Company Taxation

Useful and straight-to-the-point information about the Cyprus tax system.

Taxation of Cypriot Private Limited Companies

Residency : The management & control principle

Company tax rate : 12,5% (among the lowest in the EU)

Taxed on : Worldwide income

Other : Special contribution for defense at 30% on passive interest income – subject to various exemptions

Balance sheet based taxes : None

Exits taxes : None

Exemptions : Dividends received (certain conditions apply), profit from disposal of securities

Capital gains : Exempt, unless related directly or indirectly to the sale of Cypriot real estate

Interest withholding tax : Nil

Dividend withholding tax : Nil

Royalty withholding tax : Nil in most cases

Double tax treaties network : Very wide range

Parent Subsidiary Directive + other EU Directives : Applicable for all EU and EEA countries

Thin capitalisation rules : None

Controlled Foreign Corporation rules : None

Transfer pricing requirements : On intra group back to back financing arrangements (subject to conditions)

Notional interest deductions : Yes, on new equity used for business purposes, maximum to 80% of the taxable profit

IP regime : Yes, subject to conditions

Tax year : Calendar year

Advance rulings : Readily available