Taxes in Cyprus

When opening a company in Cyprus all investors must pay special attention to taxation regulations.

Income Tax

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.

A person is considered a resident if he or she is present in Cyprus for a period time exceeding 183 days, therefore will be subject to the income tax from sources within Cyprus.

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%.

Corporate Tax

The corporate tax in Cyprus for all business organizations is 12.5%

The corporate taxation in Cyprus is applied on all resident companies on their income derived from all sources from inside the country and from abroad.

In Cyprus, the VAT (value-added taxation) is applied on any service or product, as well as other types of transactions.

The corporate tax in Cyprus for all business organizations is 12.5%

VAT

The corporate taxation in Cyprus is applied on all resident companies on their income derived from all sources from inside the country and from abroad.

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:

• Catering / restaurant services
• Accommodation in tourist establishments
• Passenger transportation inside the country
• Travel of passengers in inland waters

The second reduced rate of 5%: applies to:

• The foodstuff supplies
• The supply of beverages, except for alcoholic drinks
• Certain pharmaceutical product and vaccines supplies
• Animal supply for the food preparation
• Newspapers / magazines
• Other types of services and products

The zero rate (0%): is applied to:

• The product exports
• Modification, supply, repair, chartering, maintenance and employment of sea vessels, in certain conditions
• Modification, supply, repair, chartering, maintenance and employment of aircraft's, in certain terms
• Gold supplies to the Central Bank of Cyprus, and others