ul. J. Dąbrowskiego 70
tel: +48 22 854 01 77
fax: +48 22 854 01 80
Like in other European countries, there are direct and indirect taxes in Cyprus.
Direct taxes include:
- income tax;
- corporate tax;
- estate duty;
- immovable property tax;
- capital gains tax;
- stamp duties.
The tax year in Cyprus is identical with the calendar year. The tax must be settled until 1 August of the following year.
Advance income tax payments are payable in three instalments on designated dates: 1 August, 30 September, 31 December.
I. Corporate income tax – CIT
- Cyprus Tax Resident (CTR), as defined by the tax law, are legal persons (companies) having management and control on the territory of Cyprus
- Companies meeting CTR criteria pay CIT in Cyprus on all their income, regardless of the place of achieving it
- Companies which are not CRP, but which have permanent establishment in Cyprus, pay CIT only for the part of the income which is generated from Cyprus.
- Companies which:
-do not have management in Cyprus (in spite of the fact that they are registered in Cyprus) and
-are managed and controlled from Cyprus but do not have registered office there and do not run business operations there are not CIT payers in Cyprus.
- CIT rate for all income of the companies subject to this tax amounts to 12,5%
II. Personal taxes (PIT)
- For tax purposes, persons staying in Cyprus in one tax year for more than 183 days shall be deemed as Cypriot residents.
- Residents pay personal taxes on all their income (country and abroad).
- Non-residents pay taxes only on income generated in Cyprus
- Progressive personal income tax rate is binding in Cyprus:
– income from0 – 19.500 EUR annually–without tax
– from 19.501 to 28.000 EUR – 20%
– from 28.001 to 36.300 EUR – 25%
– from 36.301 to 60.000 EUR – 30%
– more than 60.001 – 35%
Married persons settle personal tax separately.
III. Value Added Tax (VAT)
Principles of functioning of VAT are similar as in Poland.
Basic VAT rate in Cyprus amounts to 19%
The reduced rate s are 9% and 5%
More information can be found at the website of the Cypriot Ministry of Finance – VAT Service
IV. Double taxation avoidance agreements
The network of double taxation avoidance agreements which at the present time Cyprus has with 41 countries worldwide constitutes a serious argument for locating investments here and running business operations from here. The provisions of these agreements create particularly attractive environment for tax engineering using advantages of Cypriot holding company. New agreements with other countries are still negotiated or await ratification. List of the countries with which Cyprus signed double taxation avoidance agreements and the texts of the agreements.