Withholding Taxes in CyprusUpdated on Thursday 16th March 2017
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Foreign businessmen who want to perform business activities in Cyprus are liable for taxation purposes on several types of taxes. Companies in Cyprus are required to pay withholding taxes for their financial activities, but it is important to know that investors can be exempted from paying the aforementioned taxes, provided that certain conditions are met. Our Cypriot lawyers can offer legal advice on the withholding taxes available here.
Cypriot withholding taxes
The taxation system applicable in Cyprus states that the withholding taxes available here are not imposed for the following:
This is applicable in the situation in which such payments refer to transfers to non-residents in Cyprus.
In the situation in which royalties are deriving from Cyprus, the taxation legislation stipulates that the withholding tax will be imposed at the standard rate of 10%. However, investors performing activities in the film industry will be imposed with a withholding tax on royalties applicable at the rate of 5%.
An important aspect related to the payment of withholding taxes on royalties refers to the fact that the tax can be eliminated under the stipulations of the double taxation treaties signed by Cyprus.
The regulation is also available under the European Union’s (EU) Interest and Royalty Directive, on which our lawyers in Cyprus can offer more legal information.
Other types of withholding taxes in Cyprus
Non-residents performing business activities in Cyprus will be imposed with a rate of 10% on technical services. However, the investors can be exempted from paying this tax if their services are provided through a permanent establishment.
Companies operating in the field of public entertainment (which can refer to theatres or sports club) will be imposed with a 10% withholding tax rate on the gross income.
The activities carried out by non-residents in Cyprus related to the exploitation and extraction of continental shelf will also be required to pay the withholding tax applicable at the rate of 5%, as long as the respective activity does not derive from a permanent establishment.
Businessmen are invited to contact our law firm in Cyprus for more details on the Cypriot taxation system available in the case of withholding taxes.