pdf)

Income Tax

Tax Charge

Resident in Cyprus – In the case of a person who is tax resident in Cyprus, tax is levied on all income accruing or arising from sources both within and outside Cyprus, in respect of:

  • Profits or other benefits from any business
  • Profits or other benefits from any office or employment
  • Dividends, interest or discount
  • Rents, royalties or other profits arising from property
  • Any amount or consideration in respect of any trade goodwill reduced by any amount incurred for the purchase of such trade goodwill

Non-Resident in Cyprus – In the case of a person who is tax resident in Cyprus, tax is levied on the income accruing or arising from sources in Cyprus only, in respect of:

  • Profits or other benefits from a permanents establishment situated in Cyprus
  • Profits or other benefits from any office or employment exercised in Cyprus
  • Pensions derived from past employment exercised in Cyprus
  • Rent from property situated in Cyprus
  • Any amount or consideration in respect of any trade goodwill reduced by any amount incurred for the purchase of such trade goodwill
  • The gross income derived by an individual from the exercise in Cyprus of any profession or vocation, the remuneration of public entertainers, and the gross receipts of any theatrical, musical or other group of public entertainers

Definition

Resident in Cyprus, when applied to an individual, means an individual who stays in Cyprus for a period or periods exceeding in aggregate 183 days in the year of assessment and, when applied to a company, means a company whose management and control is exercised in Cyprus.

Permanent Establishment (OECD Model definition) means a fixed place of business through which an enterprise’s business is wholly or partly carried on, and includes a place of management, branch, office, factory, workshop, mine, oil or gas well, quarry or any other place of extraction of natural resources.

Exemptions

DetailsIndividualsOther Persons
Income from interest. Interest accruing to any person from the ordinary carrying on of any business including any interest closely connected with the ordinary carrying on of the business, is not exempted, but included in the calculation of profit100%100%
Dividends100%100%
Remuneration from any office or employment exercised in Cyprus by an individual who was resident outside Cyprus before the commencement of his employment. This exemption applies for a period of three years commencing from 1 January following the year of employment’s commencement. For employments that start during or after 2012 the exemption applies for a period of 5 years starting from the year following the year of commencement of the employment. This exemption applies for up to 2020. This exemption may not be claimed in addition to the immediately below mentioned 50% exemption for employment income.20% of the remuneration with a maximum amount of €8.550 annually 
Remuneration from any office or employment exercised in Cyprus by an individual who was resident outside Cyprus before the commencement of his employment. The exemption applies for a period of 10 years for employments starting as from 1 January 2012 provided that the annual remuneration exceeds €100.000. This exemption does not apply if for employments starting as from 1 January 2015 the individual was a Cyprus tax resident for 3 (or more) tax years out of the 5 tax years immediately prior to the tax year of commencement of the employment nor in the preceding tax year.50% of the remuneration 
Profit from the sale of securities100%100%
Profit from a permanent establishment situated outside Cyprus, unless the permanent establishment – directly or indirectly – engages more than 50% in activities, which lead to investment income, and the foreign tax burden is substantially lower than the tax burden in Cyprus (practically < 5% headline tax). From 1 July 2016, taxpayers may elect to tax the profits earned from a foreign permanent establishment, and apply for a tax credit for the foreign taxes incurred on the foreign permanent establishment profits.100%100%
Remuneration from the tendering outside Cyprus of salaried services for a total aggregate period in the year of assessment of more than 90 days to an employer not resident in Cyprus100% 
Foreign exchange (FX) gains both realized and unrealized, except from FX gains arising from the trading in foreign currencies and related derivatives.100% 
Deposits with the Cyprus Housing Finance Corporation (up to 25% of total gross income for schemes which started up to 30 April 2003)40% 
Lump sum payments on retirement or pension’s commutation, or a gratuity on death.100% 
Capital sums from life insurance or approved provident funds100% 
Income from scholarship or other educational endowment100% 
Income of any religious, charitable or educational institution of a public character 100%
Income of any co-operative society in respect of transactions with its members 100%
Emoluments from an institution’s foreign officers exercising educational, cultural or scientific function100% 
Emoluments of foreign diplomatic and consular representatives, if not citizens of Cyprus100% 
Income of any local authority 100%
Income of any approved pension or provident fund or any insurance fund 100%
Income of any company formed exclusively for the purpose of promoting art, science or sport 100%
Pensions and special grants under special legislation100% 
Widow’s pensions100% 

Capital Allowances

DetailsAnnual Wear & Tear Allowance %
Industrial buildings4
Agricultural buildings4
Commercial buildings3
Hotel buildings4
Machinery, plant and furniture10
Machinery and equipment of agricultural and animal husbandry business15
Computer hardware and operating software20
Application software -Up to €1.709-Over €1.70910033 1/3
Tools33 1/3
Tractors, excavators, trenches, cranes, and bulldozers25
Motor cars (except saloons) and motorcycles20
New Cargo Ships8
New Passenger Ships6
Second hand cargo and passenger ships and additional expenditureThe cost is written off over the expected useful life of the ship based on the certificates issued by the Shipping Registry Organization
Sailings vessels4 1/2
Ship launching machinery12 1/2
Used shipsIn accordance with special agreement

