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Corporate Tax in Cyprus

 

Joining the EU in 2004, Cyprus became one of the most attractive business destinations in Europe.

The tax rate for Cypriot companies is 12.5%, which is one of Europe’s lowest rates. This rate is applied on all profits generated worldwide from a Cypriot company, however, if the company is operated solely as a “Holding Company” (i.e., to hold shares of other companies) it will not be taxed. Furthermore, a uniform 10% corporate tax rate is now levied on all “resident companies”. This new taxation status is residence-based, thus a company is only “resident in the Republic” if its business is centrally managed and controlled in Cyprus. Under these new rules, a resident corporation is taxable on its worldwide income accrued or arising from sources both within and outside Cyprus if it is managed and controlled from Cyprus. Accounting and auditing of a Cyprus Private Company is compulsory every year. To obtain a Cypriot tax identification number, it is required that most directors reside in Cyprus and SFM can provide local directors through its nominee director service.

The following income is not taxable:

  • Dividends.
  • Profits from the sale of listed securities.
  • Interests not from ordinary activities or not directly related to the key activity of the company.

Possible deductions:

  • Donations to charity.
  • Representation expenses.
  • All expenses related to the maintenance of a building.
  • Contributions to employers’ social insurance.

Expenses cannot be deducted from:

  • Maintenance of motor vehicles.
  • Business taxes.

When does the tax return have to be submitted?

  • For a company registered prior to the 1st of July (e.g. 22/04/2010), the accounts must be presented to the tax authority before the 31st of December of the following year (31/12/2011) for the preceding year (2010).
  • If the company was registered after the 1st of July (e.g. 30/09/2010), the accounts must be submitted to the tax authority before the 31st of December two years after (31/12/2012) for the preceding years (2010 and 2011).

If you have questions regarding the Cyprus tax system please contact us.

Cyprus Accounting Price Sheet

Transaction/Entry (1) Accounting
(no VAT/VIES registered)
per annum
(2) Audit fees
per annum
TOTAL
1 - 10 250 € 750 € 1000 €
11 - 50 1000 € 1500 € 2500 €
51 - 100 1250 € 1750 € 3000 €
101 - 200 1750 € 2500 € 4250 €
201 - 350 2200 € 3000 € 5200 €
+ 350 Upon request Upon request Upon request
Dormant Account 250 € 750 € 1000 €
Non-Trading Account* 250 € 750 € 1000 €

Bank charges will not be counted as Transactions on bank statements.
* No movement since prior year, which had trading or activity.

1. Accounting & VAT/VIES fees include:

  • Posting transactions into accounting software.
  • Filing of accounting and management documents.

VAT and VIES submission

  • Preparation and submission of VAT returns (50 € x 4).
  • Preparation and submission of VIES returns (50 € x 12).

2. Audit and related fees include:

  • Preparation of Audited Financial Statements in English.
  • Preparation of Corporation Tax Return – IR4.
  • Preparation of Employer’s Return – IR7.
  • Preparation of Declaration for the exemption for deductions of defence contribution on dividends – IR42A.
  • Preparation of questionnaire for ascertaining whether the conditions relating to the term “Non Cyprus Resident” is applicable to the beneficiary dividends from companies – IR42AQ.
  • Prepare company minutes for dividends distribution.
  • Prepare shareholder’s dividend certificate.