Basis of taxation

Local and international business companies are considered to be identical subject to the new Income Tax Law. Therefore a Company is taxed according to its residency that is it is either to be incorporated in Cyprus or its control and management are carried out in Cyprus. Cyprus tax resident companies are taxed on their worldwide income. Non-resident companies are taxed in Cyprus only when their income is arising from a PE (Permanent Establishment) or from immovable property that is situated in Cyprus.

Personal Tax Rates

  • Non-taxable amount-€19,500
  • Between €19,501-28,000-Tax rate at 20%
  • Between €28,001-36,300-Tax rate at 25%
  • Over €36,301 tax rate at 30%

Defence Tax
Defence tax is levied only for Cyprus residents and Cyprus tax residents as follows:-

  • Dividends at 15%
  • Interest at 10%
  • Interest on Government Bonds at 3%
  • Rents at 3%
Capital Gain Tax

It is levied at the rate of 20% on gains arising from the disposal of immovable property. As a general rule, the gain is the difference between the sales price, less the original cost of the property, capital improvements and transaction costs of the sale. Generous exemptions also in place, e.g. net capital gains up to €85,430 earned from the disposal of your residence, not taxable. Any other exemption up to €17,086 gains.

Inheritance Tax

On the 1st January 2000, Law 74(1)/200) came into force. This law abolished all obligations to pay inheritance tax regardless of size of the estate. The fact that there is no Inheritance Tax to pay under Cyprus law is encouraging to invest in the island.