In recent years Cyprus has been assumed the most attractive European tax regime across Europe.
Let’s start from beginning. You start up the project and register the company in Cyprus. What kind of taxes and how much must you pay?
A Cypriot company can either be a private company established by one or more persons or a public company established by any seven or more persons who cooperate for any legal purpose and form a limited liability company, by signing the Memorandum of Association and by complying with the provisions of the Cyprus Companies Law. Every company must have a company secretary and a registered ofﬁce address in Cyprus which may also be used as the business address of the company.
Annual Corporate Levy
Every Company registered in Cyprus is subject to annual levy of €350.
Taxes in Cyprus for Companies:
Trading profits are taxed at the rate of 12,5%, one of the lowest corporate income tax rates in Europe.
Special contribution for defence
Special contribution for defence is imposed on dividend income, “passive” interest income and “passive” rental income earned by Cyprus tax residents.
It is charged at the rate of 17% on dividend income (for individuals) and 3% on rental income. Dividends received by a Cyprus tax resident company from other Cyprus tax resident companies are excluded from all taxes, unless they are indirectly declared after the lapse of four years from the end of the year in which the profits were generated, in which case they may be subject to Special contribution for defence at 17%.
Capital gains tax
Capital Gains Tax is charged at the rate of 20% on gains from the disposal of immovable property situated in Cyprus including gains from the disposal of shares in companies which own such immovable property, excluding shares listed on any recognised stock exchange.
The headline Cypriot VAT rate is 19% from 13 January 2014, reduced VAT rates of 9% from January 2014 apply to some goods and services.
Some goods or services are exempt from VAT, including:
- banking and financial services;
- hospital and medical services;
- educational and sports activities;
- supplies of real estate, except supply of new buildings before their first use.
Immovable Property Tax
This tax is payable on 30 September each year by physical and legal persons. The rate depends on the property value and consists from 6% for property valued 40.000 euro to 19% for property valued over 3.000.000 euro.
The rate for 2014 is 7,8% for both the employer and the employee. The employer should make other contributions summarizing at the rate of about 11,7%.