Individuals’ Deductions

DetailsRate %
Expenses of rented property20% of the rents
Interest paid in respect of rented buildings100%
Subscriptions to unions or professional associations100%
Donations to approved charitable institutions, supported by receipts100%
Social insurance contributions, life insurance premiums and contributions to approved pension funds or medical fundsUp 1/6 of taxable income before the deduction of these allowances
The life insurance should be taken on the taxpayer’s life and not on his/her spouse’s. The allowance granted for insuring the life of the spouse is still valid for policies effected before 1 January 2003 
The annual premiums are restricted to 7% of the insured amount 
In the case of cancellation of a life insurance policy within 6 years from the day of its issue, a percentage of the premiums, which were previously allowed, is taxable as follows:-Cancellation within 3 years -Cancellation from 4 to 6 years30%20%

Companies’ Allowed Deductions

For the purpose of ascertaining the chargeable income, there shall be deducted all outgoings and expenses wholly and exclusively incurred by the company, including:

  • Repair of premises, plant, machinery and means of transport
  • Ordinary annual contributions paid by an employer to social insurance and approved funds on employees’ salaries
  • Employer’s contributions to: 
           Medical fund for employees – 1 % on employee’s remuneration
           Provident/Pension fund for employees -10% on employee’s remuneration
  • Interest expense incurred to acquire the 100% of the share capital of a subsidiary company, provided that the subsidiary does not have either (directly or indirectly) any assets that are not used in the business. If the subsidiary has either (directly or indirectly) assets that are not used in the business then the interest deduction is restricted to the amount which relates to assets used in the business. This applies for acquisitions of subsidiaries from 1 January 2012.
  • New equity introduced into a company as from 1 January 2015 in the form of paid up share capital or share premium is eligible for an annual notional interest deduction (NID). The annual NID deduction is calculated using a reference interest rate on the new equity. The reference interest rate is the yield of the 10 year government bonds (as at December 31 of the prior tax year) of the country in which the new equity is invested in the business of the company plus a 3% premium. The interest rate cannot be lower than the yield of the 10 year Cyprus government bond as at the same date plus a 3% premium. For 2016 the minimum relevant interest rate is 6,685%. A taxpayer may elect not to claim all or part of the NID for a particular tax year. Specific anti-avoidance provisions also apply. The NID deduction cannot exceed 80% of the taxable profit as calculated before applying the NID. In case there are losses, the NID will not be available and this means that the NID cannot create or increase a tax loss.
  • Royalty income, embedded income and other qualifying income derived from qualifying intangible assets as provided in the ‘new’ Cyprus intellectual property (IP) box (this provision applies with effect from 1 July 2016)(1): 80% of the net profit as calculated using the modified nexus fraction.
  • Royalty income, embedded income and other qualifying income derived from qualifying intangible assets in the ‘old’ Cyprus IP box: 80% of the net profit
  • Bad debts of any business
  • Expenditure for scientific research
  • Donations or contributions made for educational, cultural or other charitable purposes without a limit
  • Expenditure for the maintenance of a building in respect of which there is a Preservation Order. Up to €700, €1.100 or €1.200 per square meter (depending on the size of the building)
  • Interest in relation to the acquisition of business assets used in the business
  • Entertainment expenses for business purposes: Lower of €17.086 or 1% of the gross income of the business
  • Contributions to a fund approved under regulations, for educational purposes and maintenance of an individual attending any university, college, school or other educational institution
  • Expenses in relation to rents receivable
  • Interest relating to a rented property

Not – Allowed Deductions

  • Expenses and Disbursements not wholly or exclusively paid for acquiring the income
  • Expenditure which is not supported by appropriate supporting documentation as required by the relevant Regulations
  • Expenses of a private motor vehicle – whole amount
  • Expenses of business entertainment, including hospitality of any kind, made in connection with a business and that exceeds 1% of the gross income of the business. In case that these expenses do not exceed 1% of gross income, then the allowable deduction is up to a maximum of ₤17.086
  • Interest applicable to the cost of purchase of private motor vehicle irrespective of whether it is used in the business or not, or any other asset not used in the business. This provision does not apply after the lapse of seven years from the date of purchase of the relevant asset
  • Wages and salaries for services offered within a tax year on which social insurance or other contributions have not been paid in the year in which they were due.
  • Domestic or private expenses including the cost of travelling between the place of residence and the place of work
  • Rent of premises owned and used by the person carrying on of a business
  • Remuneration of interest on capital paid or credited by the person carrying on business
  • Cost of goods taken out of the business for private use
  • Any sum employed or intended to be employed as capital
  • Expenditure for improvements, alterations or additions to immovable property
  • Sums recoverable under an insurance or contract of indemnity
  • Rent or cost of repairs of premises not incurred for the purposes of earning the income
  • Taxes
  • Payments of a voluntary nature

Individuals Tax Rates

Taxable Income ₤Tax Rate %Amount of Tax ₤Accumulated Tax ₤
0 – 19.500000
19.501 – 28.000201.7001.700
28.001 – 36.300252.0753.775
36.301 – 60.000307.11010.885
60.000 and over35  

