Articles

Corporate Income Tax (CIT)

All companies that are tax residents of Cyprus are taxed on their income accrued or derived from all sources in Cyprus and abroad.

The standard CIT rate in Cyprus is 12.5%.

Interest received by companies in the ordinary course of their business, including interest closely connected to the ordinary course of business, is also considered as ‘active’ interest income and is only taxed under CIT (after deducting allowable expenses) at the standard CIT rate of 12.5%.

Company, Sole Trader or Employee?

Although we can go into a great extent for all of them, this article focuses on the last part which is deciding whether to trade as a physical person or as a company. The answer to this choice is made easier by the introduction of the 35% personal taxation on salaried income exceeding the first Euro 60,000 taxable income. Coupled with the legal protection a company offers, individuals who are going to set up a business in Cyprus are more likely to do so via the setup of a Cyprus company. 

You can not trade or do business if you are an employee other than of your own company. In addition to the non dom there are several tax benefits for overseas employees which could reduce their taxes up to 50% if employed by a Cyprus company.

Non-Domiciled Rule. What does it mean for me? 

The non-domiciled rule is a clever tax law which was introduced by the Cyprus Income Tax office few years ago and it is a tax status for individuals who have not been living in Cyprus 12 out of the last 20 years. 

Benefits of this tax status? 

Individuals who are living in Cyprus and are tax residents but not domiciled are not subject to special defense tax which applies to dividend income, interest income and rental income.  

Therefore, an individual with worldwide dividend income is entitled to tax free dividends 

I have received an offer from 5 firms. What to do next? 

You have received 5 offers from audit and assurance firms within your specified criteria! That is great. Have a chat with the engagement partner and get a feel of the firm. You may even consider visiting them to assess their culture and if it meets yours.