Taxation is one of the many advantages of living in Cyprus. There is a high income tax threshold, special rates for foreign pensions and interest can be tax free for 17 years. There is no capital gains tax on shares and no local inheritance tax.
The main features in the provisions of the Cyprus tax legislation that determine the attractiveness of Cyprus for optimization of international tax structures are:
• One of the lowest corporate tax in Europe, 12,5%
• No withholding tax on interest paid to non-tax resident shareholders
• No withholding tax on dividends paid to non-tax resident shareholders
• Cyprus maintains an extensive network of advantageous double tax treaties with over 50 countries that allows a Cyprus Holding Company on payments of dividends, interests and royalties to suffer a tax burden at destination jurisdiction from 0% a maximum of 15%
• No capital gains tax is applied on profits arising from the sale of securities
• No capital gains (goodwill) or income tax is applied after the liquidation of the company
• No thin capitalization rules
• It can be incorporated and maintained with very low costs
• The holding company is considered a tax resident and enjoys the attractive tax legislation, when the control and the management takes place in Cyprus
• Meaning the company should meet some criteria to prove that the base is in Cyprus
• When the company is considered a tax resident, then is taxed according to the tax rates on the world-wide income