Corporate Tax Rates

Taxable Income ₤Tax Rate %
0 – any amount12.5%

Special Tax Rates

CountryDividends (%)
Foreign pensions of individuals:-Upto €3.420-Over €3.4200%5%
The gross amount of any intellectual property rights, royalty, other exploitation rights, premium, compensation or other similar income, derived from sources within Cyprus by any non-resident person, is subject to withholding tax (subject to DTT / use of Interest & Royalties Directive). If rights are used outside Cyprus then 0% is applicable.10%
The gross amount of any rental in respect of the showing of cinematograph films in Cyprus, derived by any non-resident person, is subject to withholding tax (subject to DTT / use of Interest & Royalties Directive).5%
The gross income derived by an individual non-resident in Cyprus, from the exercise of any profession or vocation in Cyprus or of public entertainers not resident in the Republic, and the gross receipts of any theatrical or musical or other group of public entertainers, including football clubs and other athletic missions from abroad, derived from performances in the Republic is subject to withholding tax.10%
The gross income derived within the Republic by a non-resident person that has no permanent establishment in Cyprus in relation to services performed in the Republic with respect to the extraction, exploration or exploitation of the continental shelf, subsoil or natural resources, as well as the installation and exploitation of pipelines and other installations on the ground, the seabed or above the surface of the sea, is subject to withholding tax.5%
The gross income derived from sources within the Republic, for technical assistance provided by any non-Cyprus resident person, is subject to withholding tax. Such income is exempt from withholding tax if the services are provided by a permanent establishment in Cyprus.10%

Payment of Tax Withheld

Tax withheld on payments to non Cypriot residents should be paid to the tax department by the end of the following month.

In case the tax withheld is not paid on time, an additional penalty of 5% is imposed on the tax withheld in addition to any interest that may be imposed.

Tax Losses

Generally, loss from one source of income is set-off against income from other sources in the same year. Any loss remaining after the set-off is carried forward over the next five years.

Losses in respect to the year 1997 and after, which were not set-off against profits up to the year 2002, may be carried forward to the year 2003 and the following years.

In case there is any change in the ownership of the company’s shares and a substantial change in the company’s nature of the business, within any three-year period from the year of the loss, then the loss cannot be carried forward to the following years.

Group Relief

Current year tax losses may be surrendered by one Cyprus tax resident group company to another.

A group company which is tax resident in another EU country may also surrender current year tax losses to a Cyprus tax resident company, provided such company firstly exhausts all possibilities available to utilise its tax losses in its country of residence or in the country of any intermediary EU holding company.

Two companies shall be deemed to be members of a group if:

One is by 75% subsidiary of the other, or

Each one separately is 75% subsidiary of a third company

Group relief is available if both companies are members of the same group for the entire tax year.

The interposition of a non-Cyprus tax resident company does not affect the eligibility for group relief as long as such company is tax resident in either an EU country or in a country with which Cyprus has either a tax treaty or an exchange of information treaty (bilateral or multilateral).

Where a company has been incorporated by its parent company during the tax year, this company will be deemed to be a member of this group for group relief purposes for that tax year.

Losses incurred by any person from any business carried on outside Cyprus, can only be set-off from the same persons’ income from other sources for the same year.

In the case where a business owner, including a partnership, converts his business into a company, any of the owner’s accumulated losses may be carried forward to the company.

Losses of Permanent Establishments (PE) situated outside Cyprus can be offset against profits arising in the Republic. However, in the future when profits arise in the PE, an amount equal to the losses previously utilized will be included in the taxable income of the resident company (“claw-back provisions”).

Contact one of our officers to initiate the incorporation of a Cyprus registered company and start reaping the full benefits of an onshore, low-tax, EU jurisdiction. Simply fill in the contact box below or contact us by email on enquiries@fbscyprus.com

Defence Fund Contribution

The Defence Fund Special Contribution is imposed on income accrued from sources in Cyprus received or deemed to have been received by any individual who is tax resident and domiciled in Cyprus and by Cyprus tax resident companies.

Rates

Defence Fund Contribution – Rates
Rates DetailsIndividuals % Other Persons %
Interest [except interest accrued to any person from the ordinary carrying on of his business, which is exempt); interest received by a Group Finance Company from its group company members (>50% directly or indirectly or exercise of control) is deemed as accrued from the ordinary carrying on of its business and therefore exempt]3030
Dividends received or deemed to be received from a company resident in Cyprus17 
Dividends received from abroad1717(1)
Interest from savings certificates and development stocks issued by the Government330
Interest accrued from the provident fund 3
Profits of a Public Corporate Body 3
Rents (reduced by 25% instead of actual expenses)33

(1) In the case that the dividends are received from a company where the shareholders hold directly at least 1% of the share capital, then the dividends are exempt from the payment of special contribution.

This exception does not apply if:

  • The company paying the dividend engages more than 50% in activities that lead to investment income, and
  • The foreign tax burden on the income of the company paying the dividend is substantially lower than the tax burden of the company that receives the dividend.

Refund

An individual, – whose annual income, including interest – does not exceed the amount of €12.000, has the right to a refund of the tax withheld on interest in excess of the amount corresponding to 3%.

Foreign Tax Allowance

In case that foreign tax was paid on income subject to special contribution, this can be given as an allowance against the special contribution payable on the income, irrespective of the existence of a double taxation relief with the foreign country.

Deemed Distribution

A company resident in Cyprus has to pay 17% special contribution to the defence fund based on a deemed distribution of 70% of the accounting profits after taxation and before set-off of losses brought forward from previous years, after taking into consideration any dividends paid within the two years. The deemed distribution takes place two years after the end of the year of assessment.

This deemed distribution applies only when the shareholders of the company are tax residents of Cyprus and Cyprus domiciled individuals. (Non – Resident/Domiciled Beneficial Shareholders are exempt).

Domiciled in Cyprus

An individual is considered to be domiciled in Cyprus for Special defense contribution purposes, if such an individual has a domicile of origin as defined in the Wills and Succession Law.

