The tax framework is being constantly transformed through the incorporation of international and EU rules and best practices promoting transparency and combatting tax avoidance, all amidst the ever-present effort to enhance tax collection and enforcement.
Main Characteristics and Tax Advantages of the Cyprus Tax System
- The taxable profits of all Cypriot companies are taxed at the rate of 12.5%, the lowest in Europe that is not offshore. With proper tax structuring, much lower effective tax rates can be achieved.
- A fully EU and OECD compliant tax system (Cyprus is a respectable EU country, non – tax heaven jurisdiction).
- No withholding of tax on dividends.
- No capital gains tax.
- Tax exemption for profits from the sale of securities;
- Freely transferable accounts of any currency may be kept either in Cyprus or anywhere abroad without any exchange control restrictions.
- No withholding tax on payment of dividends, interest and royalties to non-resident individuals or to non-resident corporate shareholders.
- No thin capitalization and controlled foreign corporation legislation provides efficient tax planning opportunities.
- No time restriction on carrying forward of tax losses.
- Group relief provisions are available.
- Capital gains realized on immovable property held outside Cyprus will be exempt from capital gains tax.
- Able to register for VAT purposes.
- No obligation (or right) for the Holding Company for VAT registration & compliance.
- Profits earned from a permanent establishment abroad are fully exempt from Cypriot tax, subject to certain conditions.
- No withholding tax on dividends received from EU subsidiaries.
Cyprus has concluded an impressive number of treaties for the avoidance of double taxation. Along with the low corporate tax rates and the special provisions for holding companies, the Cyprus companies provide an excellent vehicle for effective international tax planning. The identity of the owners can be kept secret, and nominee shareholders may be used.
Given the legal labyrinth that taxpayers often face internationally, a judicious cost-benefit analysis is imperative in deciding which issues are worthwhile to litigate and on which issues it is more viable to concede. With our experience and in-depth knowledge, we can assist in making this decision.
Our tax litigators cover all stages of the tax litigation process, including negotiations with appropriate authorities, the provision of opinions, dealing with compliance issues, and appearances before the District Court and the Supreme Court. We provide innovative advice and skilled litigation services when you are faced with tax related problems and obstacles.
With the support of our firms’ litigation team, we cover all the tax issues that any business is likely to face; from venture to start-up; financing; growth capital; bolt-ons and joint ventures; to the realisation and return of value - and all that entails for owners, investors, stakeholders and shareholders.
Through a seamless collaboration with our Advisory, Regulatory and Corporate Departments we advise clients on the selection of the right jurisdiction for a transaction, or the best strategy to reduce overall taxation and protect corporate or individual assets. Our clients range from individuals to large corporate companies, both locally and abroad.