Cyprus Tax Law

Corporate Tax

A company is tax resident in Cyprus when its management and control is exercised in the Republic. Their taxable income includes both income earned in Cyprus and abroad. A non-Cyprus tax resident is taxed only on income earned in Cyprus.

All companies are subject to a uniform tax rate of 10% which is the lowest corporate tax rate in the European Union.

Cyprus tax resident companies are exempt in respect of dividends received from other Cyprus resident companies. Dividends received by Cypriot companies from foreign subsidiaries. Interest income is taxed at the corporate tax rate of 10% arising from or closely connected to the ordinary activities of the company. Moreover, 50% of all other interest income is exempted from income tax and is subject to special defense contribution at 10%. Profits gained from the sale of securities listed on a recognized Stock Exchange are exempted from tax for all companies.

Personal Income Tax

An individual tax resident of Cyprus is considered to be an individual who stays in the Republic for 183 days in the year of assessment. Cyprus tax residents are taxed on income earned both in Cyprus and abroad. On the contrary non tax residents are taxed on income earned only from Cyprus sources. Individuals who were not Cypriot residents before the commencement of their employment are allowed after the first year an exemption of 20% of their earnings with a maximum amount €8.543 annually. This exemption can be used for 3 years commencing from the 1st January following the first year of employment.
The rates for income tax for year 2008 are listed in the table below.

 

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