The following individuals are not considered to be domiciled in Cyprus:

  •  An individual who has obtained and maintained a domicile of choice outside Cyprus in accordance with the Wills and Succession Law, provided that such an individual has not been a tax resident of Cyprus for a period of 20 consecutive years preceding the tax year, or
  • An individual who has not been a tax resident of Cyprus for a period of 20 consecutive years prior to 16 of July 2015

Contact one of our officers to initiate the incorporation of a Cyprus registered company and start reaping the full benefits of an onshore, low-tax, EU jurisdiction. Simply fill in the contact box below or contact us by email on enquiries@fbscyprus.com

Social Cohesion Fund

An employer is liable to pay a social cohesion fund contribution of 2% on the amount of the emoluments of the employees employed by him (without any restriction as to the amount of the emoluments).

The contribution to this fund substitutes the employer’s contribution to the defence fund on the employees’ emoluments.

Exemption

The foreign employee’s emoluments, employed by an International Business Company, are exempted from the contribution to the social cohesion fund.

Social Insurance

Contribution Rates

All stock exchange transactions are subject to a special levy only for the period between 1 January 2000 and 31 December 2005. The levy is paid by the seller to the CSE who is obliged to pay the levy to the State.

ContributorRate (%)
Self-employed individuals14,6
Employee7,8
Employer7,8
Employer’s contribution to the Redundancy Fund1,2
Employer’s contribution to the Human Resource Development Authority Fund0,5

Emoluments Maximum Limit

EmployeesPer Week €Per Month €Per Year €
Weekly employees1.046 54.392
Monthly employees 4.53354.396

Self – Employed Employments Minimum Limit

Employment CategoryPer Week €Per Year €
Persons exercising a profession:for a period not more than 10 yearsfor a period of more than 10 years38419.94977640.351
Wholesalers, estate agents, insurance agents, manufacturers and other entrepreneurs77640.351
Skilled workers practicing in urban areas37519.496
Builders and persons practicing a profession relevant to the building industry47124.483
Travelling salesmen, postmen, waste collectors, miners, sailors, salesmen, farmers, stock-farmers, fishermen and similar occupations26213.602
Secretaries, typists, cashiers, technical assistants, media associates, drivers of transportation media, operators of excavators and similar occupations37519.496
Teachers (university, pre-primary, primary and secondary education, assistants and special teachers)for a period not more than 10 yearsfor a period of more than 10 years37575019.49638.991
Cleaners, messengers, guards and shop owners35718.589
Designers, computers users, marine engineers, agents, musicians, magicians and persons without an occupation38419.949

Contact one of our officers to initiate the incorporation of a Cyprus registered company and start reaping the full benefits of an onshore, low-tax, EU jurisdiction. Simply fill in the contact box below or contact us by email on enquiries@fbscyprus.com

Capital Gains Tax

Tax Charge

Tax is only imposed on profits from disposal of:

  •  immovable property situated in Cyprus,
  • companies’ shares (not listed in any stock market), which have immovable property in Cyprus,
  • shares of companies which own directly or indirectly shares in a company or companies which have immovable property situated in Cyprus and at least 50% of the value of these shares arises from the market value of the immovable property.    

Any trading profits from the disposal of shares of companies, which own directly or indirectly immovable property in Cyprus, will be subject to CGT in case such profits are exempt under Income Tax Law.

The disposal proceeds subject to CGT, from the sale of shares of companies which hold directly or indirectly property in Cyprus, are restricted to the market value of the immovable property held.

Profit Determination

The tax is imposed on the net profit from disposal at the rate of 20%.

The net profit is calculated as: the disposal precedent less the greater of the cost or market value on 1 January 1980 adjusted by inflation. The Inflation is calculated by using the official Retail Price Index. The index on 1 January 1980 was 34,96 (base year 2005).

Exemptions

  • Transfer by reason of death
  • Gifts to relatives within the third degree of kindred
  • Gifts to a company of which the shareholders are and will continue to be members of the disposer’s family for five years after such gift
  • Gift by a company, of which all the shareholders are members of the same family, to any of its shareholders when the property gifted was also acquired by the company as a gift. The property must remain in the hands of the donee for a period of at least three years
  • Gift to the Republic or to a local authority for educational or other charitable purposes or to approved charitable institutions
  • Exchange or sale in accordance with the Agriculture Land (Consolidation) Laws
  • Exchange of properties where the values of the immovable properties being exchanged are equal
  • Gain on disposal of shares, which are listed on any Stock Exchange
  • Gains from transfer of property or shares in case or reorganization

Individuals’ Lifetime Exemptions

ExemptionAmount €
For sale of own residence85.430
For sale of agricultural land by a farmer25.629
For other sales17.086

The combination of the above exemptions cannot exceed €85.430 per individual

Contact one of our officers to initiate the incorporation of a Cyprus registered company and start reaping the full benefits of an onshore, low-tax, EU jurisdiction. Simply fill in the contact box below or contact us by email on enquiries@fbscyprus.com

Immovable Property Tax

Tax Charge

As of 2017, the immovable property tax is abolished.

Land Registry Fees (Transfer Fees)

Value per Plot €Rate %Fees €Accumulated Fees €
0-85.00032.5502.550
85.001-170.00054.2506.800
Over 170.0018  

The land transfer fees are reduced to 50% for any purchase of property including immovable property

No transfer fees are payable when the immovable property being transferred is subject to VAT.

