2023 Doing Business in Cyprus (India Edition)

DOING BUSINESS C YPRUS
86
INDIA EDITION
KEY FEATURES OF THE CYPRUS TAX SYSTEM
Simple, transparent and EU harmonised tax system
following recommended OECD practices.
Enjoys the tax benefits of EU Directives (Parent – Subsidiary
Directive, Merger Directive and Interest and Royalties Directive).
Extensive Tax Treaty network with 68 countries.
A corporate income tax rate of 12.5%, one of the lowest within the
EU with possibility to enjoy a much lower effective tax rate.
Availability of a Notional Interest Deduction for
companies receiving new equity funding.
The tax deduction can reach up to 80% of the taxable
income generated by the new equity.
IP Box regime based on the nexus approach which allows 80% deemed
deduction on qualifying profits from the business use of qualifying IP.
Increased deduction of 20% on the actual expenditure incurred for scientific
research as well as research and development, subject to conditions.
Attractive Tonnage Tax (TT) regime for ship owners, managers and charterers.
Attractive tax jurisdiction for funds and attractive
tax regime for fund managers.
Capital gains are exempt from tax (except for capital gains arising
from the disposal of immovable property located in Cyprus).
Profits of a foreign Permanent Establishment exempt from tax.
Gains from trading in securities (shares, bonds and certain
other financial instruments) are exempt from tax.
Unilateral credit relief for foreign taxes.
No withholding tax on dividend, interest or royalty payments (for
use of royalties outside of Cyprus) made abroad, unless these are
made to EU blacklisted jurisdictions (relevant conditions apply).
No taxes on entry and on qualifying reorganisations.
Carry forward of tax losses for five years.
Tax incentives for expatriate employees taking up
employment in Cyprus (20%/50% exemption).
Dividend income and interest income are exempt from SDC for non-domiciled
individuals taking up tax residency in Cyprus (eligibility for 17 years).
Possibility to obtain Cyprus tax residency by spending
only 60 days in Cyprus (subject to conditions).
No inheritance tax.
No immovable property tax.