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Tax Facts &

Figures
2015 - Cyprus
The tax system in
Cyprus
January 2015

Table of contents

Foreword

Personal income tax

Special contribution

10

Corporation tax

12

Special contribution for defence

23

Capital gains tax

30

Estate duty

33

Value added tax

34

Immovable property tax

44

Trusts

46

Transfer fees by the department of land and surveys

48

Social insurance

50

Stamp duty

52

Capital duty

54

Tax treaties withholding tax (WHT) tables

55

2015 Tax diary

65

PwC in Cyprus

68

PwC offices in Cyprus

70

Your contacts in PwC

72

PwC Cyprus

Foreword
This publication provides valuable information about the
tax system in Cyprus, based on the current tax legislation
and practice.
The Tax, Facts & Figures 2015 - Cyprus publication which
provides a general description of our tax system represents a
rich source of general guidance that will enable you
to effectively proceed with your tax planning in a timely
manner.
However in no case a publication can substitute proper
professional advice. All of us in PwC are here to offer
you our knowledge and expertise and to support you in
achieving your personal and corporate tax goals. The
specialised solutions we offer to you are adjusted to your
own needs and will support you in structuring your tax
operations in an efficient way.
Please do not hesitate to contact us at any of the addresses
shown at the back of this publication.
PwC Cyprus
January 2015

Tax Facts & Figures 2015 - Cyprus

Personal income tax

Basis of taxation
All Cyprus tax resident individuals are taxed on all chargeable
income accrued or derived from all sources in Cyprus and
abroad. Individuals who are not tax residents of Cyprus are taxed
on certain income accrued or derived from sources in Cyprus.

PwC Cyprus

An individual is tax resident in Cyprus if he spends in Cyprus more

than 183 days in any one calendar year. Days in and out of Cyprus are
calculated as follows:

the day of departure from Cyprus counts as a day of residence

outside Cyprus
the day of arrival in Cyprus counts as a day of residence in Cyprus
arrival and departure from Cyprus in the same day counts as one day
of residence in Cyprus
departure and arrival in Cyprus in the same day counts as one day of
residence outside Cyprus

Foreign taxes paid can be credited against the personal income tax
liability.

Personal tax rates

The following income tax rates apply to individuals:
Chargeable income for
the tax year

First 19.500
From 19.501 - to 28.000
From 28.001 - to 36.300
From 36.301 - to 60.000
ver 60.000

Tax rate

Accumulated tax

%
Nil
20
25
30
35

Nil
1.700
3.775
10.885

Foreign pension income is taxed at the flat rate of 5%. An annual

exemption of 3.420 is granted. The taxpayer can however elect to be
taxed at the normal tax rates and bands set out above. This is a choice
which may be made year-on-year.

Tax Facts & Figures 2015 - Cyprus

Exemptions
The following are exempt from income tax:
Type of income

Exemption

Interest, except for interest arising

from the ordinary business activities
or closely related to the ordinary
business activities of an individual

The whole amount (1)

Dividends

The whole amount (1)

Remuneration from any employment

exercised in Cyprus by an individual
who was not a resident of Cyprus
before the commencement of the
employment, exemption applies for
a period of 5 years for employments
commencing as from 1 January
2012 provided that the annual
remuneration exceeds 100.000
Remuneration from any employment
exercised in Cyprus by an individual
who was not a resident of Cyprus
before the commencement of the
employment, exemption applies for a
period of 3 years commencing from
1st January following the year of
commencement of the employment

50% of the remuneration

PwC Cyprus

20% of the remuneration

with a maximum amount of
8.550 annually

Remuneration from salaried services

rendered outside Cyprus for more
than 90 days in a tax year to a
non-Cyprus resident employer or to a
foreign permanent establishment of a
Cyprus resident employer

The whole amount

Profits of a permanent establishment

abroad under certain conditions

The whole amount

Lump sum received by way of retiring

gratuity, commutation of pension or
compensation for death or injuries

The whole amount

Capital sums accruing to individuals

from any payments to approved funds
(e.g. provident funds)

The whole amount

Profits from the sale of securities

(2)

The whole amount

Notes:
1. Such dividend and interest income is subject to Special Contribution
for Defence.
2. The term Securities is defined as shares, bonds, debentures,
founders shares and other securities of companies or other legal
persons, incorporated in Cyprus or abroad and options thereon.
A circular has been issued by the Tax Authorities in 2008 further
clarifying what is included in the term Securities. According to the
circular the term includes, among others, options on Securities,
short positions on Securities, futures/forwards on Securities, swaps
on Securities, depositary receipts on Securities (ADRs, GDRs),
rights of claim on bonds and debentures (rights on interest of these
instruments are not included), index participations only if they result
on Securities, repurchase agreements or Repos on Securities, units
in open-end or close-end collective investment schemes. The circular
also clarifies specific types of participation in foreign entities which
are considered as Securities.
Tax Facts & Figures 2015 - Cyprus

Tax deductions
The following are deducted from income:

Contributions to trade unions or

professional bodies

The whole amount

Loss of current year and previous

years (for individuals required
to prepare audited financial
statements, current year losses and
losses of the previous five years only
may be deducted)

The whole amount

Rental income

20% of rental income

Donations to approved charities

(with receipts)

The whole amount

Expenditure incurred for the

maintenance of a building in
respect of which there is in force a
Preservation Order

Up to 1.200, 1.100 or
700 per square meter
(depending on the size of
the building)

Social Insurance, provident fund,

medical fund (maximum1% of
remuneration), pension fund
contributions and life insurance
premiums (maximum 7% of the
insured amount)

Up to 1/6 of the chargeable

income

Special contribution (see page 10)

The whole amount

Expenditure incurred for the

acquisition of shares in an innovative
business

The whole amount

PwC Cyprus

Example of personal Tax computation for 2014

Salary (5.885 monthly)

Rent receivable

70.620
5.000

Interest receivable

700

Dividend income

600

Social Insurance contributions

Special contribution
Life insurance premiums
Insured sum
Provident fund contribution
Donations to approved charities with
receipts

4.243
831
8.500
100.000
3.000
300

Tax Facts & Figures 2015 - Cyprus

Tax computation
Salary
Rent receivable
Interest receivable (exempt)
Dividends receivable (exempt)
Total income
Less: deductions
Donations - (with receipts)
Special contribution
20% of rent income
Net total income
Life insurance premiums:
Restricted to 7% of the insured sum
(7% @ 100.000 = 7.000)
Provident fund, social insurance
contributions and life insurance premiums
restricted to 1/6 of net total income
(3.000 + 4.243+ 7.000 = 14.243
restricted to 1/6 of 73.489)
Taxable income

PwC Cyprus

70.620
5.000
-

75.620
300
831
1.000

2.131
73.489

(12.248)
61.241

Tax payable: - first

- next
- next
- next
- rest
Income tax payable
Special contribution for defence*
Dividends receivable 600 x 17%
Interest receivable 700 x 30%
Rent receivable
5.000 25% = 3.750 x 3%
Special contribution**
Social insurance
Total tax payable

19.500
8.500
8.300
23.700
1.241

0
1.700
2.075
7.110
434
11.319

102
210
112

424
831
4.243
16.817

*Please refer to Special Contribution for Defence section (page 23)

** Please refer to Special Contribution section (page 10)

Tax Facts & Figures 2015 - Cyprus

Special
Contribution

Gross monthly emoluments

from employment / pension

2014 - 2016
First 1.500
From 1.501 to 2.500
From 2.501 to 3.500
Over 3.500

10

PwC Cyprus

Government and
semi-government
employees and
pensioners

Private sector
employees, selfemployed individuals
and private sector
pensioners (2) (3) (4)

il
2,5%(1)
3,0%(1)
3,5%(1)

Nil
2,5% (minimum 10)
3,0%
3,5%

Notes:
1. The Special Contribution rate becomes 3%, 3,5% and 4% respectively
for highly ranked civil service officials/ employees within their
respective scale.
2. In the case of private sector employed individuals and private sector
pensions the Special Contribution relates to services rendered
in Cyprus. In the case of self-employed individuals the Special
Contribution relates to any business carried on in Cyprus.
3. For private sector employed individuals the Special Contribution
does not apply, inter alia, on retirement gratuities, on payments from
approved provident funds, on remuneration of the crew of qualifying
ships and on reimbursements of business expenses.
4. In the case of private sector employed individuals the recipient of
the remuneration is liable for half the Special Contribution and the
employer for the other half.

