Date de publication : 06-10-1907
The following information are for the sole purpose of providing a general overview of the local taxation of the Corporate tax aspects of the country. In any case, it can not replace a tax advice, or be considered as an official information.
Yes we tax in Cyprus
The additional protocol to the tax treaty between Cyprus and San Marino has been signed.
The tax treaty between Cyprus and Luxembourg has been signed.
Local tax advisors
No specific information on the local tax advisors in Cyprus.
Resident companies are taxed on their worldwide income. However, non-resident companies are only taxed on their revenues derived from Cyprus sources.
Definition of residency is based on the OECD Model of Convention.
Registration in Cyprus in not decisive for application of the residence. However, tax administration considers that an entity would be deemed resident of Cyrpus for tax purposes, in case where such entity has management & control in Cyprus.
Management & Control is in Cyprus if following conditions are fulfilled:
- All correspondence from third parties should be directed to the company’s mailing address in Cyprus. Correspondence should not be directed to its non-Cyprus shareholders;
- All corporate filings and reporting functions should be performed by representatives located in Cyprus;
- Agreements relating to the corporation’s business or investment assets should be executed in Cyprus, or at least signed by the company in Cyprus. The corporation’s corporate seal and corporate financial records should be maintained in Cyprus;
- The corporation should establish a bank account in Cyprus. Only employees of the company or its Cypriot directors should have signing authority, or if this is not possible then they should be co-managed between Cyprus resident and non-resident signatories. All expenses associated with running the registered office in Cyprus and other executive functions should be paid with funds drawn on this account;
- To whatever extent possible, the company’s day-to-day operations should be directed and managed from Cyprus.
Corporate Income Tax
General CIT tax rate is 12.5%
Following expenses are not deductible:
- Expenses of incorporation
- Fines and penalties
- General provisions for bad debts
Following income are non-taxable income:
- Dividends (participation exemption)
- Profits from a permanent establishment abroad
- Gains from a qualifying loan restructuring
Carry forward: Yes, 5 years
Carry back: No
Companies should submit the tax return annually before the 31st December of the following year.
Tax returns are established by the company on a self-assessment system.
Companies shall pay two advance payments on 31 July and 31 December of the current taxable year.
Whithholding Taxes (payment to foreign companies)
The local tax rates in Cyprus are the following, subject to the provisions of an applicable double tax treaty, if any.
Capital gains are taxed separately to a 20% tax rate.
Standard tax rate is 19%.
Reduce tax rates are 9% and 5%.
The following goods and services are Zero-rated:
- Services related to importation of goods
- Export of goods outside EU
- Intra EU supplies of goods
- Intra EU transportation of goods or passengers
The following goods and services are exempt of VAT:
- Insurance and reinsurance transactions
- The granting and negotiation of financial guarantees
Note : companies making exempt supplies cannot be registered for VAT purposes and as a consequence they could not deduct the Input VAT.
Certain non-resident companies (which are not required to register and incur Cypriot VAT in the course of their business activities in Cyprus) may apply for a refund.
Refunds under the 13th Directive are subject to the reciprocity principle, which means that Cyprus only refunds VAT to foreign companies in countries that offer similar refunds to Cypriot companies.
No other specific information of VAT in Cyprus.
For CIT purposes, the tax administration has the right to issue an assessment and examine a tax year within six years from the end of the relevant tax year to which the tax declaration relates.
For VAT purposes, prescription period is also a six years period. And VAT authorities may investigate earlier years as well if there is an indication of fraud.
There is no specific foreign exchange control in Cyprus.
There are no specific thin capitalization rules in Cyprus.
Do not hesitate to share your experience in Cyprus with us in the comments below. Any comments are welcome !