Cyprus Tax Rates – Low Corporate Tax
Cyprus Tax Rates are generally very low. That makes Cyprus a very attractive jurisdiction.
Cyprus Tax Rates: Cyprus is a low tax jurisdiction, not a no tax Jurisdiction and as such is ideal for your offshore tax planning. Cyprus Taxes can favorably compare to any taxes in the EU countries and many big countries all over the world. Cyprus Tax Rates are very low, and even zero when it comes to offshore companies. For example the Cyprus Tax Rate on Dividends paid out to the shareholders is 0%! The Cyprus Tax on Dividends earned by a Cyprus Holding company which is a holder of shares in any company in a third country is 0%! The Cyprus Tax on profits from any permanent establishment abroad, such as hotels, factories, chain of restaurants etc is 0%! The Cyprus Tax on profits from trading is shares or other securities including forex or bitcoins is 0%! The Cyprus Tax on revenue from IP such as patents, licenses, sales of inventions etc is only 2.5%! As you can see generally Cyprus Tax Rates on very important revenue categories are either zero or minimal. Make this an advantage for your offshore operations. See below in detail most of the Cyprus Taxes.
Cyprus Tax Rates: Corporate Tax Rate
Cyprus Corporate Tax Rate is only 12.5%! Planning Your Taxes is a crucial key to your business success.Our expertise in this field since 1979 will be your leverage for a successful tax optimization plan. Cyprus Corporate Tax Rate at only 12.5% offers tremendous opportunities to the international company and the entrepreneur. Make the low Cyprus Corporate Tax Rate your high end tool to your success. The other Cyprus Tax Rates are also very favorable. See below the various Cyprus Taxes. Our firm offers a full range of tax services, such as Accounting and Auditing. We also offer full vat tax filing and payment of the vat tax. The Vat tax rate in Cyprus is 19% and is payable every three months. VAT and VIES .
Our team of independent Accountants/Auditors offer all the financial and accounting advice and services to shore up your business efforts and support you day by day on a personal basis so that you may have every opportunity to reach your goals successfully. They will be the architects of your tax planning around the low Cyprus Corporate Tax Rate, advising you along the way without reservations to avoid pitfalls and mistakes. The Cyprus Tax System is a very concise and rich system which provides for every possibility covering onshore but also offshore operations and activities and cross border trading and other activities.
Some of Cyprus`s Taxes are the following:
- Cyprus Corporate Tax.
- Cyprus Income Tax.
- Cyprus Capital Gains Tax.
- Immovable Property Tax.
- Immovable Property Transfer Tax.
- VAT Tax.
- Special Defense Contribution Tax.
- Double Tax Treaties.
Every tax is regulated by a relevant legislation, which provides for the tax rate and its collection. Cyprus Taxes are approved by the Cyprus Government and in particular by the Cyprus Parliament.
Who Pays Cyprus Corporate Tax
Cyprus Corporate Tax is payable on the net profits by all Cyprus Tax resident entities whether thy are physical persons or legal entities. The Tax legislation, its regulatory provisions, its executions and its interaction with the business community is straightforward and predictable. The Cyprus Tax Authorities are fair and have excellent relations with the taxpayers. By providing an efficient and transparent environment, the Cyprus Tax enhances Cyprus’s competitiveness and contributes to making Cyprus a jurisdiction, which is attractive for international tax planning of every serious businessman.
Below we give you a short description for every tax, with particulars of rates and legislation. They are for your general guidance and not for a source of tax advice to regulate your business in detail. If you need any professional advice, please get in touch with us for a responsible and professional approach and advice to your particular Cyprus tax problem query or need. There are two kinds of Cyprus Company. One that is not tax resident in Cyprus and therefore does not pay tax, but pays tax in the country in which it is considered to be tax resident.
It is of course taxed on profits made from trading activities within the Republic. A company in Cyprus, is considered as a Tax Resident in Cyprus if it management and control is exercised in Cyprus i.e. if the majority of the Directors are tax residents and the board meetings and decisions of the company are taken in Cyprus. If a Cyprus Company is Tax Resident in Cyprus, it pays Cyprus Corporate Tax and of course it benefits of the 12.5% Corporate Tax Rate and of the Double Taxation Avoidance Treaty,
If a Cyprus Company is tax resident in Cyprus, it pays corporate tax at the rate of 12.5% , on all sources of income, whether the source is located within the Republic or outside the Republic!
Cyprus Tax Rates: Exemptions:
- No corporate tax is charged, on dividends paid to the shareholders who are not tax resident in Cyprus or on dividends received by the company as a shareholder of any companies abroad.
- No tax on profits from trading in securities.
- No tax on interest earned.
- No withholding tax on royalties paid from Cyprus in respect of intellectual property exploited outside Cyprus.
- No tax or capital gains and no tax on profits of sale of immovable property held by the Cyprus company, which is situated outside Cyprus.
- No tax on profits made through a permanent establishment, like a chain of supermarkets, which is situated wholly abroad.
- Tax losses can be carried forward indefinitely.
