International TAX planning
Cyprus, being a low tax jurisdiction, is one of the most popular choices for international tax planning.
Its favourable tax regime, together with its extensive network of double tax treaties and its excellent infrastructure, offers invaluable tools for efficient tax planning and a reputable base for your international business.
Cyprus TAX planning
Cyprus Tax Benefits
The corporate rate is 12.5%, one of the lowest in the European Union.
Income from dividends is exempt from tax regardless of its source. Exemption to the general rule is when:
- The company paying the dividend engages in more than 50% of its activities in producing investment income, and
- The foreign tax burden on the company paying the dividend is substantially lower than that in Cyprus (Substantially lower meaning less than 50% of the applicable corporation tax rates in Cyprus).
Dividends of non-resident shareholders as well as of Non-Domiciled tax residents are exempt from withholding taxes.
Royalties in respect of intellectual property rights used outside of Cyprus are exempt from withholding taxes.
Income or capital gains tax is not imposed on profits and gains, which results from the disposal of titles.
According to article 8(22) of the Income Tax Law N118(I)/2002, any gain arising from disposal of titles is exempt from Income Tax.
The definition of titles incorporates the following:
– Ordinary shares
– Preference shares
– Founder’s shares
– Options on titles
– Short position on titles
– Futures/Forwards on titles
– Swaps on titles
– Depositary receipts on titles e.g.
– ADRs and GDRs
– Rights of claim on bonds and debentures
– Index participation only if they represent titles
– Repurchase agreements /REPOS on titles
– Participation in companies, e.g. Russian OOO and NAO, and American LLC provided that there is no double tax exemption of the income.
Cyprus has concluded double taxation treaties with over fifty countries worldwide.
Real estate or other assets can be held in a Cypriot company and are exempt from capital gains tax provided that the above are outside the territory of the Republic of Cyprus.
If the respective income is subject to Cyprus tax, relief for taxes paid abroad is offered in the form of a tax credit. The relief is given unilaterally irrespective of the existence of a double tax treaty. Where a double tax treaty exists, the treaty provisions apply if more beneficial.
VAT is levied at 19%, which is one of the lowest rates in the European Union.
Most international transactions are free of VAT.
– The lower of: 20% of income or €8.550 annually, on remuneration from any office or employment exercised in Cyprus by an individual who was not a Cyprus tax resident before the commencement of his/her employment, for a period of 5 years commencing from 1st January following the year of commencement of the employment. This exemption applies for employment started during or after 2012 and will be available until the year 2020.
– Deduction 50% on remuneration from any office or employment exercised in Cyprus by an individual who was not a Cyprus tax resident before the commencement of his/her employment, for a period of 10 years if the annual remuneration exceeds €100.000.
Cyprus has adopted the EC Merger Directive; therefore there is no corporate income tax, capital gains tax, stamp duties and property transfer fee on reorganisations such as mergers, divisions/ part-divisions, the transfer of assets or exchange of shares.
No tax is imposed on the liquidation of a Cypriot company owned by non-resident shareholders or Non-Domiciled tax residents.
Full adoption of the EU Directives beneficial to Cyprus Holding Companies:
M. Target Group can assist both businesses and individuals, on all aspects of Cyprus direct and indirect taxes.
We further obtain Tax rulings from the Tax Authorities and provide opinions on interpretations of provisions in Double Tax Treaties, and on indirect tax matters including EU VAT matters through analysis and application of the VAT Directives.
The Cyprus Tax Planning services include the following:
THE 183 DAYS’ RULE
TAX Residency for individuals
The 60 Days’ RULE
As of 1st January 2017, the above tax residency rules have been amended to also provide that, an individual who does not stay in any other country, for one or more periods exceeding in aggregate 183 days in the same tax year and is not tax resident in any other country for the same year, is deemed as a resident in Cyprus in that tax year, if all of the following conditions are met:
As from 16 July 2015, Cyprus has introduced a special tax regime for new tax residents.
In brief, if you:
What TAXES are NOT applicable in Cyprus?
NEED MORE INFORMATION?
Please feel free to contact us for a personalize consultation on local and/or international tax planning
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