Cyprus tax matters


Corporate tax

The tax rate on corporate profit is 12.5%. 

Royalties

There is no withholding tax imposed on payments of royalties when the royalty is paid for use outside Cyprus. If the payment is made outside Cyprus but the royalty is to be used in Cyprus, then a 12.5% withholding tax applies. 

The above applies only in the absence of a double tax treaty and provided that the Cypriot legislation implementing the EU Interest and Royalties Directive 2003/49/EC does not apply. 

Capital Gains Tax (“CGT”)

CGT is imposed on profits from the disposal of immovable property situated in Cyprus, or shares in companies which own immovable property situated in Cyprus when shares are not listed in any stock market. The tax is imposed on the net profit at a rate of 20%. The net profit is calculated as the disposal proceeds less the greater of the cost or market value on 1 January 1980, adjusted for inflation. Inflation is calculated using the official Retail Price Index. 

The sale of shares in a company (other than one holding immovable property in Cyprus) is exempt from taxation. 

Dividends

Under the Cyprus Income Tax Law, dividends are exempt. However, those may be taxed under the Special Contribution for Defence Tax. 

Special Contribution for Defence Tax (SCDT) 

Every resident person who receives any dividend from a company is liable to SCDT at the rate of 15%, except the following: 

Dividends paid from one Cyprus resident company to another. 

Dividends received from an overseas company by a resident company of Cyprus, or by a company which is not resident of Cyprus but has a permanent establishment in Cyprus, holding directly at least 1% of the share capital of the overseas company. This exemption does not apply if the company paying the dividend engages in more than 50% of its activities that produce investment income, and if the foreign tax burden on the income of the company paying the dividends is substantially lower than the Cypriot tax burden.

 

Double Tax Treaties

Cyprus has concluded double taxation treaties covering the following countries:

  • Austria
  • Bulgaria
  • Belarus
  • Belgium
  • Canada
  • China
  • Denmark
  • Egypt
  • France
  • Germany
  • Greece
  • Hungary
  • India
  • Ireland
  • Italy
  • Kuwait
  • Lebanon
  • Malta
  • Russia
  • Norway
  • Poland
  • Romania
  • Mauritius
  • South Africa
  • Sweden
  • Syria
  • Singapore
  • Thailand
  • United Kingdom
  • USA
  • Serbia
  • Montenegro
  • Slovenia
  • Slovakia
  • Czech Republic
  • Azerbaijan
  • Armenia
  • Kyrgyzstan
  • Moldova
  • Ajikistan
  • Uzbekistan
  • Ukraine
  • Seychelles
  • San Marino
  • Qatar
  • United Arab Emirates
  • Estonia
  • Finland
  • Portugal
  • Spain