Cyprus Double Tax Avoidance Treaties
A Cyprus Company can take advantage of an extensive network of Double Tax Avoidance Treaties, with at least 42 countries, such as the USA, China, India, Canada, Russia, UK, European Countries etc. Cyprus Corporate Tax at 12.5% flat is one of the lowest in the European Union. A Double Tax Avoidance Treaty with your country guarantees that you get at least preferential treatment when the time comes to pay corporate tax of your company in your country. The general rule is that you will pay the lower tax of the two. You can check the list of Double Tax Treaties of Cyprus with third countries and check if your country has signed one with Cyprus.
Who is Liable to Cyprus Income Tax
Any physical person, who is tax resident in Cyprus, pays Cyprus Income Tax on all his profits made by trading within the country or Cyprus Income Tax on profits from sources outside the country. Such Cyprus Income Tax is imposed on income from employment or trading or services rendered, rents and pensions. A tax resident individual is considered one who spends 183 days or more in the country at any given year. The higher tax rate for a physical person is 30% for a net income of €36.301 and over. All expenses gone to generate the income are deductible.
The following incomes are by the Cyprus Income Tax law, excluded from taxation:
- Dividend Income.
- Interests Accrued.
- Profits from trading in securities.
- Profits from a permanent establishment which is maintained abroad.
- Employment income derived from non tax resident employer, which represents 90 days or more outside Cyprus.
- Widow’s pension.
- Retiring lump sum payment.
- Life insurance lump sum payment.
Cyprus Tax Rates: Payment of Cyprus Income Tax
The Cyprus Income Tax Authority notifies by letter the Taxpayer whether on his Tax Returns, income tax has been levied. The letter is usually sent to the Registered Office address of the company or the business address of the Tax Payer. If the tax is paid within the time limit set, then no penalty or interest is charged if the Tax Return was filed belated or the tax is paid belated then there is a penalty and interest paid on the sum of the Income Tax. Cyprus Income Tax is actually paid at the local offices of the Income Tax of every District.
Cyprus Capital Gains Tax
One of the taxes, comprised in the Cyprus Tax system is the Capital Gains Tax. Cyprus Capital Gains Tax is a flat rate tax of 20%. Cyprus Capital Gains Tax is levied on the profits realized by the sale of immovable property by physical persons or corporate persons such as a Cyprus Company. The profit realized is ascertained after deduction of the purchase price, the transfer fee tax, interests paid if purchased by a loan improvement cost etc. A sum of €10.000 is exempted for every person or company if it is the first time they sell any immovable property.
Exemptions to Capital Gain Tax
- Transfer of property on Death.
- Gifts between relations up to 3rd Degree, such as parents to children, between cousins, grandparents, grandchildren etc.
- A gift to a company if the shareholders are members of the Donor’s family and stay as such for the following 5 years.
- A gift by a family company to its members, provided the land was acquired by donation as a gift.
- Gifts to charitable organizations.
- Also land exchanged with other immovable property of equal value is exempt.
- If the main residence is sold, then the sum of €85,430 is exempted.
- Finally, land sold by a farmer, the sum of €25,629 is exempted.
Cyprus Tax Rates: Cyprus Vat Tax Rate
Cyprus VAT Tax is a special tax levied on goods, commodities and services. The basic rate is 18%. There is of course the reduced rate of 8% and 5% and in some cases 0%. All physical persons and companies who trade in goods, commodities, services etc. in Cyprus with a turnover of €187.200 a year or €15,600 per month, which are subject to VAT must register with the VAT Authorities and submit their VAT return forms every 3 months. VAT is paid at any Cyprus Banks or directly to the Cyprus VAT Authority.
EU Regulatory Obligations – The EU VIES System
Businesses who carry out intra-community trading in goods,services and commodities must file the intrastat Form. Intrastat forms are submitted to the Cyprus VAT Authorities, no later than the 10thday which follows the end of the month stated on the intrastat form. It must be filed every month. Businesses who carry out trading in goods and services with in the EU Community, have to complete and file the VIES form, every month. This is done by the accountant’s office to the VAT Authorities, once a month.
Penalties For Non Submission:
- Late payment of VAT entails the payment of 10% fine on the amount of the VAT payable and 5, 35% p.a. interest.
- Late registration for those services, the penalty is €85 for every month.
- Late de-registration, €85 one-off.
- Late submission of return, €51 one-off.
- Late submission of recapitulation schedule for supplies, €50 one-off.
- Late submission of intrastat, €15 for each return.
Special Defense Contribution Tax
This Cyprus tax is paid only by Cyprus companies which are Tax Resident in Cyprus and carry out trading in Cyprus. Special Defense Contribution Tax has been increased recently by Law 117(1)/2002 as follows: Dividends 20%. Interest income (15% up to 28 April 2013) today 30%. Interest received by an individual from 3%. Government Savings Certificates. Interest received by an individual from 3%. Government Bonds Interest earned by an approved provident fund 3%. Interest earned by the Social Insurance Fund 3% Rental income (less 25%) 3%.
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