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Corporate tax in Cyprus

Joining the EU in 2004 placed Cyprus as one of the most attractive business destinations in Europe.
The tax rate for Cypriot companies is 10%, which is one of the lowest rates. This rate is applied on all profits generated worldwide from the Cypriot company. If the company is operated solely as a “holding Company” (to hold shares of other companies); it will not be taxed.
Accounting and auditing is compulsory every year.
To obtain a Cypriot tax identification number, it is required that most directors reside in Cyprus. SFM may provide local directors, through its nominee director service.

The following income is not taxable:

• Dividends.
• Profits from the sale of listed securities.
• Interests not from ordinary activities or not directly related to the key activity of the company.

Possible deductions:

• Donations to charity
• Representation expenses
• All expenses related to the maintenance of a building
• Contributions to employers’ social insurance

Expenses cannot be deducted from:

• maintenance of motor vehicles
• business taxes

When does the tax return have to be submitted?

• For a company registered prior to the 1st of July (e.g. 22/04/2010), the accounts must be presented to the tax authority before the 31st of December of the following year (31/12/2011) for the preceding year (2010).
• If the company was registered after the 1st of July (e.g. 30/09/2010), the accounts must be submitted to the tax authority before the 31st of December two years after (31/12/2012) for the preceding years (2010 and 2011).

If you have questions regarding the Cyprus tax system contact us.