Development of tax strategies and structures for businesses
Legal support during company registration and maintenance
Corporate Tax Residency in Cyprus
Cyprus remains a reliable and advantageous jurisdiction for company registration and international business operations in 2025. Key benefits of the Cypriot tax system include:
✓ Low corporate tax rate ✓ Preferential taxation of dividends and capital gains ✓ Access to the European market and international agreements ✓ Flexible corporate structures ✓ Transparent and predictable tax regulations compliant with EU and OECD standards
Thanks to these factors, Cyprus continues to rank among the leading international tax centres. Registering a company in Cyprus is an effective tool for tax planning and international business expansion.
To benefit from tax incentives provided by Cypriot legislation and international double taxation treaties, a company must obtain Cyprus tax residency. To qualify, the company’s management and control must be effectively exercised from within Cyprus.
Conditions for a company to be considered a Cyprus tax resident:
A majority of the board of directors are Cyprus tax residents
Board meetings are held regularly in Cyprus, with key managerial and financial decisions made on the island
Corporate bank accounts are managed from Cyprus
Accounting records and corporate documentation are maintained in Cyprus
If these conditions are met, the company can obtain a Cyprus Tax Residency Certificate and access all available tax benefits.
Therefore, to effectively leverage Cyprus’s tax advantages, it is crucial not only to register the company but also to ensure real substance — including appointing local directors with appropriate authority.
Legal and tax support at all stages will enable the company to establish a compliant operational model aligned with Cypriot legislation and international standards.
Corporate Tax Table in Cyprus (2025)
Type of Tax
Rate
Corporate Income Tax
12.5% on profit
IP Box Regime
Up to 2.5%
VAT (Value Added Tax)
Standard rate – 19% Reduced rates – 9% / 5% Zero rate for specific categories
Dividend Tax
0%
Capital Gains Tax
20% (only on transactions involving Cypriot real estate or shares in companies holding such property)
Branches of Foreign Companies
Taxed under general rules
Employer’s Social Contributions
15.4% of employees’ salaries
Taxes in Cyprus for Legal Entities
There are several types of taxes applicable to legal entities in Cyprus. The main types include:
Below we take a closer look at the key taxes a Cypriot company is subject to.
1. Corporate tax in Cyprus for business
Corporate income tax in Cyprus is levied at a flat rate of 12.5% on the company’s taxable profit. This is one of the lowest rates in the European Union, giving Cyprus a stable competitive advantage among leading European jurisdictions for international business and investment.
For comparison:
Portugal: 16% to 20%
Spain: from 15%
Italy: from 24%
The low tax burden makes Cyprus an attractive jurisdiction for company registration, holding structures, and international operations.
How Corporate Tax is Calculated in Cyprus
Taxable profit is determined in the following steps:
Gross revenue – the total income from all activities.
Deductible expenses – costs incurred in generating revenue. Under Cypriot law, allowable deductions include: office rent, utilities, salaries and social contributions, marketing and representation expenses, depreciation of assets, travel and transportation expenses. Expenses must be properly documented and economically justified.
Tax adjustments and exemptions – to apply any available tax incentives (e.g., IP Box regime).
Taxable profit – calculated as (gross income – allowable expenses + tax adjustments).
Tax rate applied – 12.5% on the taxable profit.
Tax Filing Deadlines for Corporate Income Tax in Cyprus The corporate tax return must be filed by March 31 of the second year following the tax year in question (e.g., for 2024, the deadline is March 31, 2026). You can view the full tax calendar on the official website of the Cyprus Tax Department.
Reducing Corporate Tax in Cyprus via the IP Box Regime
The IP Box (Intellectual Property Box) is a tax regime designed to encourage innovation and attract high-tech companies to Cyprus. When using the IP Box, companies can significantly reduce corporate tax — to as low as 2.5%.
Under the IP Box regime, 80% of the profit from qualifying IP assets is excluded from taxation. Therefore, only 20% of the revenue from intellectual property is subject to the 12.5% corporate tax.
The following transactions are subject to VAT in Cyprus: the supply of goods and services within the territory of Cyprus; acquisition of goods from other EU countries (intra-Community trade); import of goods from third countries into Cyprus.
Companies registered in Cyprus are required to register for VAT if:
their taxable turnover exceeds the threshold of €15,600 per year;
they import or acquire goods from the EU above the prescribed limit;
they provide services within Cyprus that are subject to VAT.
VAT Rates in Cyprus in 2025
Standard rate: 19%
Reduced rates: 9% or 5% – depending on the type of business activity and turnover
Zero rate (0%) applies to a range of goods and services defined by law, such as the supply of certain medical products and most banking and insurance services.
VAT on International Transactions
The application of VAT in international operations in Cyprus depends on the direction of movement of goods and services.
When exporting goods and services from Cyprus, companies may benefit from a preferential VAT exemption regime. This means that when selling goods or providing services to other countries, Cypriot businesses can be exempt from charging VAT to their customers.
However, when importing goods and services into Cyprus, VAT may become payable under local law. In such cases, companies must apply the applicable Cypriot VAT rate and include it in the price of goods or services.
How Does the 0% VAT Rate Work When Dealing with an EU Company?
When goods or services are supplied to a company in another EU country, the Reverse Charge mechanism applies. This means the Cypriot company issues the invoice without VAT (VAT 0%), indicating that the reverse charge applies. The obligation to calculate and pay VAT is transferred to the buyer – the company resident in another EU country.
