Cyprus is a member of the European Union and the Eurozone. It features on the white list of the OECD and has committed to the highest standards of transparency, assuming an early-adopter status for the automatic exchange of information on tax matters.
Cyprus provides an established, stable and solid legislative framework under which Cyprus companies can be formed for intermediary or ultimate holding purposes within corporate groups.
Use of the Cyprus holding company is widespread in project finance, cross-border transactions and global investment management.
Double-Tax Avoidance
Amongst other advantages, a Cyprus holding company can achieve low or zero withholding tax rates when extracting dividends from underlying subsidiaries by relying on either:
► an applicable double tax treaty, or
► the provisions of the EU Parent Subsidiary Directive.
Cyprus has concluded over 50 agreements for the avoidance of double taxation, and has one of the largest collections of treaties globally, including the USA, Canada, India, China, Switzerland, the UAE and Russia.
Outgoing Dividends
There are no withholding taxes on dividend payments from Cyprus companies to persons not resident in Cyprus, irrespective of where they reside or whether a double tax treaty is in place with the jurisdiction of residence.
Notional interest deduction (NID)
The NID is deductible against the company’s taxable profits that arise as a result of the newly introduced capital and cannot exceed 80% of the taxable profit as calculated before allowing for this deduction.
The NID is available on new qualifying equity issued by a Cyprus company. It is calculated by multiplying the new qualifying equity amount by a reference interest rate.
Incoming dividends
Dividends received into a Cyprus company are taxed at 17%, however an exemption mechanism (satisfied in the majority of cases) results in zero taxation of incoming foreign dividends.
Innovating Companies
All expenses related to research and development undertaken by innovating companies, together with expenses incurred for the purchase of shares in such companies, are treated as deductible from taxable income.
Capital Gains
There is no taxation on capital gains other than on gains accruing from the disposal of immovable property held in Cyprus or shares in companies the property of which consists of immovable property held in Cyprus.
Intellectual Property Royalties
Cyprus affords a regime under which 80% of qualifying profits generated from qualifying assets will be deemed to be tax deductible expenses. Qualifying assets are those:
► acquired, developed or exploited by a person in the course of its business
► that relate to intellectual property,
► that result from research and development expenditure, and
► for which the person is the economic owner, excluding any rights relating to marketing.
Cyprus provides an established, stable and solid legislative framework under which Cyprus companies can be formed for intermediary or ultimate holding purposes within corporate groups.
Use of the Cyprus holding company is widespread in project finance, cross-border transactions and global investment management.
Double-Tax Avoidance
Amongst other advantages, a Cyprus holding company can achieve low or zero withholding tax rates when extracting dividends from underlying subsidiaries by relying on either:
► an applicable double tax treaty, or
► the provisions of the EU Parent Subsidiary Directive.
Cyprus has concluded over 50 agreements for the avoidance of double taxation, and has one of the largest collections of treaties globally, including the USA, Canada, India, China, Switzerland, the UAE and Russia.
Outgoing Dividends
There are no withholding taxes on dividend payments from Cyprus companies to persons not resident in Cyprus, irrespective of where they reside or whether a double tax treaty is in place with the jurisdiction of residence.
Notional interest deduction (NID)
The NID is deductible against the company’s taxable profits that arise as a result of the newly introduced capital and cannot exceed 80% of the taxable profit as calculated before allowing for this deduction.
The NID is available on new qualifying equity issued by a Cyprus company. It is calculated by multiplying the new qualifying equity amount by a reference interest rate.
Incoming dividends
Dividends received into a Cyprus company are taxed at 17%, however an exemption mechanism (satisfied in the majority of cases) results in zero taxation of incoming foreign dividends.
Innovating Companies
All expenses related to research and development undertaken by innovating companies, together with expenses incurred for the purchase of shares in such companies, are treated as deductible from taxable income.
Capital Gains
There is no taxation on capital gains other than on gains accruing from the disposal of immovable property held in Cyprus or shares in companies the property of which consists of immovable property held in Cyprus.
Intellectual Property Royalties
Cyprus affords a regime under which 80% of qualifying profits generated from qualifying assets will be deemed to be tax deductible expenses. Qualifying assets are those:
► acquired, developed or exploited by a person in the course of its business
► that relate to intellectual property,
► that result from research and development expenditure, and
► for which the person is the economic owner, excluding any rights relating to marketing.