Taxation of a Cyprus Company
Cyprus is considered a primary international business center amongst 50 countries, offering an ideal entrepreneurial environment and supporting facilities.
The private limited company called International Business Company (IBC) is the most common type of company used by non-residents for international business activities.
The following categories of IBC’s are currently operating on the island:
Royalty, advertising & marketing, trusts, architecture & engineering holding, construction & drilling, invoicing, re-invoicing, magazines & newspapers, employment agency, real-estate & land development, leasing, shipping & ship-management, management, trading, captive insurance companies, sales, headquarters, foreign sales corporations (F.S.C’s)
International Business Companies may be also formed for the purpose of management and control of any other company.
Taxation of a Cyprus Company | Advantages of an IBC
- Corporation tax of 12.5% on net profits (one of the lowest in the EU)
- Existence of double taxation treaties with over 40 countries
- Dividends have no withholding tax (unless the recipient is a Cyprus tax resident)
- No withholding tax on interest
- Profit from the disposal of shares, securities, etc. are tax exempt
- The annual capital allowance on fixed assets and all expenses incurred for the earning of income (with some restrictions and exceptions) are allowed as deductions
- No capital gains tax (except the disposal of immovable property in Cyprus)
- On the inheritance of shares of an IBC, no estate duty is payable
- No stamp duty payable on documents referring to ordinary daily activities
- For companies and their foreign employees, no exchange control regulations apply
- Expatriate employees, receiving their salary through Cyprus, do not pay income tax if working abroad.