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Tax Incentives for International Business Companies

The worldwide income of an international business company is taxable in Cyprus, provided that its management and control is from Cyprus. Please see related article and be advised on this very important topic.
Tax is calculated on net profits as adjusted for tax purposes every calendar year.

Corporation tax

International business companies are taxed at 10% on their worldwide profits, provided that the share holder is a non- resident. Please be advised on this topic.

No tax needs to be paid when an international business company makes payment for dividends, interest and royalties to overseas tax residents.

No tax is payable on dividends received under certain relaxed conditions. Interest received is taxable. Please be advised on this topic.

Capital Gains Tax and Inheritance Tax

No capital gains tax needs to be paid in Cyprus on the sale of assets which are property of an international business company, provided the property is outside Cyprus (eg. land).
There is no capital gains tax on the transfer, or sale of the shares of an international business company.
Also there is no inheritance tax.

Estate Duties

No estate duty is payable on property situated outside Cyprus.

VAT

Please be advised on this very important topic.

An international business company can register with the VAT authorities in Cyprus and claim VAT refunds on expenses and purchases made in Cyprus.
In certain circumstances registration might be desirable and therefore voluntary and in certain circustances it may be obligatory.

In many cases there is no VAT on the sales of International Business Companies but there are cases where VAT rules have to be followed and cases where VAT output has to be charged. There are also cases where there is an obligation to register with another member state.

Inland Revenue Requirements

All companies registered in Cyprus are required to submit a company income tax retrun and tax computations to the income tax service for every calendar year, based on audited financial statements which must be kept at the registered office of the company available on demand for inspection by the income tax authorities.

The corporation tax of 10% on net profits is payable:

By provisional self assessments during the accounting year in 3 equal instalments
By self assessment seven months after the end of the accounting year

Double Tax Treaties / Agreements for the avoidance of double taxation

A double tax treaty is an agreement between two countries, mentioned in the agreement as contracting states, so that income earned in country "A" by a resident in country "B" is not taxed in country "B" without any regards to the tax already paid in country "A". For example if a person from country "B" has income from country "A" and already paid 10% tax on this income in country "A", and the tax on this income in country "B" is 30%, he will pay only the difference to the tax authorities of country "B", in other words only 20%. This is the main aim of the double tax treaties, but for economic development reasons one may find out that the total taxes can be further reduced. The double tax treaties also include provisions for tax fraud, and exchange of information and in certain circumstances include provisions which exclude certain persons from the benefits of the agreement.

By the time of writing Cyprus has concluded double tax treaties with the following countries:

Armenia, Austria, Belarus, Bulgaria, Canada, China, Czech republic, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Kyrgyzstan, Malta, Moldova, Norway, Poland, Romania, Russia, Slovakia, South Africa, Syria, Sweden, Tajikistan, Thailand, Turkmenistan, Ukraine, United Kingdom, United States, Uzbekistan, Yugoslavia, Singapore, Mauritius, Lebanon and Seychelles.

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