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Cyprus Facts

What is special about Cyprus?

  • lowest corporate tax rate in the European Union at 10 per cent
  • one of the lowest top statutory personal income tax rate at 30%
  • extensive double tax treaties network with over 40 countries
  • enabling lower withholding tax rates on dividend or other income received from the subsidiaries abroad
  • no withholding tax on dividend income received from subsidiary companies abroad under certain conditions
  • no withholding tax on dividends received from EU subsidiaries
  • no withholding tax on capital gains and income on the disposal of neither the shares of the subsidiary’s share capital nor the shares of the Cyprus holding company
  • no tax on capital gains or income on the liquidation of the Cyprus holding company
  • no withholding tax on distribution of profits
  • outward dividends by the Cyprus Holding Company to its non-resident shareholders are exempt from any withholding taxes
  • profits earned from a permanent establishment abroad are fully exempt from Cypriot tax, subject to certain conditions
  • a diversified group of Cyprus companies belonging to a Cyprus holding company can set off
  • Group relief for the utilisation of tax losses
  • no minimum holding period

There is one or two rules for dividends received to be tax–free there must be a 1% holding and more than 50% of the paying company’s activities should result from trading activities and not from investment income.

Gains accruing from disposal of shares listed on any recognized Stock Exchange will be exempted from tax

Gains accruing from disposal of immovable property held outside Cyprus and shares in companies, the property whereof consists of immovable property held outside Cyprus, will be exempted from capital gains tax.

The concept of Double Tax treaties is that Cyprus registered Business Entities that have tax exemptions in Cyprus will have the same exemptions in the treaty country. These treaties follow closely the OECD model. The country of residence will give a credit for taxes paid in the other treaty country. The Cyprus international entity qualifies for treaty protection under all the extent treaties except those with Canada, France, the UK and the USA. Even in those cases the limitations apply only to flows of income to Cyprus and not to income flows from Cyprus to the countries.

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