Mortgage Fees

MortgageRate %
Loans1

Inheritance Tax

Inheritance tax has been abolished on 1 January 2000. The executor of the estate should submit the deceased’s statement of assets and liabilities to the tax authorities, within six month from the date of death.

Contact one of our officers to initiate the incorporation of a Cyprus registered company and start reaping the full benefits of an onshore, low-tax, EU jurisdiction. Simply fill in the contact box below or contact us by email on enquiries@fbscyprus.com

Stamp Duty

Receipts:

[Documents relating to transactions involved in reorganization of companies or any transactions that take place outside Cyprus are exempt from stamp duty]

DetailsAmount
-for amounts of ₤2-₤20
-for amounts over ₤20
2 cents
4 cents
Contracts (Only for transactions that take place within Cyprus):

-for amounts up to ₤100.000
-for amounts over ₤100.000
-unspecified amount


₤1,5 for every ₤1.000
₤2 for every ₤1.000
₤20
Registration of a limited liability company with authorized capital of:

-up to ₤5.000
-from ₤500.001-₤100.000
-over ₤10.000


₤75
₤125
₤125 for the first ₤10.000 and ₤3 for every additional ₤1.000
Issue of shares by a limited company₤1 for every ₤1.000 paid up value

Stock Exchange Special Levy

All stock exchange transactions are subject to a special levy only for the period between 1 January 2000 and 31 December 2005. The levy is paid by the seller to the CSE who is obliged to pay the levy to the State.

TypeRate
Individuals0.6%
Legal Persons1%

Exempted Transactions:

  • Issuing and buying back of securities by the issuer.
  • Transactions relating to non-convertible corporate bonds or debentures.
  • Transactions relating to debentures, development stock and government securities.
  • Gifts of securities from parents to their children, between spouses or relatives up to the third degree of kindred.
  • Transfer of securities by reason of death.

Value Added Tax

Rates

Rate %Details
0%
  • EU sales, exports, food (unless the supply is in the course of catering), medicines and vaccines
  • Commission from abroad for imports and exports from and to Cyprus
  • International air and sea transportation of persons, goods and related services
  • Ship management services
  • Goods that are to be placed in customs warehouses (bonded warehouses) or free-zones, and be subject to the relevant customs regime or temporary importation (transit) or transshipment regime goods that are intended to be incorporated into drilling
  • Goods after importation, but before customs clearance
5%
  • Supply of food in the course of catering (excluding alcohol), animal feeding stuffs, fertilizers
  • Accommodation in hotels and other tourist establishments, supply of coffins, services supplied by undertakers, services of road cleaning, refuse collection and waste treatment (other than services provided by local administration)
  • Services of writers, composers and artists, newspapers, magazines and books
  • Sales of fertilizers, insecticides, fungicides, animal feed, plant seeds, livestock animals for foodstuff manufacturing
  • Water, gas bottles, ice cream and related products, non-bottled water
  • Salted or spicy products made with cereal or potatoes, salted, roasted, spicy nuts, sundry goods used by disabled persons
17%
  • All supplies of goods or rendering of services except those taxed at 0%, 5% or exempt

 

Exemptions

  • Rentals of property
  • Supplies of immovable properties
  • Insurance and financial services
  • Medical services, hospital services
  • Educational services
  • Postal Services
  • Disposal of land to be used for building purposes

Registration

Registration for VAT is obligatory:

  • At the end of any month, if the value of the taxable supplies (supplies taxed at the rates of 0% and/or 5% and/or 17%) in the period of one year, then ending has exceeded ₤9.000, or
  • At any time, if there are reasonable grounds for believing that the value of the taxable supplies in the period of 30 days, then beginning will exceed ₤9.000.

Businesses with a turnover of less than ₤9.000 can be registered voluntarily.

Voluntarily Registration

A person who has a business establishment in Cyprus, or his usual place of residence is in Cyprus, and he acquires supplies outside Cyprus (taxable supplies if made within Cyprus), is entitled to voluntary registration.

Right of Registration

  • Expenditure for entertainment of persons other than staff
  • Purchase of private saloon cars up to nine seats.

Intra – EU Goods Trading

Merchandisers who undertake sales to or purchase from (including triangular trade) other EU Member States need to submit the following forms, in addition to the quarterly VAT Return:

EU Acquisitions (Purchases):

Intrastat (detailed reporting of all physical arrivals of goods – all items – in Cyprus)

  1. Inclusion in VAT Return (on a total basis)

EU Supplies (Sales):

  1. Intrastat (detailed reporting of all physical departures of goods – all items – in Cyprus)
  2. VAT Information Exchange System form (VIES form – detailing allsales, including triangular transactions)
  3. Inclusion in VAT Return (on a total basis with 0% VAT rate)

Submission Deadlines:

  1. VAT Return – 40 days from the end of VAT reporting quarter
  2. VIES – 40 days from the end of the calendar quarter, for the transactions of the calendar quarter
  3. Intrastat – 10 days from month end for transactions of previous month

Contact one of our officers to initiate the incorporation of a Cyprus registered company and start reaping the full benefits of an onshore, low-tax, EU jurisdiction. Simply fill in the contact box below or contact us by email on enquiries@fbscyprus.com

Ship Management Services

Income derived from the rendering of ship management services is subject to tax at the rate of 4, 25%.

