The Tax System in Cyprus Corporate Tax

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The Tax System in Cyprus Corporate Tax

Cyprus offers a range of tax benefits to companies that carry out business in Cyprus. These advantages derive from the favourable tax regime in Cyprus, which is in line with the Organization for Economic Co-operation and Development (OECD) and the European Union, as well as from the extensive network of double taxation conventions. In short, the main corporate tax provisions are:

a uniform corporate tax rate of 12.5% ​​the lowest rate in the EU;

no taxation of dividends or interest payments to non-residents of Cyprus;

no withholding tax on royalties in respect of the use of rights outside Cyprus;

Favourable treatment of losses;

no taxation on permanent establishment outside Cyprus, subject to conditions;

double taxation agreements with over 46 countries;

not to impose capital gains tax on the disposal of securities on a recognized Stock Exchange;

no tax on profits from reorganisations;

tax-free repatriation of profits and capital

Income Tax of Natural Persons:

Tax resident of Cyprus is a person resident in the Republic for 183 days in the fiscal year. Cypriot tax residents are taxed on income earned both in Cyprus and abroad. In contrast, non-residents are taxed only on their income from Cypriot sources.

The highest tax rate for income is 35% and tax-free income for each tax year is € 19,500.

The following income tax provisions apply to natural persons:

low income tax;

no taxation of income from dividends and interest, subject to certain conditions;

no tax is levied in case of permanent establishment abroad and for salary earned abroad under certain conditions;

Profits secured by the sale of securities are exempt from taxation;

loss for the current year and previous years is deducted from taxable income under certain conditions;

income derived from retirement bonuses, death or injury compensation, provident fund, pension fund or other approved funds is exempt from tax.

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