CYPRUS CORPORATE TAX

CYPRUS CORPORATE TAX

Cyprus is a highly reputable international business and investment hub. The well-established business infrastructures, the simple and straightforward procedures, the experienced labour force, and the favourable tax scheme, attract business people and investors from all over the world to launch their projects on the island.

Currently, Cyprus maintains double tax treaties with more than 50 countries and the corporate tax in Cyprus is 12.5%, one of the lowest in Europe.

Basic Information:

Cyprus tax resident companies are taxed on income accumulated or derived from all sources within and outside Cyprus. Note that a company is tax resident in the Republic of Cyprus if it is managed and controlled from the Republic of Cyprus.

Non-Cyprus tax resident companies are taxed on income accumulated or derived from sources within the Republic of Cyprus.

As it has been mentioned above, the corporate tax in Cyprus is 12.5%, one of the lowest in Europe.Nevertheless, the following types of income are fully exempt from taxation:

  • Profitsderiving from the sale of securities;
  • Dividends;
  • Interest not arising from the ordinary business activities or correlated with the ordinary operations of the company;
  • Profitsfrom maintaining a permanent establishment abroad (under certain conditions);
  • Foreign Exchange (FX) profits, except for FX gains derived from trading in foreign currencies and related derivatives;
  • Gains deriving from the disposal of securities;
  • Gains deriving from a loan restructuring;

Deductible Expenses:

It should be pointed out that all expenses incurred entirely and exclusively for the production of income are deductible for corporate tax purpose, including:

Expense Deduction (%)
Interest arising for the direct or indirect acquisition of 100% of the share capital of a subsidiary company, under the condition that the subsidiary company does not possess, directly or indirectly, any assets that are not used in the business. 100%
Notional interest deduction (NID) on new equity. up to 80% of the taxable profit deriving from assets funded by the new equity.
Expenses related to the maintenance of buildings under preservation order(under certain conditions). It depends on the size of the building.
Donations to approved charity organisations. 100%
Profits deriving from the exploitation and/or disposal of intellectual property rights. 80%
Employer’s contributions to Social Insurances and other approved funds on employees’ salaries. 100%
Expenses for scientific research, including R&D expenditures carried out by an innovative business. 100%

 

Contact us and find more information on Cyprus corporate tax:

The multilingual and experienced team of RAH Legal is able to provide you with a tailor-made legal support and detailed information on all the matters related to taxation of Cyprus companies. Our services are available in English, Greek, Arabic and Hebrew. Among others, our team of corporate lawyers are able to assist you with the incorporation of a Cyprus company effectively and efficiently. If you wish to find more information on taxation and company formation in Cyprus, then please contact us.

 

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