When opening a company in Cyprus all investors pay special attention to taxation regulations. In Cyprus both individuals and companies are liable to income tax according to the Income Tax Law No. 118 issued in 2002. The income tax in Cyprus is paid for trade income, salaried services, pensions, interest, dividends, royalties and other incomes.
Income Tax in Cyprus
The income tax is applied to residents of Cyprus. A person is considered a resident if he or she is present on Cypriot territory for a period of time exceeding 183 days, therefore will be subject to the income tax from sources within Cyprus or abroad. The Cypriot taxable income varies from 0% to 35 % depending on the income.
For pensions earned for services rendered abroad the income tax is set at 5 %.
VAT in Cyprus
In Cyprus, the VAT (value-added taxation) is applied on any service or product, as well as other types of transactions.
The VAT rates
in this country are as follows:
• A standard rate of 19%: is applied to product and service supplies which are not subject to the zero VAT rate, the reduced rate or are not exempt;
• The first reduced rate of 9%: it applies to:
o Catering and restaurant services;
o Accommodation in tourist establishments or hotels, as well as any other similar establishments;
o Passenger transportation and their luggage inside the country utilizing urban, rural and intercity taxis and buses;
o Travel of passengers in inland waters, as well as their luggage.
• The second reduced rate of 5%: applies to:
o The foodstuff supply;
o The supply of beverages, except for alcoholic drinks;
o Certain pharmaceutical product and vaccines supplies;
o Animal supply for the food preparation;
o Newspapers, books and magazines;
Other types of services and products. Our lawyers in Cyprus
can offer more information on what they may consist of.
• The zero rate (0%): is applied to:
o The product exports;
o Modification, supply, repair, chartering, maintenance and employment of sea vessels, in certain conditions;
o Modification, supply, repair, chartering, maintenance and employment of aircrafts, in certain terms;
o Passenger transportation from Cyprus to a foreign country;
o Gold supplies to the Central Bank of Cyprus, and others.
Corporate tax in Cyprus
The corporate taxation in Cyprus is applied on all resident companies on their income gained or derived from all sources from inside the country and from abroad.
The corporate tax in Cyprus for all business organizations is 12.5%.
The defense tax in Cyprus
The Cypriot defense tax is a special contribution people have to pay for unearned income sources such as dividends, bank interests, incomes from rents. The percent for this tax varies between 17 and 30 percent depending on the source of income. The defense tax is imposed according to the Special Contribution for the Defense of the Republic Law No. 117, issued in 2002.
The capital gains tax in Cyprus (CGT)
The capital gains tax in Cyprus is imposed on earnings on immovable properties, shares on companies with immovable properties included. This rate is set at 20 percent. The tax is imposed according to the Capital Gains Tax Laws 1980-2002. For more information our Cypriot lawyers will remain at your disposal.
Immovable Property Tax in Cyprus
The immovable property tax in Cyprus has been abolished starting with 1 January 2017 for the 2017 tax year, as well as the following year.
Our law firm in Cyprus will provide you with the best legal advice regarding all Cypriot taxes. Please contact us for further information.