Tax Facts & Figures 2015 - Cyprus

11

Corporation tax
Basis of taxation
All Cyprus tax resident companies are taxed on their income accrued or
derived from all chargeable sources in Cyprus and abroad. A non- Cyprus
tax resident company is taxed on income accrued or derived from a
business activity which is carried out through a permanent establishment
in Cyprus and on certain income arising from sources in Cyprus.
A company is a resident of Cyprus if it is managed and controlled in
Cyprus.
Foreign taxes paid can be credited against the corporation tax liability.

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PwC Cyprus

Corporate tax rate

The corporation tax rate for all companies is

Tax rate
%
12,5

Type of income

Exemption limit

Profit from the sale of securities (1)

Dividends

The whole amount

The whole amount (2)

Interest not arising from the ordinary

activities or closely related to the
ordinary activities of the company (3)

The whole amount (4)

Profits of a permanent establishment

abroad, under certain conditions

The whole amount

Notes:
1.
2.
3.
4.

For a definition of securities see page 5.

Such dividend income may be subject to Special Contribution for
Defence.
All the interest income of Collective Investment Schemes is
considered to be arising from the ordinary activities or closely
related to the ordinary activities of the Scheme.
Such interest income is subject to Special Defence Contribution.

Tax Facts & Figures 2015 - Cyprus

13

Corporate tax deductions for expenses

Generally expenses incurred wholly and exclusively in earning taxable
income and supported by documentary evidence are deductible for
corporate tax purpose, including:
Type of expense

Deduction limit

Interest expense incurred for the direct or

indirect acquisition of 100% of the share
capital of a subsidiary company will be treated
as deductible for income tax purposes provided
that the 100% subsidiary company does not
own (directly or indirectly) any assets that
are not used in the business. If the subsidiary
owns (directly or indirectly) assets not used
in the business the interest expense deduction
is restricted to the amount which relates to
assets used in the business. This applies for
acquisitions of subsidiaries from 1 January
2012.

The whole
amount of interest
expense if the
subsidiary does
not own (directly
or indirectly) any
assets not used in
the business. A
restricted amount
of interest expense
if the subsidiary
owns (directly or
indirectly) assets
not used in the
business.

80% of the net royalty income from owned

intangible assets as well as 80% of the
net profit emanating from the disposal of
intangible assets (1,2)

80%

Donations to approved charities (with receipts) The whole amount

Employers contributions to social insurance

and approved funds on employees salaries

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PwC Cyprus

The whole amount

Any expenditure incurred for the maintenance Up to 700,

of a building in respect of which there is a
1.100 or 1.200
Preservation Order
per square meter
(depending on the
size of the building)

Entertainment expenses for business purposes Lower of 17.086

or 1% of the gross
income of the
business
Expenditure incurred for the acquisition of
The whole amount
shares in an innovative business

Notes:
1.
2.

The term intangible assets includes copyrights, patents and

trademarks.
Additionally any expenditure of a capital nature incurred for the
acquisition or development of such intangible assets may be claimed
as a tax deduction in the year in which it was incurred and the
immediate four following years on a straight line basis.

but not including:

Expenses of a private motor vehicle

The whole amount for 7 years

Interest applicable to the cost of
from the date of acquisition of
acquiring a private motor vehicle,
irrespective of its use and to the cost the asset
of acquiring any other asset not used
in the business

The whole amount

Tax Facts & Figures 2015 - Cyprus

15

Losses carried forward

The tax loss incurred during a tax year and which cannot be set off against
other income, is carried forward subject to conditions and set off against
the profits of the next five years.
The current year loss of one company can be set off against the profit
of another, subject to conditions, provided the companies are Cyprus tax
resident companies of a group. Group is defined as:

One Cyprus tax resident company holding directly or indirectly

at least 75% of the voting shares of another Cyprus tax resident
company, with any intermediate companies also being Cyprus tax
residents

Both of the companies are at least 75% (voting shares) held, directly
or indirectly, by another third company
A partnership or a sole trader transferring a business into a company can
carry forward tax losses into the company for future utilisation.
Losses from a permanent establishment abroad can be set off with
profits of the company in Cyprus. Subsequent profits of an exempt
permanent establishment abroad are taxable up to the amount of losses
allowed.

Reorganisations
Transfers of assets and liabilities between companies can be effected
without tax consequences within the framework of a reorganisation and
tax losses can be carried forward by the receiving entity.
Reorganisations include:

mergers

demergers

partial divisions

transfer of assets

exchange of shares

transfer of registered office of a European company (SE) or a

European cooperative company (SCE).
16

PwC Cyprus

Annual wear and tear allowances on tangible fixed assets

The following allowances which are given as a percentage on the cost of
acquisition are deducted from the chargeable income:

Fixed assets
Plant and machinery

Plant and machinery (1)

Furniture and fittings
Industrial carpets
Boreholes
Machinery and tools used in an agricultural business

10
10
10
10
15

Buildings
Commercial buildings
Industrial, agricultural and hotel buildings (2)
Flats
Metallic greenhouse structures
Wooden greenhouse structures

%
3
4
3
10
33 1/3

Tax Facts & Figures 2015 - Cyprus

17

Vehicles and Means of Transportation

Commercial motor vehicles

Motor cycles
Excavators, tractors, bulldozers, self-propelled loaders and
drums for petrol companies
Armoured Motor Vehicles (e.g. used by Security Services)
Specialised Machinery for the laying of Railroads
(e.g. Locomotive engines, Ballast wagons, Container wagons
and Container Sleeper Wagons)
New Airplanes
New Helicopters
Sailing vessels
Motor Yachts
Steamers, tugs and fishing boats
Shipmotor launches
New cargo vessels
New passenger vessels
Used cargo/passenger vessels

Other

Televisions and videos

Computer hardware and operating systems
Application software
Expenditure on application software less than 1.709, is
written off in the year of acquisition
Wind Power Generators
Photovoltaic Systems
Tools in general
Videotapes property of video clubs

18

PwC Cyprus

20
20
25
20
20

8
8
4,5
6
6
12,5
8
6
Over their
useful lives

10
20
33 1/3

10
10
33 1/3
50

Notes
1.

2.

Plant and machinery acquired during the tax years 2012, 2013 and
2014 are eligible to accelerated tax depreciation at the rate of 20%
(excluding such assets which are already eligible for a higher annual
tax rate of tax depreciation).
In the case of industrial and hotel buildings which are acquired
during the tax years 2012, 2013 and 2014, an accelerated tax
depreciation at the rate of 7% per annum may be claimed.

Special type of companies

Shipping companies
The Merchant Shipping Legislation fully approved by the EU provides for
exemption from all direct taxes and taxation under tonnage tax regime of
qualifying shipowners, charterers and shipmanagers, from the operation
of qualifying community ships (ships flying a flag of an EU member
state or of a country in the European Economic Area) and foreign (non
community) ships (under conditions), in qualifying activities.
The legislation allows non community vessels to enter the tonnage tax
regime provided the fleet is composed by at least 60% community vessels.
If this requirement is not met, then non community vessels can still qualify
if certain criteria are met.
The legislation includes an all or nothing rule, meaning that if a
shipowner/ charterer/ shipmanager of a group elects to be taxed under
the tonnage tax regime, all shipowners/ charterers/ shipmanagers of the
group should elect the same.
Exemption is also given in relation to the salaries of officers and crew
aboard a Cyprus ship.

