27.04.2017. Cyprus, taxation highlights

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For our BBP clients to assist managing taxes we prepared summarized information about main taxes, showing schemes of  using companies registered in the same jurisdiction and Cyprus will be the first one.

I.Corporate Tax

Tax rate: 12,5 % / certain types of income are tax exemp or are subject to other types of taxation

Tax residency: a company is rezident in Cyprus if its management and control exercised in Cyprus

Basis of taxation: rezident companies are taxed on their worlwide income.Non-resident companies are taxed only on their Cyprus sourced income.

     Exempt income:

– profit from sales of qualifying titles(e.g.shares, bonds, options on titles)- passive interest ( e.g. bank depost interest)- dividends- profit of a permanent establishment abroad – 80% deemed expenses of the profit arising fromthe use or sale of qualifying Intellectual Property- capital gains from the disposal of immovableproperty situated outside of Cyprus

     Deductions:

Expenses incurred wholly and exclusively for the production of taxable income Donation to approved Cyprus charities
Capital allowances on fixed assets Contributions to approved funds
  Notional interest deduction on new equity

     Non-deductible expenses

Interest related with acquisition of non- business assetImmovable property tax Professional taxEntertainment expenses if excess 1% of the gross income or EUR 17086

 

II. Special cotribution for defence ( DT)

DT is a tax imposed on certain types of income earned from Cyprus tax resident entities.Non-residends are exempt from special contrubution for defence. Tax rates:

Dividend income from Cyprus resident company Nil
Dividend income from non-Cyprus resident company Nil or 17% 17%- received dividends from passive income company
Interest arising from ordinary activities of the business Nil
Other interst income 30%
Rental income ( reduced by 25%) 3%

 

III.Capital gains tax

Tax rate: 20%. Applicable only on gains from disposal of immovable property located in Cyprus or shares in companies which own such property.

IV. Withholding tax

There are no Cyprus withholding taxes on any outgoing payments from Cyprus- interest, dividends, royalties, fees. Towards non- Cyprus residents.