12,5% CORPORATE TAX
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Although Cyprus is no longer the offshore tax haven that it used to be before it became a member of the EU, it remains a dream destination for many foreign investors. An efficient and sophisticated business environment, coupled with corporate income tax of just 12,5%, help to explain the pull.
The main advantages of Cyprus companies are:
CYPRUS LTD. AS TRADING COMPANY
A company may be established for international trading purposes and pay the lowest taxation in Europe (12,5%) on their net profits. In addition, there are no withholding taxes on payment of dividends to non-resident shareholders.
If management and control is overseas, then the Cyprus company may elect to not be taxable in Cyprus. This type of company is useful for trade purposes. Nevertheless, it cannot benefit from any Double Tax Treaties, nor can it obtain any tax certificates stating that it is resident/taxable in Cyprus.
CYPRUS LTD AS HOLDING COMPANY
Holding companies – provided that minimum requirements are satisfied, a company can be established with 0% tax rate on dividends received by overseas subsidiaries.