Cyprus Tax Benefits
Overview of the Cyprus Tax System
Cyprus offers one of the most favorable tax regimes in Europe, making it an attractive destination for international businesses and high-net-worth individuals. The island's tax system combines low tax rates, extensive exemptions, and a wide network of double tax treaties to create a business-friendly environment that is fully compliant with EU and international standards.
As a member of the European Union since 2004, Cyprus provides a stable and transparent tax framework, while offering significant advantages for both corporate and individual taxpayers. These benefits are available while maintaining full compliance with the EU Code of Conduct for Business Taxation, OECD requirements, and international anti-tax avoidance measures.
Key Tax Benefits for Companies
Low Corporate Tax Rate
Cyprus offers one of the lowest corporate tax rates in the European Union at 12.5%.
Extensive Double Tax Treaties
Cyprus maintains a wide network of over 60 double taxation treaties, preventing double taxation on the same income.
Dividend Income Exemption
Dividends received by Cyprus companies from foreign subsidiaries are generally exempt from tax.
Capital Gains Tax Exemptions
No capital gains tax on profits from the sale of securities (shares, bonds, etc.).
No Withholding Taxes
Cyprus does not impose withholding taxes on dividends, interest, and royalties paid to non-residents.
Attractive IP Regime
Up to 80% exemption on profits from intellectual property assets.
Notional Interest Deduction
Tax deduction for notional interest on new equity capital, reducing the effective tax rate.
Personal Tax Incentives
Various tax incentives for high net worth individuals and expatriates relocating to Cyprus.
Corporate Tax Rate Comparison
Cyprus offers one of the most competitive corporate tax rates in Europe:
| Country | Corporate Tax Rate |
|---|---|
| Cyprus | 12.5% |
| Ireland | 12.5% |
| United Kingdom | 19% |
| Germany | 15% - 33% |
| France | 28% - 31% |
| Italy | 24% |
| Spain | 25% |
Holding Company Benefits
Cyprus is an ideal jurisdiction for holding companies due to:
- Dividend Income
100% exemption on dividend income received from foreign subsidiaries (subject to certain conditions).
- Dividend Distribution
No withholding tax on dividends paid to non-resident shareholders.
- Capital Gains
No capital gains tax on the disposal of shares, bonds, and other securities.
- Group Relief
Tax losses can be offset between Cyprus companies in the same group.
Personal Tax Benefits for Expatriates
Cyprus also offers attractive tax incentives for individuals relocating to the island:
50% Income Tax Exemption
Individuals with employment income exceeding €100,000 per annum can benefit from a 50% exemption on their income tax for up to 10 years.
20% or €8,550 Income Tax Exemption
New residents can claim a 20% exemption (or €8,550, whichever is lower) on employment income for up to 5 years.
Non-Domiciled Tax Resident Status
Non-domiciled tax residents are exempt from Special Defence Contribution tax on dividends, interest, and rental income.
No Inheritance or Wealth Tax
Cyprus does not impose inheritance tax, wealth tax, or gift tax, making it attractive for estate planning.
Tax Planning Services
Our team of tax experts can help you design and implement compliant tax structures that take full advantage of Cyprus' favorable tax regime.
Intellectual Property Tax Benefits
Cyprus offers a highly competitive IP Box Regime:
- 80% exemption on qualifying profits from IP assets
- Effective tax rate as low as 2.5% on IP income
- 80% exemption on profit from disposal of IP assets
- Compliant with OECD's BEPS Action 5 (modified nexus approach)
The regime applies to a wide range of intangible assets, including patents, software, and other legally protected IP assets.
Double Tax Treaties
Cyprus has an extensive network of over 60 double tax treaties, including with:
These treaties help prevent double taxation and reduce or eliminate withholding taxes on cross-border payments.