Accounting and tax
Corporate income tax considerations
- The standard corporate income tax rate is levied at a flat rate of 12.5% on all net income in Cyprus. To enjoy this tax rate, a local company must be tax resident in Cyprus and have its management and control exerted in Cyprus;
- Branches of foreign companies registered in Cyprus are subject to taxation at the standard corporate income tax rate of 12.5%. Branches are however exempt from payment of branch remittance tax in Cyprus;
- The VAT on provision of goods and services in Cyprus is levied at a standard rate of 19%, with a reduced rate of 0%, 5% and 9% depending on the nature of business activity of the company or the products provided;
- The company registration threshold for VAT in Cyprus is €15,600, and for intra-community acquisitions of goods the amount is €10,251. VAT returns must be submitted quarterly by the 10th of the second month following the filing quarter;
- Interest paid to a resident is subject to withholding tax at the rate of 30%. Royalties paid to a non-resident for the use of rights in Cyprus are subject to a withholding tax of 5% on film royalties and 10% on all other royalties.
Tax exemptions and other taxes applicable in Cyprus
- Capital gains derived from the sale of immovable property and from the disposal of shares in an unlisted company that owns immovable property in Cyprus is taxed at 20%;
- Employers must pay social security contributions on behalf of their employees at the rate of 9.5% of their employee gross remuneration and 2% of the total employee earnings to the social cohesion fund;
- Capital gains derived from the sale of shares of Cyprus companies are tax exempt; dividends paid to both non-resident and resident companies are additionally not subject to withholding tax;
- Real property tax is imposed annually on the market value of immovable property at rates ranging from 0.6% to 1.9%. Transfer of immovable property is taxed at rates ranging from 3% to 8% of the market value of the property;
- Stamp duty is payable on property situated in Cyprus. Stamp duty on commercial contracts is levied at varying rates with a ceiling of €20,000 per document.
Tax administration and other legal considerations
- The Cyprus tax year is the calendar year and all tax resident companies must electronically file their tax returns within the first three months following the end of the fiscal year;
- Companies with late submission stand to be subject to an administrative penalty of up to €200 with an additional interest for late filing levied at the rate of 4.75% per annum;
- Tax losses in Cyprus can be carried forward for up to 5 years following fiscal year and may be offset against future taxable profits;
- Cyprus has concluded over 55 income tax treaties with 47 countries including Denmark, Belgium, Germany, Kuwait, Ireland, China, Singapore and Sweden.
Healy Consultants Group services
- Healy Consultants Compliance Department will assist our Clients with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparation of financial accounting records and iv) preparing forecasts, budget and sensitivity analysis;
- It is important our Clients are aware of their personal and corporate tax obligations in their country of residence and domicile; and they will fulfil those obligations annually. Let us know if you need Healy Consultants’ help to clarify your annual reporting obligations.
Legal and compliance
- According to the Companies Act, a Cyprus company must have at least one director and one shareholder of any nationality;
- The Memorandum of Association is a contract between the shareholders and comprises i) company activities ii) registered office address iii) shareholder and director details iv) share capital v) profit distribution method;
- Each time a change occurs in the particulars of the company or to its officers, the change must be lodged with the Cyprus companies registry;
- Each company must have a registered office in Cyprus. Healy Consultants can provide this for monthly fee of US$1,100;
- The process of deregistering a company is dictated by the Government. This process will take a minimum of 6 months. Healy Consultants fee to project manage company de-registration is US$1,450. During this 6 months period it is mandatory to maintain a resident company secretary and a legal registered office.