The tax rate in Cyprus, of 12.50%, on all worldwide income, is the lowest in Europe. With proper tax structuring this effective tax rate can be achieved for international companies.
A non Cyprus tax resident is taxed only on income earned in Cyprus.
No withholding taxes on payments of dividends, interest and most royalties to non-Cypriots.
Dividends paid to non Cyprus Resident shareholders are exempt from Cyprus Tax.
Dividends received in Cyprus are generally exempt from Cyprus Tax.
Profits from the trading of securities are tax exempt.
No Capital Gains tax, except in respect to real estate situated in Cyprus.
All expenses incurred for the earning of income, as well as annual capital allowances on fixed assets are allowed as a tax deduction.
Unilateral tax relief for foreign tax suffered is granted to all Cypriot companies.
Transfer of assets and liabilities between companies in the course of Mergers, Takeovers and Reorganizations can take place within groups without tax consequences. This also applies to transfer of activities or exchange of shares.
In most cases there is absence of foreign withholding tax on interest or royalty income (under Double Tax Treaty or EU Interest and Royalty Directive.)
There is an absence of "thin capitalization" rules or they are inapplicable in the case of "back to back" Financing.