Cyprus Tax System Explained for International Businesses
Cyprus has built a strong reputation as one of the most competitive and transparent tax jurisdictions in Europe. The Cyprus tax system offers significant advantages for international companies seeking to optimise their global structures while maintaining full compliance with EU and OECD standards.
Corporate Tax Rate
The corporate tax rate in Cyprus is 12.5 percent, one of the lowest in the European Union. This applies to the worldwide income of companies that are tax resident in Cyprus, meaning that their management and control are exercised within the country.
Tax Residency and Management
A company is considered a tax resident in Cyprus if its management and control take place in Cyprus. In simple terms, this means that the majority of directors should reside in Cyprus and board meetings should be held locally. Trustank assists clients in ensuring their companies maintain proper substance and residency to benefit fully from Cyprus’s tax advantages.
Dividends and Withholding Taxes
Dividends paid by a Cyprus company to non-resident shareholders are exempt from withholding tax. There are also no withholding taxes on interest or royalty payments made to non-residents. These provisions make Cyprus a key location for holding and intellectual property structures.
Double Tax Treaties
Cyprus has signed more than 65 double taxation treaties with countries across the world. These agreements prevent double taxation on the same income and provide reduced withholding tax rates on cross-border payments. This network strengthens Cyprus’s position as an international business hub.
Capital Gains and Exemptions
Capital gains tax applies only on the sale of immovable property located in Cyprus or shares of companies owning such property. Gains from the sale of shares and securities are completely exempt. This is one of the most valuable features of the Cyprus tax framework for investors.
Value Added Tax (VAT)
The standard VAT rate in Cyprus is 19 percent, with reduced rates of 9 and 5 percent for specific goods and services. Companies providing services to clients outside the EU often qualify for VAT exemptions. Trustank guides clients through VAT registration and compliance to ensure smooth operations.
Intellectual Property Regime
Cyprus offers one of the most beneficial intellectual property regimes in Europe. Qualifying IP assets can benefit from an effective tax rate as low as 2.5 percent under the IP Box regime. This provides excellent opportunities for technology, innovation, and software companies.
Substance and Economic Presence
International tax standards now require companies to demonstrate real presence where they claim tax residency. Trustank Corporate Services assists clients in meeting substance requirements by offering office space, local directors, accounting, and compliance services.
Why Choose Trustank Corporate Services
Trustank combines deep legal knowledge with practical corporate support. As a Licensed Administrative Service Provider regulated by the Cyprus Bar Association, we ensure that every client’s tax structure is compliant, transparent, and efficient.
Explore the Benefits of the Cyprus Tax System
The Cyprus tax system continues to attract investors seeking long-term stability and flexibility. With the right guidance, it becomes a cornerstone for sustainable international growth. Trustank Corporate Services provides the expertise and support you need to build a secure tax-efficient structure in Cyprus.
