The Jurisdiction
Cyprus is a member of the European Union and the Eurozone. It features on the white list of the OECD and has committed to the highest standards of transparency, assuming an early-adopter status for the automatic exchange of information on tax matters.
Amongst other advantages, a Cyprus holding company can achieve low or zero withholding tax rates when extracting dividends from underlying subsidiaries by relying on either:
► an applicable double tax treaty, or
► the provisions of the EU Parent Subsidiary Directive.
Cyprus has concluded over 50 agreements for the avoidance of double taxation.
Outgoing dividends
There are no withholding taxes on dividend payments from Cyprus companies to persons not resident in Cyprus, irrespective of where they reside or whether a double tax treaty is in place with the jurisdiction of residence.
Notional interest deduction (NID)
The NID is deductible against the company’s taxable profits that arise as a result of the newly introduced capital and cannot exceed 80% of the taxable profit as calculated before allowing for this deduction.
Intellectual Property Royalties
Cyprus affords a regime under which 80% of qualifying profits generated from qualifying assets will be deemed to be tax deductible expenses.
