Cyprus Business and Tax Environment

Cyprus is considered to be the gateway betweenEurope and the rest of the world. The geographic location of Cyprus at the eastern-most point of Europe, being the crossroad of three continents, as well as the Cyprus tax and business environment has made Cyprus the ultimate platform from where international investors and multinational companies hold and manage their investments. Cyprus has many key elements that contribute to the success of businesses and investments. Pd Audit Limited is well placed to ensure your success.

Cyprus Tax System

The Cyprus tax legislation is predictable and straight forward. The key tax advantages that make Cyprusthe ultimate country for investors to hold and management their investments are:

Corporation Tax

Cyprus has a corporate tax rate of only 10% which is the lowest taxation in the European Union.

Wide network of double tax treaties

Cyprus boasts an extensive network of tax treaties; currently with more than 45 countries including countries in North America, Western and Eastern Europe as well as emerging markets such as China, Russia and Poland.

Exemption from tax on dividend income

Dividend income from foreign subsidiaries is exempt from tax provided that:

i) the company paying the dividend either engages directly or indirectly in more than 50% of activities that give rise to non-investment income

ii) the tax burden on the dividend paying company’s income is not lower than 5%.

No withholding Taxes

No withholding taxes on dividends paid to non-resident shareholders. No withholding tax is also imposed on interest paid from Cyprus, as well as royalties paid from Cyprus, in respect on intellectual property irrespective whether the recipient is a corporate body or an individual.

Profit from the sale of securities

Profits from the disposal of securities are exempt from income tax and capital gains tax under Cyprus tax legislation “Securities” are defined as “shares, bonds, debentures, founders’ shares and other securities of companies or other legal person, incorporated under a law in Cyprus or abroad, including options thereon”.

Capital gains and income tax exemption for real estate

Cypriot companies can be used to hold real estate or other assets outside Cyprus with no Cypriot capital gains tax implications on disposal of the assets as capital gains tax only applies to gains on the disposal of immovable property which is situated in Cyprus or unlisted shares in a company which owns immovable property situated in Cyprus.

Permanent establishment abroad

Profits from a permanent establishment maintained abroad are generally exempt from tax in Cyprus.

Liquidation of a Cypriot company

No capital gains tax, income tax or any other taxes arise on the liquidation of a Cypriot company owned by non-resident shareholders, irrespective of the method of liquidation.

Other Advantages of Cyprus include:

• Well-developed infrastructure
• Strong legal system
• Developed banking
• Skilled workforce with a very command in English