Tax Facts & Figures 2015 - Cyprus

19

Shipowners
The exemption applies to:

profits derived from the use/chartering out of the ships

interest income relating to the working capital of the company

profits from the disposal of qualifying ships

dividends received from the above profits at all distribution levels

profit from the disposal of shipowning companies and its distribution

The exemption also applies to the bare boat charterer of a vessel flying the
Cyprus flag under parallel registration
Charterers
Exemption is given to:

profits derived from the operation of chartered in ships

interest income relating to the working capital of the company

dividends received from the above profits at all distribution levels

The law grants the exemption provided that the option to register for
Tonnage Tax is exercised for all vessels and provided a composition
requirement is met: at least 25% (reduced to 10% under conditions) of the
net tonnage of the vessels owned or bare boat chartered in.

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PwC Cyprus

Shipmanagers
The tax exemption covers:

Profits from technical and/or crew management

Dividends paid out of these profits at all levels of distribution
Interest income relating to the working capital of the company

In order to qualify shipmanagers must satisfy the following additional

requirements:

Maintain a fully fledged office in Cyprus with personnel sufficient in

number and qualification
At least 51% of all onshore personnel must be community citizens
At least 2/3 of total tonnage under management must be managed
within the community (any excess of 1/3 taxed under corporation
tax)

The application of the tonnage tax system is compulsory for owners

of Cyprus flag ships and optional for owners of non Cyprus flag ships,
charterers and shipmanagers. Those who choose to enter the Tonnage Tax
regime must remain in the system for at least 10 years unless they had a
valid reason to exit such as disposal of their vessels and cessation their
activities.
Insurance companies
Profits of insurance companies are liable to corporation tax similar to all
other companies except in the case where the corporation tax payable
on taxable profit of life insurance business is less than 1,5% of the gross
premium. In this case the difference is paid as additional corporation tax.

Tax Facts & Figures 2015 - Cyprus

21

The Cyprus Alternative Investment Funds (AIFs) and

Undertakings for Collective Investment in Transferable
Securities (UCITs)
The sole objective of AIFs and UCITs is the collective investment of funds
of the investors/unitholders.
AIFs can take the following types and legal forms:
Types:

Limited Number of Investors (75)

Unlimited Number of Investors

Legal Forms:
Limited Number of Investors:

Variable Capital Company (VCC)

Fixed Capital Company (FCC)

Limited Partnership (LP

Unlimited Number of Investors:

Variable Capital Company (VCC)

Fixed Capital Company (FCC)

Limited Partnership (LP)

Common Fund (CF)

UCITs can take the following legal forms:

Common Fund

Variable Capital Investment Company

AIFs and UCITs are liable to tax or not depending on their legal status.
Under certain conditions, management fees charged for the management
of AIFs and UCITs funds can be exempt from VAT.

22

PwC Cyprus

Special contribution
for defence

Special contribution for defence is imposed on dividend income,

passive interest income and passive rental income earned by Cyprus
tax residents. Non-tax residents are generally exempt from special
contribution for defence. It is charged at the rates shown in the table
below:

Dividend income from Cyprus tax

resident companies
Dividend income from non-Cyprus tax
resident companies
Interest income arising from the ordinary
activities or closely related to the
ordinary activities of the business
Other interest income
Rental income (reduced by 25%)

Tax rates
Individuals Legal entities
%
%

17(1)

Nil (1)

17

Nil (2)

Nil (3)

Nil (3)

30(4)

30(4)

3(4)(5)

3(4)(5)

Tax Facts & Figures 2015 - Cyprus

23

Notes:
1.

Dividends received by a Cyprus tax resident company from other

Cyprus tax resident companies are excluded from all taxes, unless
they are indirectly declared after the lapse of four years from the end
of the year in which the profits were generated, in which case they
may be subject to Special contribution for defence at 17%.
Dividends which emanate directly or indirectly out of such dividends
on which special contribution for defence was previously suffered
are exempt.

2.

This exemption does not apply if:

more than 50% of the paying companys activities result directly
or indirectly in investment income and
the foreign tax is significantly lower than the tax burden in
Cyprus. The tax authorities have clarified through a circular
that significantly lower means an effective tax rate of less than
6,25% on the profit distributed.
When the exemption does not apply, the dividend income is subject
to special contribution for defence at the rate of 17%.

3.

Such interest income is subject to personal income tax / corporation

tax.

4.

The Special contribution for defence rate on interest income of

30% is effective for interest received or credited from 29 April 2013
onwards.
Interest income from Cyprus government savings bonds and
development bonds and all interest earned by a provident fund is
subject to Special contribution for defence at the rate 3% (instead of
30%).

24

PwC Cyprus

In the case where the total income of an individual (including

interest) does not exceed 12.000 in a tax year, then the rate on
interest income is reduced to 3% (instead of 30%).
For rental income where the tenant is a Cyprus company,
partnership, the state or local authority Special contribution for
defence on rental income is withheld at source and is payable at the
end of the month following the month is which it was withheld. In
all other cases the Special contribution for the defence on rental
income is payable by the landlord in 6 monthly intervals on 30 June
and 31 December each year.
For interest and dividends paid to Cyprus tax residents any Special
contribution for defence due is withheld at source and is payable at
the end of the month following the month in which they were paid.
However, Special contribution for defence due on dividends, interest
and rental income from abroad is payable in 6 month intervals on 30
June and 31 December each year.
5.

Rental income is also subject to personal income tax / corporation

tax.

Foreign taxes paid can also be credited against the Special contribution for
defence tax liability.

Tax Facts & Figures 2015 - Cyprus

25

Deemed dividend distribution

A Cyprus tax resident company is deemed to distribute as a dividend 70%
of its accounting profits (as adjusted for Special contribution for defence
purposes(1) and net of corporation tax, Special contribution for defence
on company incomes, capital gains tax and unrelieved foreign taxes) two
years from the end of the tax year in which the profits were generated.
Such a deemed dividend distribution is reduced with payments of actual
dividends paid during the relevant year the profits were generated or paid
during the two following years.
On the remaining net amount (if any) of deemed dividend 17% Special
contribution for defence is imposed to the extent that the ultimate direct/
indirect shareholders of the company are Cyprus tax resident individuals
(a rate of 3% is applicable on deemed dividend distribution of Collective
Investment Schemes).

When an actual dividend is paid after the deemed dividend distribution
date, then if Special contribution for defence is due on such a dividend,
the tax is imposed only on the amount of the actual dividend paid which
is over and above the dividend that was previously deemed to have been
distributed and previously suffered Special contribution for defence.

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PwC Cyprus

Notes:
1.

A number of adjustments to the accounting profit are required

for deemed distribution purposes, including for tax years 2012,
2013 and 2014 if the company has acquired in those years plant,
machinery or buildings (excluding private motor vehicles) for
business purposes, the cost of these assets will be deductible against
the accounting profits.

Tax Facts & Figures 2014 - Cyprus

27

Disposal of assets to shareholder at less than market value

When a company disposes of an asset to an individual shareholder or a
relative of his up to second degree or his spouse for a consideration less
than its market value, the difference between the consideration and the
market value will be deemed to have been distributed as a dividend to the
shareholder. This provision, does not apply for assets originally gifted to
the company by an individual shareholder or a relative of his up to second
degree or his spouse.

Company dissolution
The cumulative profits of the last five years prior to the companys
dissolution, which have not been distributed or deemed to have been
distributed, will be considered as distributed on dissolution and will be
subject to Special contribution for defence at the rate of 17% (3% for
Collective Investment Schemes).
This provision does not apply in the case of dissolution under a
Reorganisation.

