Cyprus Advantageous Tax Regime
One of the primary tax benefits of incorporating in Cyprus is the country’s low corporate tax rate.
Cyprus is a well-established international business location that provides a variety of corporate tax benefits to enterprises wishing to establish a company. The country’s favourable tax policy, combined with its European Union membership, has made it a popular destination for businesses looking to expand their operations.
One of the primary tax benefits of incorporating a company in Cyprus is the country’s low corporate tax rate. Cyprus has one of Europe’s lowest company tax rates, currently set at 12.5%. This low rate has attracted a lot of foreign enterprises to relocate to Cyprus, giving it a considerable advantage over other European locations with higher tax rates.
In addition to the low corporate tax rate, Cyprus provides a number of other tax breaks to companies wishing to set up a business in Cyprus. These include a tax credit system for enterprises who spend on research and development, as well as tax breaks for companies in particular industries, such as shipping and tourism.
Another benefit of establishing a company in Cyprus is the country’s favourable tax treaty network. Cyprus has signed several double tax treaties with other nations in order to minimise double taxation for businesses that operate in different jurisdictions. These treaties provide greater certainty and stability to businesses set up in Cyprus while also allowing them to arrange their activities in a tax-efficient manner.
Cyprus also provides firms with a variety of Cyprus tax planning options, such as the use of holding companies, licensing companies, and finance companies. Companies can use these structures to decrease their tax burden by taking advantage of the country’s favourable tax code and tax treaty network.
In addition to these tax savings, Cyprus provides a variety of other advantages to firms wishing to create a Cyprus corporation. A stable political and economic environment, a well-educated workforce, and a well-developed infrastructure are examples of these. In addition, Cyprus serves as a gateway to the European Union, giving firms access to a market of over 500 million consumers.
Important Things You Should Know
FAQ
The tax rate on the net worldwide profit from a company incorporated in Cyprus is 12.5%, which is one of the lowest corporate tax rates in the EU.
There are no withholding taxes on royalty payments relating to the use of rights outside Cyprus paid to non-residents of Cyprus (if the rights are earned in Cyprus, 10% withholding tax is applicable, or 5% in the case of cinematograph films).
All gains from trading in securities are exempt from capital gains tax, There is no tax on capital gains arising from the disposal of securities listed on a recognised Stock Exchange Market.
There is no tax on profits from reorganisation, profits derived from the transfer of ownership of shares and the payment of stamp fees.
List of the Double Tax Agreements concluded between the Republic of Cyprus and other Countries, as well as, the text of each published Agreement, can be found in the official website of the Ministry of Finance. It is noted that, the Double Tax Agreement between Cyprus and Norway which was concluded between Norway and the United Kingdom, is only available in the English language. Additionally, the Agreement concluded between Cyprus and France is only available in the English language. The other Double Tax Agreements are available in both the Greek and the English language.For information regarding the effective date here.
In Cyprus, there is no tax on dividends or interest payments to non-residents, as well as residents not domiciled in Cyprus.
Cyprus international trusts have significant tax advantages:
* The income and gains from a Cyprus international trust, derived from sources outside Cyprus, are exempt from any tax imposed in Cyprus;
* Dividends and interest received by a trust from a Cyprus company are not subject to tax, nor to withholding tax;
* Exemption from taxation in the case of a person who is not a Cyprus citizen who creates an international trust in Cyprus and retires in the country, on condition that all of the property settled and income earned is abroad, even if the individual is a beneficiary.
EU Directives and Regulations regarding IP are applicable and have been incorporated into Cyprus legislation. IP rights owned by Cyprus companies are fully protected in all EU Member States and Cyprus’ highly beneficial IP tax regime provides exemption from tax for the following:
* 80% of worldwide royalty income deriving from IP owned by Cyprus resident companies
* 80% of any profit made due to the disposal of IP owned by Cyprus resident companies
* any capital expenditure on the acquisition or development of IP is tax-deductible in the year in which it was incurred and for 4 consecutive years after that
* All of the above exemptions are also available for IPs acquired or developed before January 2012