Why cyprus
The tax for shareholders of Cyprus companies primarily concerns dividends received from the company. Here are the key points:
Dividend Tax for Resident Shareholders:
Special Defence Contribution (SDC): Resident shareholders (individuals or entities) are subject to a Special Defence Contribution (SDC) on dividends. The rate is 17%.
Personal Income Tax (PIT):
In addition to SDC, individual shareholders might be subject to personal income tax on dividends, depending on their overall income and tax status.
Dividend Tax for Non-Resident Shareholders:
No Withholding Tax: Dividends paid to non-resident shareholders are exempt from any withholding tax in Cyprus. This makes Cyprus an attractive jurisdiction for foreign investors.
Corporate Shareholders:
Resident Companies: If a Cyprus resident company receives dividends from another Cyprus company, those dividends are generally exempt from tax.
Non-Resident Companies: Non-resident companies receiving dividends from a Cyprus company are not subject to any withholding tax on those dividends.
Overall, Cyprus offers a favorable tax regime for both resident and non-resident shareholders, particularly for non-residents who benefit from no withholding tax on dividends.
The tax treatment of capital gains in Cyprus depends on the type of asset being sold and the residency status of the seller. Here’s an overview:
1. Capital Gains Tax on Immovable Property:
Immovable Property in Cyprus: Capital gains arising from the sale of immovable property located in Cyprus, or from the sale of shares in companies owning such property, are subject to Capital Gains Tax (CGT) at a rate of 20%.
Exemptions: Certain exemptions may apply, such as for gains from the sale of a primary residence (subject to conditions) or for transfers between relatives.
2. Capital Gains on Other Assets:
Securities (Shares, Bonds, etc.): Capital gains arising from the disposal of securities (such as shares, bonds, debentures, etc.) are exempt from Capital Gains Tax in Cyprus. This is a significant advantage for investors, as it means that profits from the sale of shares or other securities are not taxed.
Exemptions: The exemption applies regardless of whether the securities are sold by Cyprus tax residents or non-residents.
3. Capital Gains for Non-Residents:
No CGT on Non-Immovable Property: Non-residents are not subject to Capital Gains Tax on the sale of assets that are not immovable property in Cyprus. This makes Cyprus particularly attractive for international investors.
4. Transfer of Foreign Property:
Gains from the disposal of immovable property located outside Cyprus are not subject to Capital Gains Tax, regardless of whether the seller is a Cyprus tax resident or not.
Summary:
20% Capital Gains Tax applies to the sale of immovable property in Cyprus.
No Capital Gains Tax on the sale of securities or on immovable property located outside Cyprus.
This favorable tax treatment, especially the exemption on gains from securities, is one of the reasons Cyprus is considered a tax-efficient jurisdiction for both individual and corporate investors.
