Your Guide to Tax Benefits and Real Estate Opportunities in Cyprus

Tax Benefits for Individuals

Attractive Personal Income Tax Rates:

• Tax-Free Income: The first €19,500 of annual income is completely tax-free.
• Progressive Tax Rates: Subsequent income is taxed at progressive rates ranging from 20% to 35%, with the highest rate applying to income exceeding €60,000.
• Higher Earnings Retention: This structure allows individuals to retain more of their earnings, contributing to a higher quality of life.

Tax Residency:

• 183 Days Rule: Spend more than 183 days in Cyprus to be declared a tax resident.
• 60 Days Rule: Alternatively, spend at least 60 days in Cyprus and meet other conditions to be a tax resident.

Capital Gains Tax Exemptions:

• Real Estate and Assets: Capital gains from the sale of certain assets, such as real estate located outside of Cyprus, are generally exempt from capital gains tax, encouraging investment and allowing individuals to generate returns on their assets without incurring additional tax burdens.

Double Tax Treaties:

• Extensive Network: Cyprus has treaties with over 65 countries, reducing rates of withholding tax on cross-border income and facilitating international business and investment activities.

Estate and Inheritance Tax Advantages:

• No Inheritance Tax: Estate duty has been abolished since 2000, allowing wealth to be passed on to future generations without excessive tax burdens.

Gift Tax Exemption:

• No Gift Tax: Cyprus has abolished gift tax, ensuring that gifts can be given without any tax implications, preserving wealth across generations.

Tax Benefits for Businesses

Low Corporate Tax Rates:

• Competitive Rate: Cyprus boasts one of the lowest corporate tax rates in the EU at just 12.5%, attracting businesses seeking to optimize their tax obligations while operating within the EU market.

Taxation of Dividends:

• Exempt Dividends: Exemption on dividends received from subsidiary companies, provided certain conditions are met, allows efficient repatriation of profits to Cyprus parent companies without further taxation.

Royalty Income Exemptions:

• IP Income: Royalty income from intellectual property like patents and trademarks is exempt from taxation, encouraging investment in research and development and fostering innovation within the country.

Intellectual Property Regime:

• IP Tax Benefits: 80% exemption on net income generated from qualifying IP assets makes Cyprus an attractive destination for businesses involved in creating, holding, or maximizing IP.

Double Tax Treaties:

• Business-Friendly Treaties: Similar benefits for businesses as individuals, eliminating double taxation and facilitating international trade and investment activities.

Loss Utilization and Carry Forward:

• Loss Offset: Generous provisions for the utilization and carry forward of losses allow businesses to offset losses against future profits, minimizing tax liabilities during challenging periods.

Capital Gains Tax Incentives:

• Tax Exemptions: Capital gains from the disposal of shares and the sale of immovable property located outside Cyprus are generally exempt from taxation, incentivizing businesses to engage in investment activities and expand their operations abroad.