Paying Taxes in Cyprus

1. What is the corporate tax in Cyprus?

The standard corporate tax rate for companies that are registered in Cyprus is 10%, one of the lowest in Europe.

2. What is the VAT in Cyprus?

In Cyprus, the standard VAT rate is 18%, but there is a reduced rate of 8% and 5%. There are also some services and goods to which a zero VAT rate is applied. The minimum annual turnover that a company must reach in order to be mandatory to register for VAT is 15600 EUR (or 10251 EUR for acquisition of EU goods).

3. How can the VAT be refunded in Cyprus?

Only the following entities may request a VAT refund in Cyprus: the entities not registered for VAT, the entities with no residence in Cyprus, the entities which haven’t provide taxable supplied in Cyprus. Electronic filing for VAT refunds has been introduced, therefore one can claim a refund by submitting the application form an uploading the required invoices. The claim can be submitted to the Member State of Establishment since 1st January 2010. The deadline for filing an application in order to get a VAT refund is 30th September in the following year. The procedure will take as long as the authorities will check the eligibility for a refund.

The application for non-EU companies must be elaborated in Greek and signed by the managing director. It has to be submitted along with the invoices at the Minister of Finance.

4. What is the dividend tax in Cyprus?

The dividend tax rate in Cyprus is 20%, but there are exceptions for dividends paid to a resident company. In these cases, there is no dividend tax. Also if the conclusions of a avoidance treaty is applied, exemptions may be granted or minimized rates.

5. What are the taxes rates applied on other payments?

There are no withholding taxes on interests paid to nonresidents but in certain cases a 15% special contribution for defense rate is deducted at source for payments made to residents.

The film royalties are taxed with 5%, while the rest of the royalties on payments made on non-residents are taxed with 10%.

Technical service fees are taxed with 10%.

All the above may be reduced by the provisions of various double tax treaties concluded by Cyprus all over the years.

There is no branch remittance tax required in Cyprus.

6. Are there any incentives for foreign investors in Cyprus?

Cyprus is very attractive for foreign investments, since it has a well-developed infrastructure and well qualified labor force. In addition to these, the tax regime with a low corporate tax and reasonable VAT rate, together with the free zone area are great incentives for foreign investors who want to come to Cyprus. 

7. Why do I need a local accountant for my business in Cyprus?

It is recommended that you have a local accountant among your employees, since he or she will be faster in solving accounting issues that may appear. Besides, a local specialist with some experience in the field will meet the system’s requirements and will provide professional accounting services for your business in Cyprus.