The strategic location of Cyprus, on the crossroads of three continents, has played an important role in establishing the island as a significant business hub, that provides a secure gateway for European enterprises into the Middle East and China.

As a member of the European Union and Eurozone since 2008, Cyprus offers business opportunities for investments into Europe.

With its advanced technical infrastructure, skilled human talent and a robust legal and regulatory framework, Cyprus has become a regional quality business and financial center.

Cyprus tax system, fully compliant with OECD and EU requirements, offers a wide range of tax advantages, deductions and exemptions. With a broad double tax treaty network and one of the lowest corporation tax rates in the EU, Cyprus is considered as having one of the most attractive and competitive tax regime worldwide.

In summary, the main characteristics of the tax system in Cyprus, are the following:

• Low corporate income tax rate of 12.5%
• 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 to conditions)
• 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