Taxation overview
Resident companies
Resident Companies are the Companies whose management and control is exercised in Cyprus. The Corporation Tax for Resident Companies is 15%.
Non-resident companies
Non-Resident Companies are the Companies whose management and control is exercised outside Cyprus. The Corporation Tax for the Non-Resident Companies is Nil.
Meaning of Management and Control
In practice, following decided tax cases management and control is exercised where:-
- The majority of the Directors reside.
- The Board meetings are held.
- The general policy of the Company is formulated.
CORPORATION TAX
| Corporation Tax Rates | % |
| Resident Companies | 15 |
| Non-resident companies | Zero |
Schedule showing how various types of Income are taxed for Resident and Non-resident Companies
| TYPE OF INCOME | TYPE OF TAX | TAX RATES |
| CHARGEABLE INCOME | Corporation Tax | 15% |
| CHARGEABLE INCOME of a permanent establishment abroad |
Corporation Tax | 0% |
| INCOME FROM SALE OF SHARES | Corporation Tax | 0% |
| CAPITAL GAINS TAX There is Capital Gains Tax only if the property is sold in Cyprus |
Capital Gains Tax | 20% |
| INTEREST INCOME | ||
| BANK INTEREST / NON-TRADING INTEREST INCOME | Corporate Tax | 15% |
| Interest earned by an approved provident fund | Defence Tax | 3% |
| Interest earned by the Social Insurance Fund
An individual whose total annual income including interest does not exceed €12.000, has the right to a refund of the amount of SDC suffered on interest income in excess of 3% |
Defence Tax | 3% |
| Interest earned by (i) Cyprus government bonds, (ii) Cyprus and foreign corporate bonds listed on a recognised stock exchange and (iii) bonds issued by Cyprus state organisations, or by Cyprus or foreign local authorities, listed on a recognised stock exchange | Defence Tax | 3% |
| TRADING INTEREST Interest arising from the usual exercise of the ordinary activities i.e. interest on debit balance of clients |
Corporation Tax | 15% |
| DIVIDENDS Paid from one resident CyprusCompany to another resident Cyprus Company |
Defence Tax | 0% |
| DIVIDENDS Paid from a non-resident Company to a Cyprus resident Company |
Defence Tax | 5% |
| DIVIDENDS Paid from one resident Company to resident individuals Paid from one resident Company to non- resident individuals |
Defence Tax Defence Tax |
5% 0% |
| RENTAL INCOME | Corporation tax | 15% on profit |
| SHIP MANAGEMENT COMPANIES
SHIP OWNING COMPANIES CHARTERS |
Corporation Tax | Tonnage tax or 15% corporation tax |
| INTERNATIONAL TRUSTS | Corporation Tax | 0% |
| DOUBLE TAX TREATIES | Apply | |
| LOSSES | Can be set off against future profits within 7 years from the year that losses incurred | |
| TAX CREDIT | According to double tax treaties or unilateral tax credit for non-tax treaty Countries |