Taxation in Cyprus
Cyprian residents have taxpaying obligations for their income originating from any countries, while non-residents pay taxes on their income originating exclusively from Cyprus.
General principles of taxation in Cyprus:
- Corporate tax:
- The corporate tax is 12.6% of the positive tax base for those companies that are managed and supervised from Cyprus.
- Companies that are managed and supervised from another country are exempt from paying corporate tax.
- Loss occurred during the year can be carried forward to decrease earnings before taxation for the subsequent 5 years.
- Value Addedd Tax:
- Regulations concerning intra-community transactions in the EU are valid for taxpayers.
- Value added tax in Cyprus is payable on sales of products and services in Cyprus, products imported to Cyprus and products purchased from the European Union.
- Cyprus features multiple tax rates: 0%, 5%, 9% and 19%.
- Personal Income Tax:
- Resident taxpayers are obliged to pay personal income tax on income originating from both foreign and Cyprian sources.
- Foreign tax resident taxpayers are only required to pay income tax on gainful activities in Cyprus.
- Cyprus features multiple tax rates: 0%, 20%, 25%, 30% and 35%.
- Dividend tax:
- Income from dividends is corporate tax exempt for companies while personal income tax exempt for private persons.
- Dividend paid for a foreign tax resident company of private individual in Cyprus is tax free.
- If a Cyprian company does not pay dividend to its shareholders within 2 years after the end of the tax year, the 70% of the profit after taxation is regarded divided.
- Property tax:
- Property tax is payable by both private and legal persons who own any property on 1 January.
- In Cyprus the tax base is calculated by the market value of the property on 1 January 1980.
Additionally, Cyprus provides particularly favourable opportunities for international tax planning – the county has convention for the avoidance of double taxation with 40 countries at present.