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FAQs
1. How is a Cyprus company taxed?
A Cyprus tax-resident company is taxed on its worldwide income. Non-resident companies are taxed only on income sourced in Cyprus. A company is considered Cyprus-resident when its management and control are exercised from Cyprus.
2. Why is Cyprus considered a low-tax jurisdiction?
Cyprus offers a low corporate tax rate and an extensive network of 50+ double tax treaties, making it a leading international business hub.
Tax residency is based on management and control, not incorporation.
Non-resident companies are taxed only on Cyprus-sourced income but can still benefit from exemptions on foreign dividends, foreign permanent establishment income, and foreign losses.
3. How are losses treated?
Tax losses can be carried forward for 5 years.
Losses may also be group-relieved between Cyprus tax-resident companies and EU-resident group companies.
Worldwide losses can be offset against taxable income of the same year or carried forward.
4. Are Cyprus holding companies tax-efficient?
Yes. As an EU member state, Cyprus allows holding companies to receive tax-free dividends from EU subsidiaries under the Parent–Subsidiary Directive (subject to anti-avoidance rules).
Interest and royalties may also be received without withholding tax under the Interest & Royalties Directive.
Cyprus offers highly favourable regimes for IP structures, ship-owning, and ship-management companies.
5. How are reorganisations and mergers taxed?
Cyprus has fully adopted the EU Merger Directives.
Domestic and cross-border reorganisations—including mergers, divisions, and asset transfers—are exempt from all taxes, including:
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Capital Gains Tax
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VAT
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Stamp Duty
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Land Transfer Fees
6. What are the main benefits of using a Cyprus company?
Key advantages include:
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No general Controlled Foreign Corporation (CFC) rules
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Tax-deductible interest paid to non-resident group companies
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No thin capitalisation rules
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No tax on gains from the sale of securities
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No tax on most foreign dividend income
Additional benefits may apply depending on your business structure.
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