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A Cyprus tax resident company is taxed on all taxable income accruing or arising from sources both within and outside Cyprus. A non-Cyprus tax resident company is taxed only on taxable income accruing or arising from sources within Cyprus.
A company is considered to be tax resident in Cyprus if it is managed and controlled from Cyprus.
The Corporate Income Tax (CIT) rate is 12,5%.
TYPE OF INCOME
EXEMPTION
Interest income (other than interest arising in the ordinary course of business)
100%
Dividend income (certain conditions apply)
100%
Profit arising from the sale of Securities (Note 1)
100%
Profits of a permanent establishment outside the Republic (certain conditions apply)
100%
Foreign exchange (FX) gains other than gains arising from trading in foreign currencies and related derivatives (Note 2)
100%
Income of a company which operates in the Republic in the audio-visual industry (Note 3)
up to 50%
Notes:
In general, all expenses incurred entirely and exclusively for the production of income are deductible from taxable income. Expenses should be supported by appropriate documentation in accordance with the applicable governing regulations. Deductible expenses include the following:
TYPE OF EXPENSE
TAX DEDUCTION
Interest incurred for the acquisition of property, plant and equipment used for the business
100%
Employer’s salary contributions to approved funds
100%
Donations to approved charities (with receipts)
100%
Eligible infrastructure and technological equipment expenditure in the audiovisual industry
20% for small-sized enterprises
10% for medium-sized enterprises
Notional Interest Deduction (NID) on new equity introduced (Note 1)
up to 80% of taxable income
Royalty income and profits on the disposal of Intellectual Property (IP) rights (Note 2)
80%
Losses of the current and previous five (5) years (only with audited financial statements)
100%
Entertaining expenses for business purposes
The following types of expenses are not tax deductible:
Notes:
TANGIBLE ASSETS
ALLOWANCE
PLANT & MACHINERY
Plant and machinery
10%
Machinery and tools used in agriculture
15%
Industrial carpets
10%
Furniture and fittings
10%
BUILDINGS
Industrial, agricultural and hotel buildings
4%
Commercial buildings
3%
Metallic frame of greenhouses
10%
Wooden frame of greenhouses
33 1/3%
VEHICLES & MEANS OF TRANSPORTATION
Commercial motor vehicles and motor cycles
20%
Fork lifts, excavators, loading vehicles, bulldozers and oil barrels
25%
Armored vehicles (used in security services)
20%
20%
New airplanes
8%
New helicopters
8%
New commercial vessels
8%
New passenger vessels
6%
Motor yachts
6%
Sailing vessels
4,5%
Steamships, tug boats and fishing boats
6%
Ship launching machinery
12,5%
Used commercial and passenger ships and capital additions
Over their useful lives
TOOLS
Tools in general
33 1/3%
OTHER TANGIBLE ASSETS
Computer hardware and operating systems
20%
Application software (cost of less than €1.709 can be written off in the year of acquisition)
33 1/3%
TV and video recorders
10%
Wind power generators
Photovoltaic systems
Our Tax Department has been thriving for over a decade, with our clients seeking our professionals’ advice and assistance in all aspects relating to taxation for corporates as well as individuals, in line with the latest local and international tax developments.
Our clients entrust us with the structuring of their operations in a way that incorporates the applicable tax incentives and ensures their compliance with any and all of their tax obligations and filing of their tax returns. The exceptional quality of our tax professionals is the reason why our clients select us to be their entrusted tax partners.
Contact us today for an initial, complimentary consultation.
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