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Reduction of capital
In the case of a reduction of capital of a company, any amounts paid or due
to the shareholders over and above the previously paid-in equity will be
considered as dividends distributed subject to special
defence contribution at the rate of 17% after deducting
any amounts which have been deemed as distributable profits.
The above provisions apply only to the extent that the ultimate
shareholders (direct or indirect) are Cyprus tax resident individuals.
The redemption of units or shares in a Collective Investment Scheme is not
subject to the above provisions.

Your own consultant from our more than 160

specialist members of our tax team works closely
with you. And we support you to achieve your own
targets.

Tax Facts & Figures 2014 - Cyprus

29

Capital gains tax

Capital Gains Tax is imposed (when the disposal is not subject

to income tax) at the rate of 20% on gains from the disposal of
immovable property situated in Cyprus including gains from
the disposal of shares in companies which own such immovable
property, excluding shares listed on any recognised stock exchange.

Exemptions
The following disposals of immovable property are not subject to
Capital Gains Tax:

30

Transfers arising on death

Gifts made from parent to child or between husband and wife or
between up to third degree relatives

PwC Cyprus

Gifts to a company where the companys shareholders are members

of the donors family and the shareholders continue to be members
of the family for five years after the day of the transfer
Gifts by a family company to its shareholders, provided such
property was originally acquired by the company by way of
donation. The property must be kept by the donee for at least three
years
Gifts to charities and the Government
Transfers as a result of reorganisations
Exchange or disposal of immovable property under the Agricultural
Land (Consolidation) Laws
Expropriations
Exchange of properties, provided that the whole of the gain made on
the exchange has been used to acquire the other property. The gain
that is not taxable is deducted from the cost of the new property, i.e.
the payment of tax is deferred until the disposal of the new property

Determination of capital gain

Liability is confined to gains accruing since 1 January 1980. The costs that
are deducted from gross proceeds on the disposal of immovable property
are its market value at 1 January 1980, or the costs of acquisition and
improvements of the property, if made after 1 January 1980, as adjusted
for inflation up to the date of disposal on the basis of the consumer price
index in Cyprus.
Expenses that are related to the acquisition and disposal of immovable
property are also deducted, subject to certain conditions e.g. transfer fees,
legal expenses etc.

Tax Facts & Figures 2015 - Cyprus

31

Example

Sale price in September 2014

Cost of acquisition as at 1 January 1991
Indexation allowance January 1991 to
August 2014 (month prior to sale)
(90.000 @ 224,86/119,43) - 90.000
Capital gain
Legal expenses
Taxable Capital Gain

500.000
(90.000)
(79.450)
330.550
(1.000)
329.550

Lifetime Exemptions
Individuals can deduct from the capital gain the following:
Disposal of private residence (subject to certain
conditions)
Disposal of agricultural land by a farmer
Any other disposal

85.430
25.629
17.086

The above exemptions are lifetime

exemptions subject to an overall
lifetime maximum of 85.430

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PwC Cyprus

Estate duty
Estate duty has been
abolished since 1
January 2000.
The executor/
administrator of the
estate of the deceased,
is required by the
Deceased Persons Estate
Law, to submit to the tax
authorities a statement
of assets and liabilities
of the deceased within
six months from the
date of death.

Tax Facts & Figures 2014 - Cyprus

33

Value Added Tax

VAT is imposed on the supply of goods and provision services in Cyprus, as

well as on the acquisition of goods from the European Union (EU) and the
importation of goods into Cyprus.
Taxable persons charge VAT on their taxable supplies (output tax) and are
charged with VAT on goods or services which they receive (input tax).
If output tax in a VAT period exceeds total input tax, a payment has to be
made to the state. If input tax exceeds output tax, the excess input tax is
carried forward as a credit and set off against future output VAT.

34

PwC Cyprus

Immediate refund of excess input VAT can be obtained in the following

cases:

a period of three years has elapsed from the date the VAT became
refundable (reduced to two years as from 1/1/2014, one year as from
1/1/2015 and eight months as from 1/1/2016)

input VAT which cannot be set off against output VAT until the last
VAT period of the year which follows the year in which the VAT
period in which the credit was created falls

the input VAT relates to zero rated transactions

the input VAT relates to the purchase of capital assets of the company

the input VAT relates to transactions which are outside the scope of
VAT but would have been subject to VAT had they been carried out
within Cyprus

the input VAT relates to exempt financial and insurance services

provided to non EU resident clients (services for which the right to
recover the related input VAT is granted)
For intra-community acquisition of goods (with the exception of goods
subject to excise duty) the trader does not pay VAT on receipt of the goods
in Cyprus but instead accounts for VAT using the acquisition accounting
method. This involves a simple accounting entry in the books of the
business whereby it self-charges VAT and at the same time claims it back,
provided it relates to supplies for which the right to recover input VAT is
granted, thereby creating no cost to the business.
In cases the acquisition relates to a transaction for which the right to
recover the input VAT is not granted, the trader must pay the VAT that
corresponds to the acquisition.

Tax Facts & Figures 2015 - Cyprus

35

VAT rates
The legislation provides for the following four tax rates:

Zero rate (0%)

Reduced rate of five per cent (5%)

Reduced rate of nine per cent (8% up to 12 January 2014)

Standard rate 19% as from 13 January 2014 (18% from 14 January

2013 to 12 January 2014).
Exemptions
Certain goods or services are exempt from VAT. They include:

the letting of immovable property (the letting of immovable property

with the right of purchase is not exempt);

most banking and financial services and insurance services;

most hospital, medical and dental care services;

certain cultural educational and sports activities;

supplies of real estate (except supply of new buildings before their

first use) including supplies of land and of second-hand buildings;

postal services provided by the national postal authority;

lottery tickets and betting coupons for football and horse racing;

management services provided to mutual funds

36

PwC Cyprus

Tax Facts & Figures 2015 - Cyprus

37

Imposition of the reduced rate of 5% on the acquisition

and/or construction of residences for use as the primary
and permanent place of residence.
The reduced rate of 5% applies to contracts that have been concluded
from 1 October 2011 onwards provided they relate to the acquisition and/
or construction of residences to be used as the primary and permanent
place of residence for the next 10 years.
The reduced rate is imposed only after obtaining a certified confirmation
from the VAT Commissioner.
The eligible person must submit an application on a special form, issued
by the VAT Commissioner, which will state that the house will be used as
the primary and permanent place of residence. The applicant must attach
a number of documents supporting the ownership rights on the property
and evidencing the fact that the property will be used as the primary and
permanent place of residence. The application must be filed prior to the
actual delivery of the residence to the eligible person.
As from 8 June 2012 eligible persons include residents of non EU Member
States, provided that the residence will be used as their primary and
permanent place of residence in the Republic.
The documents supporting the ownership of the property must be
submitted together with the application. The documents supporting the
fact that the residence will be used as the primary and permanent place
of residence (copy of telephone, water supply or electricity bill or of
municipal taxes) must be submitted within six months from the date on
which the eligible person acquires possession of the residence.

38

PwC Cyprus

A person who ceases to use the residence as his primary and permanent
place of residence before the lapse of the 10 year period must notify the
VAT Commissioner, within thirty days of ceasing to use the residence,
and pay the difference resulting from the application of the reduced and
the standard rate of VAT attributable to the remaining period of 10 years
for which the property will not be used as the main and primary place of
residence.
Persons who make a false statement to benefit from the reduced rate
are required by law to pay the difference of the additional VAT due.
Furthermore, the legislation provides that such persons are guilty of a
criminal offence and, upon conviction, are liable to a fine, not exceeding
twice the amount of the VAT due, or imprisonment up to 3 years or may be
subject to both sentences.

