Tax exemptions provided by the Cyprus tax law constitute one of the main reasons Cyprus has attracted foreign investments and has turned into a lucrative hub for establishing holding companies.  Cyprus is one of the few EU countries with a comprehensive network of double tax prevention agreements.

A company is regarded as tax resident in Cyprus where its management and control is exercised in the Cyprus Republic.  Income earned in Cyprus and abroad constitutes taxable income.  A non – Cyprus tax resident is taxed only on income earned through a permanent establishment in Cyprus.

Low Corporate Tax Rate
A uniform corporate tax rate of 10% applies which amounts to the lowest corporate tax rate in the European Union.

Tax on dividends
Dividends received from other Cyprus resident companies are tax exempted. The same exemption applies to dividends from non-Cyprus resident companies, under certain conditions.

Disposal of securities
Profits earned from the sale of securities listed on a recognised Stock Exchange are exempt from tax for all companies.

Reorganisation
Transfer of assets and liabilities between companies in the course of a reorganisation such as a merger, transfer of activities, exchange of shares are exempted from tax.

Loss – set off
Where two Cyprus tax resident companies form part of the same group of companies, the loss of the one company can be set off against the profit of the other company. Furthermore, losses from a permanent establishment abroad can be set off against profits earned by a company in Cyprus.

Foreign tax relief
Tax relief of foreign tax paid is granted in Cyprus even in the absence of a double-taxation treaty, provided sufficient evidence is produced that the foreign tax has indeed been paid.

Double Tax Prevention Treaties
In an effort of providing extensive corporate tax advantages to tax resident companies, Cyprus has entered into Double Tax Prevention Treaties with the following countries: Austria, Belarus, Belgium, Bulgaria, Canada, China, Czech Republic Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Mauritius, Norway, Polad, Romania, Russia, Singapore, Slovakia, South Africa, Sweden, Syria, Thailand, UK, USA, Yugoslavia.

For more information contact Helena Andreou at helena@antonisandreou.com