- According to Forbes Magazine, Cyprus offers the lowest burden of taxation in the entire EU
- A company resident in Cyprus (management & control is in Cyprus) is subject to 10% corporate tax on its worldwide income
- Income arising from ship management activities is subject to a special rate of 4,25% or tonnage tax
- No tax on gains from: (a) sale of securities (such as founder shares, public shares, bonds, debentures, etc), (b) sale of real estate located outside Cyprus provided it is of a capital nature, and (c) surpluses from an overseas company liquidation
- There are no specific rules on transfer pricing
- The general rule is that all transactions should be at an arms length basis
- There are no thin capitalisation rules
- Capital can be supplied primarily by loans from shareholders rather than stock investment. The main tax advantage of this is that the distributions of interest on the debt are fully deductible from corporate income tax whereas dividend distributions on stock are non-deductible.
- Unilateral tax credit relief is given on taxes suffered abroad
- Foreign tax on income can in many circumstances be credited against Cyprus tax payable over such income or gains
- Loss compensation
- Companies may carry forward corporate tax losses, without adjustment for inflation, indefinitely. Loss carry backs are not allowed.
- Transfer of losses within groups of companies
- Group loss relief in respect of the loss for the year is allowed between resident group companies that meet certain criteria
- No taxes on reorganisations based on the EU Merger Directive (includes mergers, divisions, transfer of assets, exchange of shares)
- No taxes arise on the transfer of business or assets or the exchange of shares
|
|