Tax Facts & Figures 2014 - Cyprus

39

Difference between zero rate and exempt supplies

The difference between zero rate and exempt supplies is that businesses
that make exempt supplies are not entitled to recover the VAT charged on
their purchases, expenses or imports.

Irrecoverable input VAT

As an exception to the general rule, input VAT cannot be recovered in a
number of cases which include the following:

acquisitions used for making exempt supplies;

purchase, import or hire of saloon cars;

entertainment and hospitality expenses (except those relating to

employees and directors);

Registration
Registration is compulsory for businesses with (a) turnover subject to
VAT in excess of 15.600 during the 12 preceding months or (b) expected
turnover subject to VAT in excess of 15.600 within the next 30 days.
Businesses with turnover of less than 15.600 or with supplies that are
outside the scope of VAT but for which the right to claim the amount of
the related input VAT is granted, have the option to register on a voluntary
basis.
An obligation for registration also arises for businesses which make
acquisition of goods from other EU Member States in excess of 10.251,61
during any calendar year. In addition as from 1 January 2010 an obligation
for VAT registration arises for businesses engaged in the supply of
intra-community services for which the recipient must account for VAT
under the reverse charge provisions. Furthermore an obligation for VAT
registration arises for businesses carrying out economic activities from
the receipt of services from abroad for which an obligation to account

40

PwC Cyprus

for Cyprus VAT under the reverse charge provision exists subject to the
registration threshold of 15.600 per any consecutive 12 month period. No
registration threshold exists for the provision of intra-community supplies
of services.
Exempted products and services, and disposals of items of capital nature
are not taken into account for determining annual turnover for registration
purposes. Registration is effected by completing the appropriate
application form.

Tax Facts & Figures 2015 - Cyprus

41

VAT declaration - payment/refund of VAT

VAT returns must be submitted quarterly and the payment of the VAT must
be made by the 10th day of the second month that follows the month in
which the tax period ends.
VAT registered persons have the right to request for a different
filing period. Approval of the VAT authorities is required. The VAT
Commissioner also has the right to request from a taxable person to file his
VAT returns for a different period.
Where in a quarter input tax is higher than output tax, the difference is
refunded or is transferred to the next VAT quarters.
As from 19 February 2013 taxpayers who make a claim for VAT refund will
be entitled to repayment of the principal amounts together with interest
in the event that the repayment is delayed for a period exceeding four
months from the date of the submission of the claim.
The grace period for the VAT Authorities to repay the refundable amounts
is extended by four months (i.e. eight months in total) in the event that the
Commissioner is carrying out an investigation in relation to the submitted
claim.

42

PwC Cyprus

Thresholds and penalties

Amount
in Euro
()

Registration threshold (taxable supplies in Cyprus)

15.600

Registration threshold for distance sales (sale of

goods to persons not subject to VAT registration in
Cyprus, by suppliers resident in another EU Member
State)

35.000

Registration threshold for acquisition of goods in

Cyprus from suppliers resident in another EU Member
States

Registration threshold for intra-community supply of

services

no
threshold

Registration threshold for receipt of services from

abroad for which the recipient must account for VAT
under the reverse charge provisions

15.600

Penalty for late submission of VAT return

Penalty for omission to keep books and records for a

period of 6 years

Penalty for late submission of VIES return

50 for each
return

Penalty for late submission of corrective VIES return

15 for each
return

10

Omission to submit the VIES return constitutes a

criminal offence with a maximum penalty of

11

Penalty for late registration with the VAT authorities

10.251,61

51 for each
return
341

850
85 per
month of
delay

Tax Facts & Figures 2015 - Cyprus

43

Immovable Property
Tax

Immovable Property Tax is imposed on the market value as at 1 January

1980 and applies to immovable property located in Cyprus owned by the
taxpayer on 1 January of each year. This tax is payable on 30 September
each year. A discount of 10% of the tax due is available if the tax is paid
by 31 August each year. Physical and legal persons are both liable to
Immovable Property Tax.

44

PwC Cyprus

The 2015 bands and rates for Immovable Property Tax for properties
situated in Cyprus are per the table below which apply per owner, not per
property.
Tax rates
Property value (as at 1 January
1980)

First 40.000*
From 40.001 to 120.000
From 120.001 to 170.000
From 170.001 to 300.000
From 300.001 to 500.000
From 500.001 to 800.000
From 800.001- to 3.000.000
Over 3.000.000

Rate

Accumulated tax

6
8
9
11
13
15
17
19

240
880
1.330
2.760
5.360
9.860
47.260

* Property owners whose property has a total value of 12.500 or less (using
values of 1.1.1980) are exempt from Immovable Property Tax.

Exemptions
The following are not subject to Immovable Property Tax:

Public cemeteries
Churches and other religious buildings (partly exempt)
Public hospitals
Schools
Immovable property owned by the Republic
Foreign embassies and consulates
Common use and public places
Property under Turkish occupation
Buildings under a Preservation Order
Buildings of charitable organisations
Agricultural land used in farming or stock breeding, by farmer or
stock breeder residing in the area

Tax Facts & Figures 2015 - Cyprus

45

Trusts

A trust may be defined as the obligation of a person (i.e. the trustee)

to whom property is transferred by the owner of the property and the
creator of the trust (i.e. the settlor), to hold and manage such property for
a defined period according to the wishes of the settlor, oral or written as
expressed in a Deed of Trust or a Will, in favour of a specified person or
persons or class of persons (i.e. the beneficiaries). A trust is not a separate
legal entity.

46

PwC Cyprus

International Trusts
The Law defines an International Trust as being a trust in respect of
which: (a) The Settlor is not a tax resident in Cyprus during the calendar
year which precedes the year of creation of the trust; (b) At least one
of the Trustees from time to time is a tax resident in Cyprus during the
trust period; and (c) None of the Beneficiaries are tax residents in Cyprus
during the calendar year which precedes the year of creation of the trust.
According to applicable law: (i) Where the beneficiary is resident in
Cyprus, the income and profits of a Cyprus International Trust which are
earned or deemed to be earned from sources within and outside of Cyprus,
are subject to every form of taxation imposed in Cyprus. (ii) Where the
beneficiary is not a resident of Cyprus, the income and profits of a Cyprus
International Trust which are earned or deemed to be earned from sources
within Cyprus, are subject to every form or taxation imposed in Cyprus.

Tax Facts & Figures 2015 - Cyprus

47

Transfer fees by the

department
of land and surveys

The fees charged by the Department of Land and Surveys to the acquirer
for transfers of immovable property are as follows:
Market Value

First 85.000
From 85.001 to 170.000
Over 170.000

Rate
%
3
5
8

Fee

2.550
4.250

Accumulated fee

2.550
6.800

In an effort to revive the real estate market, sale-purchase contracts

concluded between 2 December 2011 and 31 December 2016, which are
subject to VAT will be exempt from the above transfer fees and those not
subject to VAT will be eligible for a 50% exemption from the above transfer
fees (subject to conditions).
48

PwC Cyprus

In the case of property transferred to a family company, transfer fees are

refundable after five years if the property remains with the company and
the shareholders remain the same.
In the case of property transferred from a company whose shareholders
are spouses and/or their children, to one of the two spouses, or their
children or to a relative up to third degree of relation the transfer fees are
calculated on the value of the property as follows:

if the transfer is to a spouse - 8%

if the transfer is to a child - 4%
if the transfer is to a relative - 8%

Also the following rates are applicable in the case of free transfers:

from parents to children 0,2%

between spouses 0,4%
between third degree relatives 0,4%
to trustees 50

Value in these cases refers to values as at 1 January 1980.

Mortgage registration fees are 1% of the current market value.
In the case of companies reorganisations, transfers of immovable property
are not subject to transfer fees or mortgage registration fees.

