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Please note that the PDF file also includes images and practical examples.

Cyprus is one of the most favoured jurisdictions for international tax planning offering invaluable tools to reduce or even eliminate the total tax burden of the company structure.

 

General Tax Advantages:

  • The lowest tax regime in Europe
  • 12.5% corporation tax on net profits
  • Dividend income received from abroad is tax exempt
  • Profits earned from a permanent establishment abroad are exempt from corporation tax
  • Profit from the disposal of shares and other securities is tax exempt
  • Interest received not arising from the ordinary activities of the company is exempt from corporation tax
  • No tax withheld on payment of dividends and interest to non-resident individuals or companies
  • Tax losses can be carried forward for up to 5 years to be set-off against future profits
  • Losses from a company can be set off against profits of other companies in the same group during the same financial year
  • Group reorganizations are possible without any tax implications
  • Over 40 double tax treaties

 

General non-tax advantages:

  • A prestigious low tax jurisdiction
  • The possibility to combine with companies based in Tax Havens to optimize tax reduction
  • Confidentiality and anonymity of beneficial owners
  • No exchange control restrictions
  • Easy migration of legal entities into and out of Cyprus from and to other jurisdictions
  • Excellent infrastructure, banking and legal systems
  • Access to EU directives
  • Work permits granted for staff of Cyprus companies with foreign shareholders
  • Residence permits and/or citizenship is granted to investors under certain conditions

 

Double Tax Treaty Provisions:

The most significant provisions are:

  • Withholding tax rate (WHT) on dividends:
    • 0% if the requirements of EU Parent-Subsidiary Directive (90/435/EEC) are met (i.e. if the parent company holds at least 10% of the subsidiary for over 2 years)
    • 25% in all other cases
  • WHT on interest:
    • 5% if the requirements of EU Parent-Subsidiary Directive (90/435/EEC) are met
    • 10% in all other cases
  • WHT on royalties:
    • 5 % in the case of films
    • 0% in all other cases

 

For examples of tax efficient corporate structures utilising the double tax treaty between Cyprus and Greece please open the publication in PDF format. The relevant link is at the top of this page.