Cyprus Taxation Attracts International Businesses

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Cyprus has one of the most attractive tax jurisdictions in the world, offering a unique and favourable tax system. With a privileged location to the EMA market (Europe, Middle East and Africa) Cyprus has become the world’s bridge between the East, West, North and South, this fact is not a secret in the world of international business.

A recent KPMG survey of more than 400 tax professionals across Europe confirmed that Cyprus is rated as having the most attractive tax regime, scoring 90%. A major factor in this result is due to Cyprus being a member of the EU – ensuring free movement of goods, services, capital and citizens being able to conduct business with no legal restrictions.

However, the reasons continue with the following:

  • Corporate Income Tax rate of 12.5% and standard VAT rate of 19%.
  • Double Tax Treaties network with 64 countries.

    Tax exemption from:

    • Divided income received.
    • Profits of foreign branches of Cypriot companies.
    • Profits from the disposal of securities.
    • No tax on capital profits from the sale of property outside of Cyprus.
    • Profits from the use of intellectual property rights (80% exempt).
    • No withholding tax on:

      • Dividends paid to non-resident shareholders.
      • Interest and most royalties paid from Cyprus.
  • Cyprus practices internationally agreed tax standards.
  • Cyprus tax legislation is stable and straightforward.
  • Relations between businesses and tax authorities are strong ensuring efficient taxation.

Cyprus not only offers a favourable tax system but what many business owners have recognised as a favourable work-life balance. A surplus of blue flag beaches, restaurants, bars and entertainment, Cyprus is a well-rounded option for international business owners. Due to Cyprus attracting many nationalities a variety of employees with varying skills and languages are abundant on the island thus meeting the unique needs of any business. A rise in international business has been noted in the following industries:

Energy Industry Grown in the Past 10 Years

Cyprus hydrocarbons discoveries have gained the attention of many global international energy giants such as ENI, Kogas, Royal Dutch Shell, ExxonMobil and Total. Cyprus has also been improving corporation with Egypt, Israel, Lebanon, Greece, Jordan and Italy, becoming a convenient regional energy hub in the Mediterranean. New opportunities are arising in a range of energy investments paving the way for international business. Including gas, liberalisation of the electricity market, renewables and the EuroAsia Interconnector project to connect Cyprus, Israel and Greece via submarine electricity cable and a related one to connect Egypt.

Banking Sector

The banking sector has seen new comers such as Swedish Ancoria Bank with an initial capital of €50 million. Acquisitions and mergers are also increasing with strategic new investment entering the sector from the sale of the majority stake of the Cyprus subsidiary of Greece’s largest lender Piraeus Bank, to Lebanese Holding M. Sehnaoui SAL. This sale has injected €40 million into the bank, now named AstroBank. The sector is seeing more activity, providing opportunities for new players to enter the market and providing investment opportunities that can be tapped into by international banks.

Continual Strong Growth in the Shipping Industry

The shipping industry is one of Cyprus most successful export services. The island is considered one of the top global hubs for ship owning and ship management services and is home to some of the world’s biggest names in shipping. Cyprus is also the largest third-party ship management centre in Europe and the largest crew management centre in the world. Natural gas finds within Cyprus and cooperation with neighbouring countries to exploit it are also increasing expectations for the island’s already flourishing shipping sector.

Real Estate Increase from the Scheme for Naturalization of Investors in Cyprus by Exception

With room for big and small international business to take advantage of the favourable tax system, work-life balance and economy, businesses have also attracted international workers from around the globe. Those who come to Cyprus have the opportunity to partake in the scheme for naturalization of investors in Cyprus by exception. Essentially this allows individuals who invest a certain amount of money in property to become a citizen of Cyprus – an EU Country.

This increase has raised the demand for property that real estate developers strive to meet. As Luxury new projects continue to be built all over the island providing homes for many local and international workers. The demand has also been noticed by international companies who also develop real estate projects on the island.

Cyprus is truly a diverse island not only drawing international business with a favourable tax system but providing the bonus of a dynamic workforce, great location and ideal lifestyle that all contribute to the flourishing economy.


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Date published: December 4, 2018