Tax Facts & Figures 2015 - Cyprus

49

Social insurance

50

Contributions

Employer

7,8

Employee

7,8

PwC Cyprus

The rate of Social insurance contributions is applied to a maximum level

of emoluments. The maximum level of emoluments for 2015 and 2014 is
54.396 (weekly 1.046/monthly 4.533).
The rate of 7,8% applies for both the employer and the employee up to 31
December 2018.

Other employers contributions

The employer makes the following other contributions based on
employees emoluments:
%

Social cohesion fund

2,0*

Redundancy fund

1,2**

Industrial training fund

0,5**

Holiday fund (if not exempt)

8,0**

* Social cohesion fund is calculated on total emoluments and has no

maximum level
** Restricted to the maximum level of emoluments as with the social
insurance contributions
The contributions of self-employed persons are 14,6%
of their income. The amount of the contributions is subject to a lower and
a maximum limit, depending on the profession or trade of the SelfEmployed Person. These limits are set on an annual basis.

Tax Facts & Figures 2015 - Cyprus

51

Stamp duty
The following table gives the amount
or rate of duty payable on certain
documents. Transactions which fall
within the scope of reorganisations are
exempt from stamp duty. Also, documents
relating to assets situated outside Cyprus
or business affairs that take place outside
Cyprus are exempt from stamp duty.

52

PwC Cyprus

Nature of documents
Receipts (if not exempt) - for sums of over 4
Cheques
Letters of credit
Letters of guarantee
Bills of exchange (payable within three days, on
demand or at sight)
Contracts with a fixed amount
- the first 5.000
- between 5.001 - to 170.000
-above 170.000
Contracts without fixed sum
Customs declaration documents (depending on
document type)
Bills of lading
Charterparty

7 cents
5 cents
2
4
1
0
1.5
2*
35
18-35
4
18

Powers of attorney
- general
- limited
Certified copies of contracts and
documents

6
2
2

* Capped at a maximum of 20.000.

Tax Facts & Figures 2015 - Cyprus

53

Capital duty
Upon incorporation of a Cyprus company
Authorised share capital

105 plus 0,6% on the

authorised share capital

Issued share capital

There is no capital duty

payable if the shares are
issued at their nominal
value. There is a 20 flat
duty if the shares are issued
at a premium

Upon subsequent increases

Authorised share capital
Issued share capital

54

PwC Cyprus

0,6% on the additional

share capital
20 flat duty on every
issue, whether the shares
are issued at nominal value
or at a premium

Tax treaties
withholding tax (WHT)
tables
WHT on dividends, interest and royalties
Cyprus does not levy a WHT on dividends, interest and royalties paid to
non-residents of Cyprus except in the case of royalties earned on rights
used within Cyprus, which are subject to a WHT of 10% (5% in the case
of cinematographic films). Such Cyprus WHT on royalties for rights used
within Cyprus may be reduced or eliminated by double tax treaties entered
into by Cyprus or by the EU Interest and Royalty Directive as enacted in the
Cyprus tax legislation.
WHT on other types of income
Cyprus levies a 10% WHT on technical services performed by nonresidents in Cyprus. However no such WHT is levied if such services are
performed via a permanent establishment in Cyprus of the non-resident or
if performed between associated companies as these are defined by the
EU Interest and Royalty Directive as enacted in the Cyprus tax legislation.
Cyprus also levies a 10% WHT on the gross income/ receipts derived by
a non- resident individual from the exercise in Cyprus of any profession
or vocation including the remuneration of public entertainers (such as
theatrical, musical including football clubs, other athletic missions etc).

Tax Facts & Figures 2014 - Cyprus

55

WHT on dividend, interest and royalties tables

Table A below illustrates the applicable Cyprus WHT rates on outbound
dividend, interest and royalty payments.
Table B, further below, illustrates the WHT rates provided for in the double
tax treaties entered into by Cyprus. This table illustrates the maximum tax
rates on Cyprus inbound payments which the treaty partner country may
charge on such type incomes qualifying under the respective treaty. The
actual WHT rate charged may be lower/eliminated based on each paying
countrys domestic law provisions.

Table A- WHT on outbound payments from Cyprus

Paid to

Non-treaty
countries
Armenia
Austria
Belarus
Belgium
Bosnia (7)
Bulgaria
Canada
China, P.R.
Czech Republic
Denmark
Egypt
Estonia
Finland
France
Germany
Greece
Hungary
56

PwC Cyprus

Paid from Cyprus

Dividends Interest
(1)
(1)
%
%

Royalties
Rights
not used
within
Cyprus %

Royalties
Rights used
within Cyprus
%

Nil

Nil

Nil

5/10(2)

Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil

Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil

Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil

5
Nil
5
Nil
5/10 (5)
5/10 (5)
0/5/10 (4), (5)
5/10 (5)
0/10 (12)
Nil
5/10 (5)
Nil
Nil
0/5 (3)
Nil
0/5 (5)
Nil

Paid to

India
Ireland, Rep. of
Italy
Kuwait
Lebanon
Lithuania (9)
Malta
Mauritius
Moldova
Montenegro (7)
Norway
Poland
Portugal
Qatar
Romania
Russia
San Marino
Serbia (7)
Seychelles
Singapore
Slovakia
Republic (10)
Slovenia
South Africa
Spain
Sweden
Syria
Thailand
Ukraine
United Arab
Emirates
United Kingdom
United States

Paid from Cyprus

Dividends Interest
(1)
(1)
%
%

Royalties
Rights not
used within
Cyprus %

Royalties
Rights
used within
Cyprus %

Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil

Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil

Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil

5/10 (5)
0/5 (5)
Nil
5
Nil
5
5/10 (5)
Nil
5
5/10 (5)
Nil
5
5/10 (5)
5
0/5 (11)
Nil
Nil
5/10 (5)
5
5/10 (5)
0/5 (11)

Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil

Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil

Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil

5
Nil
Nil
Nil
5/10 (5)
5/10 (6)
5/10 (8)
Nil

Nil
Nil

Nil
Nil

Nil
Nil

0/5 (3)
Nil

Tax Facts & Figures 2015 - Cyprus

57

Notes- Table A- outbound Payments from Cyprus

1.

Under Cyprus legislation, there is no WHT on dividends and interest

paid to non residents of Cyprus.
2. Royalties earned on rights used within Cyprus are subject to WHT of
10% (except royalties relating to cinematographic films, where the
WHT rate is 5%).
3. A WHT rate of 5% is applicable on royalties for cinematographic films
including films and video tape for television.
4. 0% on literary, dramatic, musical, or artistic work (excluding motion
picture films and works on film or videotape for use in connection with
television).
5. The WHT rate of 5% is applicable on cinematographic film royalties.
6. 5% WHT applies for any copyright of literary, dramatic, musical,
artistic, or scientific work.
7. Serbia, Montenegro and Bosnia apply the Yugoslavia/ Cyprus treaty.
8. A 5% WHT will be levied on payment of royalties in respect of any
copyright of scientific work, any patent, trademark, secret formula,
process, or information concerning industrial, commercial, or
scientific experience and cinematographic films.
9. The treaty was signed on June 21, 2013, and entered into force on
April 17, 2014. It will be effective January 1st, 2015.
10. The Cyprus-Czechoslovakia treaty applies with the Slovak Republic.
11. 5% rate applies for patents, trademarks, designs or models, plans,
secret formulas, or processes, or any industrial, commercial, or
scientific equipment, or for information concerning industrial,
commercial, or scientific experience.
12. 10% for patent, trademark, design or model, plan, secret formula or
process, computer software or industrial, commercial, or scientific
equipment, or for information concerning industrial, commercial, or
scientific experience.

