Tax system characteristics

The main characteristics of the Cyprus tax system are outlined below:

• Low corporate income tax rate of 12.5%
• EU & OECD Compliant
• Access to EU directives (e.g. Parent-Subsidiary)
• Extensive double tax treaty network with over 60 countries
• Dividend participation exemption (subject to conditions)
• Exemption from tax on gains from the disposal of securities (e.g. shares, bonds)
• Notional interest deduction on equity applies to all taxpayers and all business activities
• No withholding taxes on interest and dividends
• No taxation of capital gains (except for disposal of real estate in Cyprus or shares of company holding real estate in Cyprus)
• No succession taxes
• No Controlled Foreign Company (CFC) rules
• Tax neutrality on foreign exchange differences unless they arise from trading in currencies or currency derivatives
• Foreign tax relief on income subject to both Cypriot and overseas tax
• Exemption on profits of foreign permanent establishments (subject toc onditions)
• Company reorganisation rules based on the EU Mergers Directive allow for tax-neutral group restructuring 
• Attractive Intellectual Property regime in line with “modified nexus approach” (OECD Action 5)
• No exit tax rules 
• 50% exemption on employment income exceeding €100,000 per annum for non-residents taking up employment in Cyprus
• No tax on dividends, interest and rental income of non-domiciled individuals