Cyprus Tax Laws were recently reviewed, amended, and modernized. They operate in compliance with European Community Law, the EU Code of Conduct on Business Taxation and with OECD directives, but at same time they were designed to satisfy the needs of an International Business Centre.

A transitional period covers years 2003, 2004 & 2005 for international business companies (offshore) established prior to 31 Dec 2001. Please contact us for further information.

Tax Liability

Tax Liability in Cyprus is Residence Based Liability:

• Residents are taxed on worldwide income, and
• Non-Residents are taxed on income only from Cyprus sources

Definitions

Tax Law clearly specifies the basis upon which tax residency is to be decided:

"Resident in the Republic,

when applied to an individual, means an individual who stays in the Republic for a period or periods exceeding 183 days in aggregate in the year of assessment

and

when applied to a company, means a company whose management and control is exercised in the Republic

Although not specifically addressed in the Law the "Residency Test" for companies is

Where,

• The majority of directors reside
• Board meetings are held
• The general policy of the company is formulated

All three criteria must be valid in order to get the Cyprus Tax Residency status.

Tax Law Highlights

Tax law in Cyprus offers a few eye-catching benefits for the international businessman:

• Corporation tax rate is at 10%
• There are no withholding taxes on interest and dividend payments for non-residents
• Profits from a Permanent Establishment abroad of a Cyprus resident company are exempt from tax
• There is no tax on Profits form the Sale of Securities

There is an extensive double tax treaties' network between Cyprus and more than 30 countries. The list continues to grow especially after the 16th April 2003 signing of the accession of Cyprus in the European Union, offering unique opportunities for international tax planning in a secured and efficient way.

For specific queries on tax law please contact us and we shall provide you with our prompt reply.