The rendering of ship management services to ships allows a company the option to:

  1. Be taxed on its profits at the rate of 12,5%, or
  2. Pay Tonnage tax at 25% of the rate applicable to ship owners and charterers for the qualifying ships under management link to , provided it satisfies certain criteria

These include:

  1. the maintenance of a fully fledged office in Cyprus, and
  2. the employment of a sufficient number of qualified personnel (51% of whom should be EU/EEA citizens) and
  3. at least 2/3 of the management is entirely carried out from the territory of the EU/EEA. Further, and
  4. a share of his fleet must be comprised of EU flag ships, which share must not be reduced in the three-year period following the exercise of the option (flag-share requirement).

All ships and crews under management must comply with relevant international standards, in particular those relating to maritime security, safety, training and certification of seafarers, environmental performance and on-board working conditions.

The term Ship Management Services includes recruitment of crew, crew management services, as well as services relating to technical and financial management of the ship, under certain conditions.A ship manager who provides commercial management services will not be considered a qualifying ship manager and his income will be subject to income tax.

A ship manager who has opted for the Tonnage tax system must remain under this system for at least 10 years. Early withdrawal will result in penalties.

Shipping

Profits or Dividends payable by a shipping company registered in Cyprus, which owns ships flying the Cyprus flag and operates in International waters, are exempt from Cyprus Taxation.

The salaries of the officers and the staff of a ship which is registered in Cyprus, fly the Cyprus flag, and operates in international waters are exempt from tax.

Defence Fund Special Contribution

Dividends derived directly or indirectly from profits generated from the exploitation of a ship under the Cypriot flag, or from the rendering of ship management services, are not subject to special contribution to the defence fund.

Tax Calendar

Tax Calendar

Obligation: Submission of Tax Return by Individuals not Preparing Accounts

Date: 30 April

Form: I.R.1

Obligation: Submission of Employer’s Return & Employees Details

Date: 30 April

Form: I.R. 7

Obligation: Payment of Contribution to the Defense

Date: 30 June

Form: I.R.601

Obligation: Fund on Income for the First Six Months

Date: 30 June

Form: I.R.601

Obligation: Submission of Temporary Tax Assessment for the current year

Date: 1 August

Form: I.R.6

Obligation: Payment of First Installment of Tax Based on the Temporary Tax Assessment

Date: 1 August

Form: I.R.6

Obligation: Payment of the Balance of Tax for the Previous Year

Date: 1 August

Form: I.R.158

Obligation: Payment of the Second Installment of Tax Based on the Temporary Tax Assessment

Date: 30 September

Obligation: Payment of Immovable Property Tax

Date: 30 September

Obligation: Submission of Company’s Income Tax Return, Audited Accounts and Additional Information

Date: 31 December

Form: I.R.4

Obligation: Submission of Tax Return, Accounts and Additional Information by Individuals who Submit Audited Accounts

Date: 31 December

Form: I.R.1

Obligation: Submission of Revised Temporary Tax Assessment for the Current Year, if Considered Necessary

Date: 31 December

Form: I.R.6

Obligation: Payment of Third Installment of Tax Based on the Temporary Tax Assessment

Date: 31 December

Obligation: Payment of Contribution to the Defense Fund on Income for the Second Six Months

Date: 31 December

Form: I.R.601

Obligation: Tax Deducted from Employees’ Emoluments

Date: By the end of the next month

Form: I.R.61

Obligation: Contribution to the Defense Fund Withheld from Dividends and Interest

Date: By the end of the next month

Form: I.R.601

Obligation: Social Insurance Deducted from Employees’ Emoluments

Date: By the end of the next month

Obligation: Submission of VAT Return and Payment of VAT

Date: By the 10th of the second month after the end of the VAT period

Form: VAT 4

Double Taxation Aggreements

A constructive use of the Cyprus Treaties’ Network has rendered considerable advantages to businesses and individuals who have chosen to establish legal entities in Cyprus. Tax treaties legally supersede local tax legislation and for this reason they are a useful tax-planning tool to protect businesses and individuals against double taxation of income earned in other countries.

Notes:

  1. The main purpose of these treaties is the avoidance of double taxation of income earned in any of these countries. Under these agreements, a credit is usually allowed against the tax levied by the country in which the tax payer resides for taxes levied in the other treaty country, and as a result the tax payer pays no more than the higher of the two rates (a number of the treaties also contain very beneficial “tax-sparing credits”).
  2. The EU Parent Subsidiary and the Interest & Royalties Directives can be used to eliminate withholding taxes on payments of dividends, interest and royalties from or to EU Group Companies and the EU Merger Directive to eliminate the tax effects of EU Group reorganizations

