Taxation

 1.Non-resident individuals or companiesare tax-exempt except for income generated in Cyprus such as income from employment, rent, interest royalties, or from a permanent establishment in Cyprus.

 2.Cyprus resident individuals and companies are taxed on their world wide income, which includes all business profits, rents, royalty rights plus the profit from the sale of goodwill. However, certain income is tax exempt even for resident companies (see Value added tax).

 

Taxable
Income
Tax Rate Cumulative
Tax
Tax
€   %  €  € 
0 - 19.500 0 0 0
19.501 - 28.000 20 1.700 1.700
28.001 - 36.300 25 2.075 3.775
36.301 - 60.000  30 7.110 10.885
60.001 and over 35

For the first 3 years of employment a foreign employee who was previously non-resident and is now employed in Cyprus, receives a 20% deduction (up to £5000).  Pensions received by residents from employment abroad that exceed £2000 per annum are taxed at a flat rate of 5%.

Exemptions from income tax (but subject to defence tax see article "Withholding tax anD Defence tax".)

  • Interest income, the whole amount.Interest income arising in the ordinary course of business, including interest closely connected with the carrying on of the business, is not considered as interest but trading profit and is not exempt.
  • Dividend income, the whole amount.
  • Remuneration from any office employment exercised in the Republic by an individual who was resident or outside the Republic before the commencement of the employment .The exemption applies for a period of three years from 1st January following the year of commencement of the employment,  20% of the remuneration or  €8.550  (whichever is the lower).
  • Remuneration from any office or employment exercised in the Republic by an individual who was resident outside the Republic before the commencement of his employment in the Republic.The exemption applies for a period of 5 years starting from the fi rst year of employment provided that the above income of the employee exceeds €100.000 per annum, 50% of the remuneration.
  • Gains from disposal of securities including units in an open-ended or closed-ended collective investment scheme, the whole amount.
  • Remuneration from the rendering outside the Republic of salaried services to a non-resident employer or to a permanent establishment outside the Republic of a resident employer for a total aggregate period in the year of assessment of more than 90 days, the whole amount.
  • Profits from a permanent establishment  maintained outside the Republic (subject to certain conditions), the whole amount.
  • Rent of preserved building  (subject to certain conditions), the whole amount.

3. The Cyprus corporation tax rate is 10% on net taxable income from established companies which is accrued from all chargeable sources in Cyprus and abroad. However, all foreign taxes paid can be accredited against the Corporation Tax Liability.

Exemptions

  • Interest income, the whole amount. Interest income arising in the ordinary course of business including interest closely connected with the carrying on of the business, and interest earned by open-ended or closed-ended collective investment schemes, is not considered interest but trading profit and is not exempt.
  • Dividend income, the whole amount.
  • Profit from the disposal of securities, the whole amount.Including the redemption of units or other ownership interests in an openended or closed-ended collective investment scheme Profi ts from a permanent establishment The whole maintained outside the Republic amount (subject to certain conditions).
  •  Rent of preserved building (subject to certain conditions), the whole amount.

 

4. Residents

A. Companies - Management and Control exercised in Cyprus?

 

B. Individuals - Spend more than 183 days in Cyprus?

TAX-diagram

(1) In the case that the dividends are received from a company where the shareholders hold directly at least 1% of the share capital, then the dividends are exempt from the payment of special contribution.

This exception does not apply if:

  • The company paying the dividend engages more than 50% in activities that lead to investment income, and
  • The foreign tax burden on the income of the company paying the dividend is substantially lower than the tax burden of the company that receives the dividend.

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