Cyprus Tax Advantages
With its wisely shaped, EU- and OECD-compliant tax system, Cyprus is the most advantageous business jurisdiction in the EU
Cyprus Tax Advantages
The Cyprus Tax Regime is set to provide a business-friendly environment
In Cyprus, the corporate tax rate on taxable business profits is 15.0%. Furthermore, the Cyprus Tax Regime provides for several income classes that are not taxable.
Cyprus is probably the best place to do business in the EU, not only because business-friendly Cyprus Tax Regime. Currently (March of 2026) around thousand companies are registered in Cyprus every month in Cyprus – a clear proof of the many advantages of Cyprus’ legislation.
In the course of harmonisation, focusing on the then future EU-membership, Cyprus dismissed its “offshore” legislation in 2002 and 2003 step by step. Simultaneously, a new system of EU-conform tax advantages has been set up, and the refinement is still continued day by day. Today, Cyprus is even more attractive as a place of doing business, providing not only tax advantages but many other advantages as well.
The Cyprus Tax Reform 2026
Please read about the Cyprus Tax reform 2026:
The importance of substance
In order to fully benefit from the tax advantages of Cyprus, Companies in Cyprus are required to maintain operative substance in Cyprus. For more information:
Companies Need Sufficient Substance to Avoid Cross-Border Tax Issues;
Cyprus Tax Residency: Where will my Cyprus Company get taxed?.
The Cyprus Tax Regime: Some of the many tax advantages that Cyprus Companies benefit from:
- differentiation between ‘tax residents’ and ‘non tax residents’
- corporate tax is only 15.0 %, very low tonnage tax for ship-owning and shipping companies, 3.0 % on income from Intellectual Property (conditions apply, please read our specific page)
- no corporate tax for ‘non tax resident’ companies (with management residing abroad; special conditions apply)
- no Cyprus tax on disposal or trading of securities
- no Cyprus tax on income from dividends on company level (for a period of four years)
- no Cyprus withholding tax on dividends paid to shareholders outside of Cyprus
- no tax on dividend and interest income for non-domiciled but tax-resident individuals (“Non-Dom tax Status”), please read our specific page
- no Cyprus tax for International Trusts
- full adoption of the EU-Parent-Subsidiary-Directive (dividend payments of the subsidiary to its parent are tax-exempted)
- full tax group relief (profits of one group company are offset against losses of another group company)
- offshore entities from other countries are allowed as shareholders
- rigid appliance of all relevant EU directives
The Cyprus Tax Regime: Cyprus Tax Classes in Brief:
Corporate Tax in Cyprus
Non tax-resident Cyprus Companies are not liable for corporate tax in Cyprus, provided that
- the directors do not reside in Cyprus, and
- that the companies do not conduct any business with natural or legal persons residing in Cyprus.
In the case where a non-tax resident Cyprus Company conducts business in Cyprus, the profit from this business will be taxed in Cyprus. Non-tax-resident companies cannot benefit from Double Taxation Avoidance Treaties.
Tax-resident Cyprus Companies pay 15.0 % corporate tax on their taxable income. However:
- income from dividends, appreciation of shares and bonds and from the purchase and sale of the aforementioned or from the sales of participations is not taxable; certain conditions apply.
Double Taxation Avoidance Agreements fully apply.
The profit that accrues from the exploitation of Intellectual Property is taxable at a favoured rate of only 3.0 %. As per the new EU regulations from 2016, a number of condition applies. Please read the related information.
Cyprus Special Contribution for Defence
The so-called Cyprus Defence Tax as per the Cyprus Special Contribution for Defence Tax Law is payable, under certain circumstances, on income from dividends and interest. The EU Parent-Subsidiary Directive fully applies.
The Cyprus Defence Tax on dividend income is 5 % (for tax-resident individuals). If a tax-resident person benefits from the non-dom tax status, Cyprus Defence Tax is not applied for a number of years.
Personal Income Tax in Cyprus
Annual earnings of an individual up to EUR 22,000 are not taxable in Cyprus. Earnings over EUR 22,000 are taxed as per the Cyprus Income Tax Law, at a rate of 20 – 35 %, where the highest tax rate of 35 % is applied for the portion of annual earnings over EUR 72,000.