International Tax Planning Benefits in Cyprus | Finance Journal And ...

Jul 15

Cyprus is a popular tourist destination because of its excellent beaches and rich culture. The Kataklysmos even and monthly festivities have made it one of the top destinations in the world. However, there are more reasons why many have kept a watchful eye on this country. It has been considered the ideal place for investment because of the various tax benefits it provides.

Corporate Tax Rate
Cyprus is proud to hold the position as one the few countries that offer the lowest corporate income tax rates in all of Europe. With a ten percent (10%) corporate tax rate, it is truly a deal worth grabbing by any businessperson.

Interest Income
Understanding of the interest income principles of Cyprus will also give you more reasons to smile.

a. Passive interest income or revenues that are gained not directly from the registered business are exempted by 50% of its corporate income tax. The remaining 50% will be taxed but only at a rate of 10%. It is an unbelievable deal for a company that was used to paying bigger taxes for their efforts in expanding the company.
b. Gross Passive Interest is considered part of the Special Contribution Defense (SCD) and is taxed with a rate of only 10%.
c. Active Interest Income or the revenue gained from direct trade performed by the company is taxed at a regular rate of 10%.

Dividend Taxation
Dividends are categorized and taxed in the following manner:
a. Inter Company Dividends or the dividend paid to another Cyprus tax resident company is completely exempted from tax.
b. Dividends receive from a company formed in a foreign company are also exempted from tax given the fact that they do not directly engage with 50% of the Cyprus company?s direct revenues and the tax burden imposed by the foreign country is not substantially lower than that which is implemented by Cyprus.

Withholding Taxes
Another incredible feature Cyprus provides is the non-existence of withholding tax to non-tax residents in reference to their dividends and interests.

Capital Gains Tax
Capital gained through sale of immovable properties located in Cyprus as well as sale of company shares, outside that of the quoted shares are taxed at a rate of 20%. On the other side, capital gained through sale of properties outside of Cyprus is completely exempt from tax.

Aside from these impressive tax benefits given by the company, it also holds several double tax treaties with prominent countries in the world that will give you favorable trading conditions. However, you could only reap the benefits of all of these advantages if you successfully have your company registered. The process is not simple and requires the intervention of professional and licensed individuals. You are recommended to seek the assistance of a certified and licensed Cyprus lawyer to guide you with the necessary documents that needs to be submitted; otherwise, the road to registering your company based on Cyprus laws may take longer than what you have expected.

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Source: http://www.dissmeyer.com/international-tax-planning-benefits-in-cyprus.html

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