Cyprus is considered as one of the most business-friendly countries globally, consistently ranking among the top in terms of its benefits and ease of doing business. The effective tax regimes and double-taxation treaties are only a few of the reasons to consider Cyprus for investing, company formation and re-domiciliation purposes.

1.The Corporate Tax Regime. It is well known that the Corporate Income Tax of Cyprus companies remains one of the lowest in Europe, at 12.5%. This, combined with schemes such as the Notional Interest Deduction (NID) or IP Box Regime, can be further decreased by up to 80%, resulting to an effective tax rate of only 2.5%!

NID Scheme: Companies are entitled to this tax deduction upon the contribution of new equity (either by cash or with assets contributed in kind) in the form of paid-up share capital or share premium. The deduction, which is calculated as a percentage on the value of equity, can decrease the taxable profit up to 80% and it is recurring (can be used every year). The Cyprus NID reference rate for 2024 is at 8.25%.

IP Box Tax Regime: 

The IP Box Regime (also known as Patent Box, Innovation Box, or IP Box) is a corporate tax regime addressed to research and development expenses: 80% of qualifying profits generated from Cypriot tax resident companies (net of any direct expenses) is exempt from Cyprus corporation tax. This scheme is ideal for tech companies and the gaming industry! 

Tax-Free Income: 

Dividends (except on certain payments to companies in jurisdictions included on the EU blacklist), Investment gains, Foreign PE trading profits, Passive Interest Income and Profits from the sale of shares and other securities (capital gains) are exempt from corporation tax! In addition to that, the extensive DTT network of Cyprus, as well as the full adoption and access to all EU Directives, make Cyprus an ideal 'holding company' EU jurisdiction. 

2. The Income Tax Regime. Cyprus offers major personal tax regime benefits to those considering relocating here.

Employee Salary Reduction: 

A 50% income exemption has been introduced in relation to first employment in the island. This exemption is available for individuals with an annual remuneration in excess of €55,000, for a maximum period of 17 years. Moreover, any earning from overseas employment, for which a Cyprus tax resident spends more than 90 days abroad in rendering their services, is exempt from Cyprus tax! 

Exemptions for Non-Doms: 

Cyprus Tax Resident individuals who are not domiciled in Cyprus (Non-Doms) are exempt from Special Defence Contribution (SDC) tax for 17 years. As a result, their Dividends and Passive Interest Income are only subject to General Health System (GHS) contribution of just 2.65%, with a maximum annual cap payable of €4,770 on total taxable income. Cyprus tax residency can be achieved by spending just 60 days in Cyprus per year, subject to certain conditions.