1. The significant tax advantages offered by Cyprus to international companies with a Cyprus tax-resident base include:

• double tax treaties with over 65 countries
• favourable tax regime, including corporation tax of 12,5%, one of the lowest rates in the EU
• nil withholding taxes on dividends and on interest payable to non-Cyprus tax residents
• exemption from tax in most cases on dividends received
• exemption from tax of profits from operations of permanent establishments situated abroad exemption from tax of profits on disposal of shares, bonds and other securities (except in the case where the company issuing the shares owns immovable property directly or indirectly that is situated in Cyprus)
• exemption from capital gains tax on gains arising from the disposal of immovable property situated abroad.

2. International companies which choose to have a permanent establishment in Cyprus can enjoy additional benefits such as:

• strategic geographic location
• availability of free zone area
• excellent communications infrastructure
• efficient legal, accounting and banking services
• liberal foreign direct investment regime
• highly qualified, well-educated and multilingual labour force
• freedom of movement of foreign currency
• one of the lowest crime rates in Europe.

1. Valued Added Tax (VAT)19%
2. Company Tax: 12.5%

3. Special defensive contribution (on non-exempt dividend income, passive interest income, and rental income earned by Cyprus tax resident companies and permanent establishments of non-Cyprus tax resident companies):

• 17% on dividends
• 30% on interest income
• 3% on rental income

4. Tonnage tax (for shipping companies): Variable amount based on the net tonnage (sliding scale fees from EUR 7.30 to EUR 36.50)

The rates applicable to ship managers are 25% of those applied for ship owners and charterers.

5. Withholding Taxes:

• Dividends: 0% (non-residents; resident corporations)
• Interest: 0% (non-residents)/30% (for residents)
• Royalties: 0 (residents; non-residents for the use of rights outside Cyprus)
• 5% (film royalties)
• Social Security Contributions Paid By Employers: 8.3% of covered earnings

For Cyprus tax purposes, “Cyprus tax resident” means an individual who, in the year of assessment (calendar year), stays in the Republic of Cyprus for a period or periods exceeding in aggregate 183 days.

As from 1st January 2017 the “60 days rule” for tax residency has been introduced. An individual will be considered as a tax resident of Cyprus if he/she satisfies either the existing “183 days rule” or the new “60 days rule” for the tax year.

The “60 days rule” applies to individuals who in the relevant tax year:

• do not reside in any other single state for a period exceeding 183 days in aggregate
• are not tax resident in any other state
• reside in Cyprus for at least 60 days
• have other defined Cyprus