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Cyprus: Offshore Legal and Tax Regimes

Tax Treatment of Offshore Operations

See Domestic Corporate Taxation for the general principles of Cyprus corporate taxation, which also apply to offshore entities.

Offshore companies are taxed at the same rate as onshore companies, that is, at 12.5% of profits; the same rate is chargeable to offshore branches of foreign companies with management and control in Cyprus. Branches with management and control outside Cyprus are exempt from tax on profits derived from sources outside Cyprus.

Offshore partnerships are not taxed on profits originating outside Cyprus.

There is no withholding tax on dividends paid by offshore companies; but no tax credit either on any tax paid.

Interest or royalties paid by an offshore company to another person or company outside Cyprus are not subject to withholding tax.

Inheritance tax is not charged on the inheritance of shares in offshore companies, and the sale of or transfer of their assets (other than Cypriot property) is exempt from capital gains and other taxes. The capital gains tax rate for transfer of Cypriot property is at 20%.

Offshore entities (and their expatriate staff) may import various goods duty-free:

  • Motor vehicles (not buses, motorcycles, coaches or caravans)
  • Office equipment (not air conditioners or consumables)
  • Household effects (not furniture or air conditioners)

 

 

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