DTT Table (Received in Cyprus) – updated Jun ’17

DTT Table (Paid from Cyprus) – updated Jun ’17

Received in Cyprus*
CountryDividends (%)Interest (%)Royalties (%)
Armenia0/5 if the beneficial owner has invested in the capital of the Company less than equivalent of €150.000 at the time of the investment5/0 if paid to the Government or to a local authority, or to the Central Bank5
Austria1000
Bahrain (The treaty is effective from 01/01/2017)000
Belarus5/10/15 (5 if amount invested > 200.000 EURO irrespective of % of votes / if less than EUR 200.000 then 15% reduced to 10% if at least 25% of share cap. owned)55
Belgium10/15 if received by a company holding <25% of votes and in all cases if received by an individual10/0 if paid to the Government of the other State, to a bank or a financial institution or in respect to debt obligations arising in connection with sale of property or the provision of services0
Bosnia101010
Bulgaria10/5 if received by a company owning at least 25% of share cap7/0 if paid to or is guaranteed by the Government, statutory body, the Central Bank.10 / does not apply if at least 25% of cap. of Cypriot resident owned directly or indirectly by Bulgarian resident paying the royalties and the Cyprus company is subject to a preferential tax rate
Canada1515/0 if paid to the Government or for export guarantee10/0 on literary, dramatic musical or artistic work with the exception of films used for television programs
China101010
Czech Republic5/0 if the beneficial owner is a company(other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends where such holding is being possessed for an uninterrupted period of not less than one year.010
Denm1ark15/0 if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends, where such holding is being possessed for an uninterrupted period of no less than 12 months if the beneficial owner is the other Contracting State or the Central Bank of that other State, or any national agency or any other agency (including a financial institution) owned or controlled by the Government of that other State if the beneficial owner is a pension fund or other similar institution providing pension schemes in which individuals may participate in order to secure retirement benefits, where such pension fund or other similar institution is established, recognized for tax purposes and controlled in accordance with the laws of that other State00
Egypt151510
Estonia000
Finland5/15 if received by a company holding <10% of votes and in all cases if received by an individual00
France5/15 if received by company (other than a partnership) holding < 10% of votes and in all cases if received by an individual10/0 if paid to Government or in connection to the sale on credit of any industrial, commercial or scientific equipment or any merchandise by one enterprise to another or in relation to any form of loan granted by a bank or guaranteed from Government or other State body0/5 on films including films used for television programs
Georgia000
Germany5/15 if received by company holding < 10% of votes and in all cases if received by an individual00
Greece25100/5 on film royalties (except films shown on TV)
Guernsey000
Hungary5/15 if received by a company holding <25% of votes and in all cases if received by an individual10/0 if paid to public body or financial institution0
Iceland10/5 if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends05
India10/ prior to 1 April 2017 the rate is 15 if received by a company holding <10% of votes10/0 if paid to a government or any other institution agreed upon between the 2 states. Prior to 1 April 2017, 0 also applies if paid to a bank or financial institution10 / also applicable on payment of technical fees, management fees and consultancy fees. Prior to 1 April 2017, a rate of 15% applies on royalties
Ireland000/5 on film royalties (except films shown on TV)
Iran10/5 if received by a company that holds at least 25% of the capital of the paying company56
Italy15100
Jersey000
Kuwait005
Latvia0 if payer is a company that is resident in Latvia and the beneficial owner of the income is a company (other than partnership) that is resident in Cyprus / 10 for all other cases0 if payer is a company that is resident in Latvia and the beneficial owner of the income is a company (other than partnership) that is resident in Cyprus / 10 for all other cases (except for certain governmental interest)0 if payer is a company that is resident in Latvia and the beneficial owner of the income is a company (other than partnership) that is resident in Cyprus / 5 for all other cases
Lebanon55/0 if paid to public body0
Lithuania0/5 if the beneficial owner is a company (other than a partnership) which holds less than 10% of the capital of the company paying the dividends and in all cases if received by an individual05
Malta0 The treaty provides that the tax on gross dividends shall not exceed that chargeable on the profits out of which the dividend is paid10/0 if paid to public body or financial institution10
Mauritius000
Moldova10/5 if the beneficial owner is a company (other than a partnership) which holds directly at least 25% of the capital of the company paying the dividends55
Montenegro The treaty between the Republic of Cyprus and the Socialist Federal Republic of Yugoslavia applies101010
Norway15/0 if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends00
Poland5/0 if the beneficial owner is a company (other than a partnership) which holds directly at least 10% of the capital of the company paying the dividends, where such holding is being possessed for an uninterrupted period of no less than 24 months5/0 if paid to public body or financial institution5
Portugal101010
Qatar005
Romania1010/0 if paid to public body or financial institution5
Russia5/10 if received by a company which has invested < $100.00000
San Marino000
Serbia The treaty between the Republic of Cyprus and the Socialist Federal Republic of Yugoslavia still applies101010
Seychelles005
Singapore010/7 if paid to a Bank or similar financial institution / 0 if to the Government10
Slovakia The treaty between the Republic of Cyprus and the Czechoslovak Socialist Republic still applies1010/0 if paid to public body or financial institution5/0 on literary, artistic or scientific work including films
Slovenia555
South Africa5 if the beneficial owner is a company which holds at least 10% of the capital of the company paying the dividend / 10 in all other cases. A protocol to the treaty entered into force on 18 September 2015 but may apply retrospectively00
Spain0/5 if received by a company holding < 10% of the capital of the paying company and in all cases if received by an individual or a company not limited at least partly by shares00
Sweden5/15 if < 25% of votes10/0 if paid to public body or financial institution0
Switzerland0 (i) a company (other than a partnership) the capital of which is wholly or partly divided into shares and which holds directly at least 10% of the capital of the company paying the dividend for an uninterrupted period of at least one year. (ii) a pension fund or other similar institution recognized as such for tax purposes, or (iii) the Government, a political subdivision, local authority or central bank of one of the two contracting states. 15% in all other cases.00
Syria0/15 if received by a company holding < 25% of the capital of the paying company and in all cases if received by an individual or a company not limited at least partly by shares10/0 if paid to public body or financial institution15/10 on literary, dramatic, musical, artistic or scientific work, including films or tapes for TV or radio broadcasting
Thailand1015/10 on interest received from financial institutions, on interest paid in connection with industrial, commercial, scientific equipment or the sale or merchandise between two companies5 for any copyright of literary, dramatic, musical, artistic, or scientific work / 10 on right to use industrial, commercial or scientific equipment / 15 on patents, trademarks, designs, models, plans, secret formulas or processes
Ukraine15/5 is applicable if the dividend is received by a company owning at least 20% of the capital of the dividend paying company and has invested in the acquisition of shares or other rights of the dividend paying company of at least €100.00025 for any copyright of scientific work, any patent, trade mark, secret formula, process or information concerning industrial, commercial or scientific experience / 10 will be levied in all other cases
United Arab Emirates000
United Kingdom15/0 applies to dividends paid to a company that controls, directly or indirectly, at least 10% of the voting power of the payer company, as well as in other situations where dividends are paid to a resident of Cyprus that is not entitled to the same tax credit to which a UK resident individual would be entitled in respect of the dividends / but local UK tax provides for 0 – so 0%100/5 on films including films used for television programs
United States of America15/5 if more than 10% of votes10/0 if paid to the Government or a bank or a fin. Inst. Or in respect to debt obligations arising in connection with sale of property or the provision of services0