58

PwC Cyprus

Table B- Maximum WHT on inbound

payments to Cyprus

Paid from

Received in Cyprus
Dividends
Interest
%
%

Royalties
%

Armenia
Austria
Belarus
Belgium
Bosnia (6)
Bulgaria
Canada
China, P.R.
Czech Republic
Denmark
Egypt
Estonia
Finland
France
Germany
Greece
Hungary
India
Ireland, Rep. of
Italy
Kuwait
Lebanon
Lithuania (30)
Malta
Mauritius

0/5 (1)
10
5/10/15 (2)
10/15 (3)
10
5/10 (7)
15
10
0/5 (11)
0/15 (4), (13)
15
Nil
5/15 (14)
10/15 (15)
5/15 (18)
25
5/15 (3)
10/15 (20)
Nil
15
0
5
0/5 (22)
Nil
Nil

5
Nil
5
Nil
10
10 (8)
0/10 (10)
10
0/10 (12)
Nil
10
Nil
Nil
0/5 (17)
Nil
0/5 (19)
Nil
15 (21)
0/5 (19)
Nil
5
Nil
5
10
Nil

5
Nil
5
0/10 (4), (5)
10
0/7 (4), (8)
0/15 (9)
10
Nil
Nil
15
Nil
Nil
0/10 (16)
Nil
10
0/10 (4)
0/10 (16)
Nil
10
0
5
Nil
10
Nil

Tax Facts & Figures 2015 - Cyprus

59

Paid from
Moldova
Montenegro (6)
Norway (31)
Poland
Portugal
Qatar
Romania
Russia
San Marino
Serbia (6)
Seychelles
Singapore
Slovak Republic
(40)
Slovenia
South Africa
Spain (29)
Sweden
Syria
Thailand
Ukraine
United Arab
Emirates
United Kingdom
United States

60

PwC Cyprus

Received in Cyprus
Dividends
Interest
%
%
5/10 (24)
5
10
10
0/15 (39)
Nil
0/5 (23)
0/5 (4)
10
10
Nil
Nil
10
0/10 (4)
5/10 (26)
Nil
Nil
Nil
10
10
Nil
Nil
Nil
0/7/10 (4), (27)
10
0/10 (4)

Royalties
%
5
10
Nil
5
10
5
0/5 (25)
Nil
Nil
10
5
10
0/5 (25)

5
Nil
0/5 (28)
5/15 (3)
0/15 (32)
10
5/15 (35)
Nil

5
Nil
Nil
0/10 (4)
0/10 (9)
10/15 (33)
2
Nil

5
Nil
Nil
Nil
10/15 (41)
5/10/15 (34)
5/10 (36)
Nil

0/15 (37)
5/15 (38)

10
0/10 (16)

0/5 (17)
Nil

Notes- Table B- inbound payments to Cyprus

1.

The rate of 5% if a dividend is paid by a company in which the

beneficial owner has invested less than EUR 150.000.
2.
A rate of 5% if the investment is not less than EUR200.000 in the share
capital of the company paying the dividend. If such investment is less
than EUR 200000, dividends are subject to 15% WHT which is reduced
to 10% if the recipient company controls 25% or more of the paying
company.
3. A rate of 15% applies if received by a company holding less than 25%
of the share capital of the paying company and in all cases if received
by an individual.
4. No WHT if paid to the government/Central Bank/ Public Authority of
the other state.
5. No WHT for interest on deposits with banking institutions.
6. Serbia, Montenegro and Bosnia apply the Yugoslavia/Cyprus treaty.
7. The 5% rate applies to companies holding directly at least 25% of the
share capital of the company paying the dividend. In all other cases the
WHT is 10%.
8. The treaty rates do not apply if the payment is made to a Cyprus entity
by a resident of Bulgaria owning directly or indirectly at least 25% of
the share capital of the Cyprus entity and the Cyprus entity pays tax in
Cyprus at a tax rate lower than the usual tax rate.
9. Nil if paid to a government/Central Bank/ Public Authority or for
export guarantee.
10. Nil on literary, dramatic, musical, or artistic work (but not including
royalties in respect of motion picture films and works on film or
videotape for use in connection with television).
11. Nil applies if received by a company (excluding partnership) which
holds directly at least 10% of the share capital of the paying company
for an uninterrupted period of no less than one year. 5% applies in all
other cases.
12. 10% for patent, trademark, design or model, plan, secret formula or
process, computer software or industrial, commercial, or scientific
equipment, or for information concerning industrial, commercial, or
scientific experience.

Tax Facts & Figures 2015 - Cyprus

61

13. A rate of 15% if received by a company controlling less than 10% of the
share capital of the paying company or the duration of any holding is
less than one uninterrupted year. A rate of 15% also applies if received
by an individual.
14. A rate of 15% applies if received by a company controlling less than
10% of the voting power in the paying company and in all cases if
received by an individual.
15. A rate of 15% if received by a company (partnership is excluded)
holding less than 10% of the capital of the paying company and in all
cases if received by an individual.
16. Nil if paid to a government, bank, or financial institution.
17. A rate of 5% on royalties for cinematographic films including films and
video tapes for television.
18. A rate of 15% if received by a company holding less than 10% of
the capital of the paying company and in all cases if received by an
individual.
19. A rate of 5% on cinematographic film royalties (other than films shown
on television).
20. A rate of 15% if received by a company holding less than 10% of
the shares of the paying company and in all cases if received by an
individual.
21. A rate of 10% for payments of a technical, managerial, or consulting
nature.
22. A rate of 5% if received by a company (other than partnership) holding
less than 10% of the capital of the company paying the dividend and in
all cases if received by an individual.
23. Nil rate applies if the recipient company (partnership is excluded)
holds directly 10% of the share capital of the paying company for an
uninterrupted period of at least 2 years. 5% in all other cases.
24. A rate of 5% applies if the beneficial owner is a company (other than
a partnership) which holds directly at least 25% of the capital of the
company paying the dividends. A rate of 10% in all other cases.
25. 5% rate applies for patents, trademarks, designs or models, plans,
secret formulas, or processes, or any industrial, commercial, or
scientific equipment, or for information concerning industrial,
commercial, or scientific experience.

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PwC Cyprus

26. A rate of 10% on dividend if paid by a company in which the beneficial

owner has invested less than EUR100.000 in the share capital of the
company paying the dividend.
27. A rate of 7% if paid to a bank or financial institution.
28. A rate of 5% if received by a company holding less than 10% of
the capital of the paying company and in all cases if received by an
individual or a company not limited at least partly by shares.
29. The treaty with Spain is effective January 1, 2015 (with the exception
of withholding taxes which have been effective May 28, 2014). This is
the first double tax treaty between the two countries.
30. The treaty with Lithuania is effective from January 1, 2015. This is the
first double tax treaty between the two countries.
31. The treaty with Norway is effective from January 1, 2015. This
replaces the previous treaty effective between the two countries.
32. A rate of 15% if received by a company holding less than 25% of the
share capital of the paying company and in all cases if received by an
individual or a company not limited at least partly by shares.
33. A rate of 10% on interest received by a financial institution or when
it relates to sale on credit of any industrial, commercial, or scientific
equipment or of merchandise.
34. A rate of 5% applies for any copyright of literary, dramatic, musical,
artistic, or scientific work. A 10% rate applies for industrial,
commercial, or scientific equipment. A 15% rate applies for patents,
trade marks, designs or models, plans, secret formulas, or processes.
35. A rate of 15% if a dividend is paid by a company in which the beneficial
owner holds less than 20% of the share capital of the paying company
and the beneficial owner has invested less than Eur 100.000.
36. A 5% WHT will be levied on payment of royalties in respect of any
copyright of scientific work, any patent, trade mark, secret formula,
process or information concerning industrial, commercial or scientific
experience. 10% WHT will be levied in all other cases.
37. A rate of 15% applies to individual shareholders regardless of their
percentage of shareholding. Companies controlling less than 10%
of the voting shares are also entitled to a rate of 15%. Companies
controlling at least 10% of the voting shares are entitled to nil WHT.

