All Cyprus tax residents are taxed on all income from all sources in Cyprus and abroad.
Individuals who are not tax residents of Cyprus are taxed on income from sources in Cyprus.
An individual is tax resident in Cyprus if he spends in Cyprus more than 183 days in any one calendar year.
€0 – €19.500 0%
€19.501 – €28.000 20%
€28.001 – €36.300 25%
€36.301 – €60.000 30%
€60.001 and over 35%
Basis of taxation
A company is considered as resident in Cyprus for corporate tax purposes if its management and control is exercised in Cyprus. The following conditions should be considered to determine whether a company qualifies as a tax resident of Cyprus:
- All strategic (and preferably also day-to-day) management decisions are taken in Cyprus by the directors exercising their duties from Cyprus. This is usually achieved by having meetings of the Board of Directors take place in Cyprus and signing contracts, agreements and other relevant company documents relating to the management, control and administrative functions of the company in Cyprus.
- The majority of the directors of the company are preferably tax resident in Cyprus and they exercise their office from Cyprus. These directors should be sufficiently qualified with prior experience in the related industry.
- An actual administrative office is maintained in Cyprus, through where the actual management and control of the company is exercised.
- Hard copies of commercial documentation (agreements, invoices, etc.) are stored in the office facilities of the company.
- The bank accounts of the company are operated from Cyprus, even if the accounts are maintained with banks established outside Cyprus.
Corporation tax rate – 12,50%
Capital gains tax
Capital Gains Tax is imposed at the rate of 20% on gains from the disposal of immovable property situated in Cyprus including gains from the disposal of shares in companies which own such immovable property, excluding shares listed in any recognised stock exchange.
Further, as from 17 December 2015 shares of companies which indirectly own immovable property located in Cyprus and at least 50% of the market value of the said shares derive from such immovable property are subject to Capital Gains Tax.
Double taxation treaties
The Cyprus double tax treaties have been drafted very closely to the Organisation in Economic Cooperation and Development (OECD) Model Treaty. The OECD model has been changed where necessary in order to conform with the tax systems of the countries concerned.
The Double Tax Agreements concluded and their respective date of enforcement between Cyprus and other countries can be found on the official website of the Ministry of Finance of Cyprus.
In accordance with the Value Added Tax law of 2000 International Business Companies (IBC’s) are treated in the same way as all the other Cypriot companies in relation to VAT.
The current standard VAT rate is 19%.
IBC’s which belong to the Republic and which trade in goods or provide services within EU member states are liable for VAT Registration in Cyprus.
IBC’s which belong to the Republic which trade in goods or provide services outside EU member states or third countries may be liable to register for VAT purposes.
From 1st January 2010 businesses are required to complete and submit a declaration for Intra Community Supplies (within EU) of services which are taxed under the reverse charge provisions of another member state. This form is called VIES. Services which are supplied to non member states are not included.
The VIES form is also completed from Companies which are performing triangular transactions.