2) Paid from Cyprus

*Important Notes:

*Low or no withholding taxes on outgoing dividends, interest and royalties (no withholding tax on dividends and interest – therefore there is no columns included below – no withholding tax on royalty payments for use of the rights outside Cyprus, 10% if the rights will be used in Cyprus (subject to DTT & EU Directives) and 5% on films (subject to DTT & EU Directives).

* If the rates of Cyprus tax are lower than those provided by the relevant treaty, then the lower rates are applicable in favor of the taxpayer.

*Possible use can be made of EU Directives to eliminate or reduce these rates – so rendering the treaty benefits is redundant. Treaties will be used where EU Directives are not applicable No tax is withheld when the royalty is paid for use outside Cyprus.

*The gross income derived from sources within the Republic, for technical assistance provided by any non-Cyprus resident person, is subject to 10% withholding tax. Such income is exempt from withholding tax if the services are provided by a permanent establishment in Cyprus.

*The gross income derived by an individual non-resident in Cyprus, from the exercise of any profession or vocation in Cyprus or of public entertainers not resident in the Republic, and the gross receipts of any theatrical or musical or other group of public entertainers, including football clubs and other athletic missions from abroad, derived from performances in the Republic is subject to 10% withholding tax.

*The gross income derived within the Republic by a non-resident person that has no permanent establishment in Cyprus in relation to services performed in the Republic with respect to the extraction, exploration or exploitation of the continental shelf, subsoil or natural resources, as well as the installation and exploitation of pipelines and other installations on the ground, the seabed or above the surface of the sea, is subject to 5% withholding tax.

Paid from Cyprus
CountryRoyalties*Rights used within Cyprus(%)
Armenia5
Austria0
Bahrain (The treaty is effective from 01/01/2017)0
Belarus5
Belgium0
Bosnia The treaty between the Republic of Cyprus and the Socialist Federal Republic of Yugoslavia still applies10/5 on cinematographic film royalties
Bulgaria10/5 on cinematographic film royalties
Canada10/5 on cinematographic film royalties / 0 on literary, dramatic musical or artistic work with the exception of films used for television programs
China10/5 on cinematographic film royalties
Czech Republic0/10 on patents, trademarks, designs, models, plans, secret formulas or processes, computer software or industrial, commercial, or scientific equipment, of for information concerning industrial, commercial or scientific experience.
Denmark0
Egypt10/5 on cinematographic film royalties
Estonia0
Finland0
France0/5 on films including films used for television programs
Germany0
Greece0/5 on film royalties (except films shown on TV)
Guernsey The treaty is effective from 01/01/2016)0
Hungary0
Iceland5
India10/5 on cinematographic film royalties
Ireland0/5 on film royalties (except films shown on TV)
Italy0
Kuwait5
Latvia0 if payer is a company that is resident in Cyprus and the beneficial owner of the income is a company (other than partnership) that is resident in Latvia / 5 for all other cases
Lebanon0
Lithuania5
Malta10/5 on cinematographic film royalties
Mauritius0
Moldova5
Montenegro (The treaty between the Republic of Cyprus and the Socialist Federal Republic of Yugoslavia applies)10/5 on cinematographic film royalties
Norway0
Poland5
Portugal10/5 on cinematographic film royalties
Qatar5
Romania5/0 if paid to the Government of the other State or to a financial institution
Russia0
San Marino0
Serbia (The treaty between the Republic of Cyprus and the Socialist Federal Republic of Yugoslavia still applies)10/5 on cinematographic film royalties
Seychelles5
Singapore10/5 on cinematographic film royalties
Slovakia (The treaty between the Republic of Cyprus and the Czechoslovak Socialist Republic still applies)5/0 on literary, artistic or scientific work including films
Slovenia5
South Africa0
Spain0
Sweden0
Switzerland (The treaty is effective from 01/01/2016)0
Syria10/5 on cinematographic film royalties
Thailand5 for any copyright of literary, dramatic, musical, artistic, or scientific work / 10 on right to use industrial, commercial or scientific equipment
Ukraine5 for any copyright of scientific work, any patent, trade mark, secret formula, process or information concerning industrial, commercial or scientific experience / 10 will be levied in all other cases.
United Arab Emirates0
United Kingdom0/5 on films including films used for television programs
United Sates of America0

Contact one of our officers to initiate the incorporation of a Cyprus registered company and start reaping the full benefits of an onshore, low-tax, EU jurisdiction. Simply fill in the contact box below or contact us by email on enquiries@fbscyprus.com

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