Attractive Tax System

Cyprus has a robust and transparent legal and regulatory framework and an attractive tax regime, which offers a wide range of incentives and advantages both for legal and natural persons.

Cyprus’ legal system is based on English Common Law principles, offers foreign businesses a familiar and reliable framework within which to operate, and is widely recognized as a business-friendly and effective system that ensures transparency and reliability in business practices. Cyprus’ legal system is also fully compliant with the EU, the Financial Action Task Force on Money Laundering (FATF), OECD, FATCA, the Financial Stability Forum laws and regulations and EU AML directives. As such, any physical person, both from the EU or a third country, who registers his or her company in Cyprus, can engage in business activities without any restrictions.

Cyprus offers an attractive and transparent tax regime, fully compliant with EU, OECD and international laws and regulations. Providing access to an extensive network of more than 60 Double Tax Treaties, and maintaining a corporate tax rate of 12.5%, one of the lowest in the EU.

Some highlights of the Cyprus tax system are as follows:

  • Flat corporate income tax rate of 12.5%
  • Fully EU & OECD Compliant
  • Access to EU directives (e.g. Parent-Subsidiary)
  • Extensive double tax treaty network with over 60 countries
  • Notional interest deduction on equity applies to all taxpayers and all business activities
  • No withholding taxes on interest and dividends
  • No taxation of capital gains including gains from the disposal of securities (except for disposal of Cyprus real estate or shares of company holding Cyprus real estate)
  • No succession taxes
  • Foreign tax relief on income subject to both Cypriot and overseas tax
  • Exemption on profits of foreign permanent establishments (subject to conditions)
  • Company reorganization rules based on the EU Mergers Directive allow for tax-neutral group restructuring
  • Attractive Intellectual Property regime in line with “modified nexus approach” (OECD Action 5)
  • No exit tax rules
  • 50% exemption on employment income exceeding €100,000 per annum for non-residents taking up employment in Cyprus
  • No tax on dividends, interest and rental income of non-domiciled individual
Modern Legal Framework

Our country’s competitive advantages are significantly enriched by a robust and transparent legal and regulatory framework and an attractive tax regime, which offers a wide range of incentives and advantages both for legal and natural persons.Our country’s competitive advantages are significantly enriched by a robust and transparent legal and regulatory framework and an attractive tax regime, which offers a wide range of incentives and advantages both for legal and natural persons.

Cyprus’ legal system, based on English Common Law principles, is widely recognised as a business-friendly and effective system that ensures transparency and reliability in business practices. Offering foreign businesses a familiar and reliable framework within which to operate, Cyprus’ legal system is also fully compliant with the EU, the Financial Action Task Force on Money Laundering (FATF), OECD, FATCA, the Financial Stability Forum laws and regulations and EU AML directives.

The very core script of the Cyprus Companies Law (CAP. 113) is a replica of the UK Companies Law. However, it is important to note that since its adoption several decades ago, the Law was, and still is, a subject of numerous amendments in the effort of the government to implement all the reforms necessary in order to remain competitive.The Companies Law, as all other legislation in the Republic of Cyprus, is fully compliant with EU Directives and Regulations. As such, any physical person, both from the EU or a third country, who registers his or her company in Cyprus, can engage in business activities without any restrictions.