Tax Facts & Figures 2015 - Cyprus

63

38. A rate of 15% if received by a company controlling less than 10% of the
voting power of the paying company and in all cases if received by an
individual. If a company controls at least 10% of the voting power of
the paying company in order to benefit from the WHT rate of 5% other
conditions relating to the income of the paying company need to be
satisfied, otherwise a WHT rate of 15%.
39. Nil rate applies if the beneficial owner is a company (other than a
partnership) which holds directly at least 10% of the capital of the
company paying the dividends or if the beneficial owner of the shares
is the Government of Cyprus or Norway. A rate of 15% in all other
cases.
40. The Cyprus - Czechoslovakia treaty applies with the Slovak Republic.
41. 10% rate applies on payment of royalties of any copyright of literary,
artistic or scientific work including cinematograph films, and films or
tapes for television or radio broadcasting. A rate of 15% applies on
payments of royalties of any patent, trade mark, design or model, plan,
secret formula or process, or any industrial, commercial, or scientific
equipment, or for information concerning industrial, commercial or
scientific experience.

64

PwC Cyprus

2015 Tax diary

End of each month
-- Payment of tax deducted from employees salary (PAYE) in the preceding
month.
-- Payment of special contribution for defence withheld on payments of
dividends, interest or rents (when the tenant is a company, partnership,
the state or local authority) made to Cyprus tax residents in the
preceding month.
-- Payment of tax withheld in the preceding month on payments to nonCyprus residents.
31 January
-- Submission of declaration of deemed dividend distribution (IR623) for
the year ended 31 December 2012.
31 March
-- Electronic submission of the 2013 corporation tax return (IR4) for
accounting periods ending on 31 December 2013 (IR4).
-- Electronic submission of the 2013 income tax return of physical persons
preparing audited financial statements (2).
30 April
-- Payment of premium tax for life insurance companies - first instalment
for 2015.

Tax Facts & Figures 2015 - Cyprus

65

30 June
-- Payment of special contribution for defence for the first six months of
2014 on rents if such tax is not withheld at source by tenant and on
dividends or interest from sources outside Cyprus.
-- Payment of 2014 personal income tax under the self assessment method
by individuals not preparing audited financial statements (2).
31 July
-- Electronic submission by employers of the total 2014 payroll (Form IR7).
-- Submission of the 2015 provisional tax return and payment of the first
instalment.
-- Electronic submission of 2014 personal tax returns of individuals whose
incomes do not include income from a trade/business, rents, dividends,
interest, royalties nor income relating to trading goodwill (1).
1 August
-- Payment of 2014 final corporation tax under the self-assessment
method.
-- Payment of 2014 personal income tax under the self assessment method
by individuals preparing audited financial statements (2).
31 August
-- Payment of premium tax for life insurance companies - second
instalment for 2015.
-- Payment of immovable property tax for 2015 with a discount of 10% on
the tax due.

66

PwC Cyprus

30 September
-- Electronic submission of 2014 personal tax returns of individuals not required
to prepare audited financial statements but whose incomes include income
from a trade/business, rents, dividends, interest, royalties or income relating
to trading goodwill (1) (2).
-- Payment of immovable property tax for 2015 without a discount of 10% on
the tax due.

31 December
-- Payment of provisional tax - second and last instalment for 2015.
-- Payment of special contribution for defence for the last six months of 2015
on rents if such tax is not withheld at source by tenant and on dividends or
interest from sources outside Cyprus.
-- Payment of premium tax for life insurance companies - third and last
instalment for 2015.

Interest and Penalties

The official interest rate, as set by the Finance
Minister, for all amounts due after 1 January 2015
was not available at the time of publishing (4,5%
for 2014, 4,75% for 2013, 5% for years 2012 and
2011, 5,35% for the year 2010, 8% for the years
2007-2009 and 9% up to 31 December 2006).
In addition to the interest, penalties are also
charged depending on the circumstances.
Notes:
1.
2.

Physical persons are required to submit

personal tax returns only when their gross
income exceeds 19.500.
A physical person is obliged to submit audited
financial statements if his/her turnover exceeds
70.000 annually.
Tax Facts & Figures 2015 - Cyprus

67

PwC in Cyprus
We support you to create the value you are looking for by providing
specialised solutions based on quality. Together we build relationships
based on trust and we say things as they are, to assist you to deal with
issues that tomorrow will prove important.
We adapt the expertise of our more than 900 professionals in Cyprus and
the power of our global network of 195,000 experts in 157 countries to
your specific needs, helping you make the difference.
In a demanding and challenging business environment, our diverse teams
of experts are sharing deep knowledge and experience. We provide a broad
range of services as listed below to meet your increasingly complex needs.
Some of our services are:

Assurance

Tax Advisory

Consulting

Corporate Compliance

Deals

Indirect Tax

Company Administration

Legal Services

68

PwC Cyprus

Getting closer to our clients,

understanding their business
needs, working with them
efficiently and supporting
them to effectively address the
challenges.

Our industry specialisation in the following sectors, gives you the benefit
of our in-depth industry knowledge and experience.

Banking

Energy

Insurance

Hospitality & Leisure

Forex

Transportation & Logistics

Other CySec regulated entities

Public Sector

Funds

Real Estate

Retail, Consumer &

Manufacturing

Telecommunications

Construction & Engineering

Tax Facts & Figures 2015 - Cyprus

69

PwC offices in
Cyprus
Nicosia
Address:

Julia House, 3 Themistocles Dervis Street,

CY-1066 Nicosia, Cyprus
P O Box 21612, CY-1591 Nicosia, Cyprus
Tel. +357 - 22555000,
Fax +357 - 22555001

Limassol
Address:

City House, 6 Karaiskakis Street,

CY-3032 Limassol, Cyprus
P O Box 53034, CY-3300 Limassol, Cyprus
Tel. +357 - 25555000,
Fax +357 - 25555001

Paphos
Address:

70

PwC Cyprus

City House, 58 Gr Dighenis Avenue,

CY-8047 Paphos, Cyprus
P O Box 60479, CY-8103 Paphos, Cyprus
Tel.+357 - 26555000,
Fax +357 - 26555001

Tax Facts & Figures 2015 - Cyprus

71

Your contacts for tax

matters in PwC
Nicosia
Board Members

Directors

Senior Managers

72

PwC Cyprus

+357-22555000
Costas L Mavrocordatos
(Head of Tax & Legal)
Nicos P Chimarides
(In charge of Tax Advisory)
Chrysilios K Pelekanos
(In charge of Indirect Tax)
Marios S Andreou
Antonis C Christodoulides
Eftychios G Eftychiou
Panicos Kaouris
Stelios A Violaris
Charalambos Sergiou
Christos Charalambides
Constantinos Leontiou
Varnavas Nicolaou
Ioanna Stylianidou
Andreas Andronicou
Helga Csenki
Angela Eliophotou
Andreas Iosif
Nicos Koufou
George Liasi
Michael Michael
Constantinos Panayi
Antonis Petrou
Michalis Stavrides
Joanne Theodorides
Anastasia Tsentas

Limassol
Board Members

+357-25555000
Cleo Papadopoulou
Constantinos L Kapsalis

Director

Martha Lambrou

Senior Manager

Eleni Sofocleous
Maria Stephanou

Paphos

+357-26555000

Board Member

Pantelis Evangelou

Senior Managers

Paris Chrysostomou
Thoula Yerasimou Stavrou

ISSN 1450-4278 (print)

ISSN 1450-4286 (online)
Designed by: PricewaterhouseCoopers Ltd - Marketing & Communications Department
Printed by: Chr. Nicolaou & Sons Ltd
This content is for general information purposes only, and should not be used as a substitute for consultation
with professional advisors.
2015 PricewaterhouseCoopers Ltd. All rights reserved. PwC refers to the Cyprus member firm, and may
sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/
structure for further details.