Cyprus stands out as a premier destination for international businesses and entrepreneurs seeking a tax-friendly environment. Its strategic location, EU membership, and comprehensive tax benefits make it a hub for global operations. Below, we explore the key tax incentives that position Cyprus as a top choice for companies and individuals alike.
Non-Domicile Status: Tax-Free Global Income
Cyprus offers non-domicile (non-dom) status to new residents, exempting them from taxes on dividends, interest, and rental income for up to 17 years. This is ideal for entrepreneurs and high-net-worth individuals looking to optimize wealth while avoiding unnecessary tax burdens.
Who Benefits? Individuals not previously tax resident in Cyprus.
Advantages: Zero Special Defence Contribution (SDC) tax on worldwide investment income.
Reduced Personal Income Tax Rates
Cyprus provides significant incentives for employees and business owners relocating to the island:
- 50% Income Tax Exemption: Available to new residents earning over €55,000 annually. This benefit lasts for 10 years.
- 20% Income Tax Exemption: Applies to lower-income individuals or those earning less than €55,000, capped at €8,550 annually and valid for five years.
These measures reduce the income tax in Cyprus for expatriates, encouraging skilled talent and business executives to relocate.
Competitive Corporate Tax Rate
Cyprus boasts one of the lowest corporate tax rates in the EU at 12.5%. This low tax rate applies to income generated within the country, making it attractive for companies across sectors.
Highlight: Cyprus’ extensive double tax treaties prevent double taxation on international income, offering additional relief for businesses.
Notional Interest Deduction (NID)
The Notional Interest Deduction is a unique mechanism that encourages equity financing. Companies can claim a deduction on “new equity” investments, effectively reducing taxable income and incentivizing the reinvestment of profits into operations.
Who Benefits? Companies raising fresh equity to fund expansions or operations.
Impact: Significant savings in Cyprus tax liabilities.
Additional Incentives for IP and R&D
Cyprus’ Intellectual Property (IP) Box Regime allows companies to benefit from reduced tax rates on profits derived from intellectual property. Paired with robust support for R&D activities, this makes Cyprus a hotspot for tech firms and startups.
Effective Tax Rate: As low as 2.5% on IP-related earnings.
Ideal For: Tech innovators, software developers, and biotech firms.
Exemption from Capital Gains Tax
Cyprus does not impose capital gains tax on the disposal of shares, securities, or other financial instruments. This exemption, along with the absence of wealth tax, makes Cyprus particularly appealing for investors.
Low Property Tax and No Inheritance Tax
For businesses and families relocating, Cyprus ensures an affordable lifestyle:
Property Tax: Minimal compared to other EU nations.
Inheritance Tax: Completely abolished, allowing wealth to transfer seamlessly to heirs.
Why Choose Cyprus for Business and Living?
Cyprus combines its tax in Cyprus advantages with a high standard of living, a strategic location, and an English-speaking workforce. The island’s membership in the EU ensures compliance with international regulations, enhancing its reputation as a secure, business-friendly jurisdiction.
For entrepreneurs and businesses ready to take the next step, Cyprus offers a blend of tax benefits, strategic opportunities, and an unmatched Mediterranean lifestyle. Discover how relocating to Cyprus can transform your global operations.