Conditions for Applying Reverse Charge:
The transaction takes place between two companies with valid VAT numbers in their respective countries (B2B);
The buyer provides a valid VAT number, which is verified via the VIES (VAT Information Exchange System);
The supply of goods or services is cross-border within the EU.
3. Dividend Tax in Cyprus
There is no actual dividend tax in Cyprus — under Cypriot tax legislation, dividends are not subject to corporate income tax — 0%.
However, for individuals who are tax residents of Cyprus, mandatory contributions to the General Healthcare System (GESY) apply to dividend income.
The GESY contribution rate is 2.65% of the total amount of dividends received. Therefore, for Cypriot tax residents receiving dividend income, the main financial obligation is linked to the compulsory healthcare contributions.
The current dividend taxation regime in Cyprus ensures a high level of tax efficiency and allows companies and their beneficiaries to optimize income ownership and distribution structures both within Cyprus and internationally. This makes Cyprus one of the most attractive jurisdictions for holding structures and profit distribution.
4. Capital gains tax
The capital gains tax rate in Cyprus is 20%. It only applies to profits related to immovable property located in Cyprus.
The 20% capital gains tax is levied on:
Profits from the sale of immovable property located in Cyprus;
Profits from the sale of shares in companies that own immovable property in Cyprus. This rule applies if at least 50% of the market value of the shares sold is linked to property located in Cyprus or a transaction involving real estate located in Cyprus.
Capital gains tax in Cyprus is not payable in the following cases:
Gifts of property/shares to relatives (up to the third degree of kinship) or to a family company, provided the shareholders remain family members of the original owner for at least five years after the gift.
Transfer of ownership due to the owner’s death or if the owner is declared missing.
Property donated to charitable or governmental organizations.
Property transferred as part of a reorganization.
Exchange of property/shares between two owners, provided that the exchanged property holds equal value.
5. Employer contributions in Cyprus
In Cyprus, employers are required to pay various contributions, totaling approximately 15.4% of the employee’s gross salary. The breakdown of these contributions is as follows:
8.8% – Employer’s contribution to the Social Insurance Fund
2% – Employer’s contribution to the Social Cohesion Fund
0.5% – Employer’s contribution to the Human Resource Development Fund
1.2% – Unemployment Fund, providing financial support to those temporarily or permanently out of work
2.9% – GESY (General Healthcare System contribution)
Additional Tax Planning Opportunities
Cyprus offers a wide range of tools for legal tax optimization for both businesses and individuals. Effective use of these instruments can significantly reduce the overall tax burden:
Non-Dom Status – exemption from tax on dividends and interest income
The Cypriot tax system remains one of the most attractive and efficient in Europe for conducting international business. A low corporate tax rate, favorable regimes for dividends and intellectual property, and flexible tax planning tools make Cyprus a strategically advantageous jurisdiction for companies across various industries.
However, effective use of all available tax benefits requires professional legal support and careful business structuring in accordance with international standards and local legislation.
Feod Group specialists support corporate clients at every stage of working with the Cypriot jurisdiction – from company registration to tax reporting.
Legal and Tax Services in Cyprus
Development of tailored tax strategies and structures for international business;
Company registration and full legal support in Cyprus;
Consulting and assistance on applying preferential regimes — IP BOX, Non-Dom;
Comprehensive review of company structure for compliance with substance requirements;
Preparation and assistance in obtaining a Cyprus Tax Residency Certificate;
Complete accounting and tax support, reporting submission, and deadline management;
Advisory on the application of Double Taxation Treaties.
Contact us — Feod Group specialists will tailor a solution for your business in Cyprus!
The corporate tax rate is 12.5% on the company’s taxable profits — one of the lowest in the European Union.
When is a company in Cyprus required to register for VAT?
When its taxable turnover exceeds €15,600 per year, or when importing or providing VAT-taxable goods or services.
What are the deadlines for filing corporate tax returns in Cyprus?
By 31 March of the second year following the tax year. For example, the return for 2024 must be submitted by 31 March 2026.
What taxes must companies in Cyprus pay?
Companies in Cyprus are required to pay: • Corporate Tax — 12.5% on profits • VAT — standard rate 19%, reduced rates 9% and 5% • Capital Gains Tax — 20% (only on Cyprus-based real estate) • Employer Contributions — approx. 15.4% of employee salaries
What contributions must an employer pay for employees in Cyprus?
Mandatory employer contributions total approx. 15.4% of the salary and include payments to Social Insurance, Human Resource Development, and GESY (General Healthcare System).
Are profits from the sale of securities taxed in Cyprus?
Generally, no. Profits from the sale of shares and other securities are exempt from Capital Gains Tax, unless related to real estate located in Cyprus.
In 2013, Anastasia Taran graduated with honors from the National University "Odessa Law Academy", earning a Master of Laws degree. She joined Feod Group in 2018 and has since gained extensive experience in international corporate, tax, and immigration law....
In 2013, Anastasia Taran graduated with honors from the National University "Odessa Law Academy", earning a Master of Laws degree. She joined Feod Group in 2018 and has since gained extensive experience in international corporate, tax, and immigration law.
Since 1992, Feod Group has been providing a wide range of legal, business and immigration services in Europe, the USA and other countries of the world.
The company has accredited western lawyers, experts in various fields of law and jurisdictions of the world.
Having offices in Europe and the USA, Feod Group provides rapid paperwork and maximum customer comfort.
We provide our clients with related services, such as relocation and adaptation abroad, organizing family relocation abroad, enrollment of children in schools and many other services.
