DJC - Cyprus Certified Public Accountants and Registered Auditors : Chartered Accountants Cyprus - CYPRUS TAX OVERVIEW INCOME TAX

CYPRUS TAX OVERVIEW INCOME TAX

Losses for the current year only can be surrendered from a group company to another group company.

Group relief will be given provided that both companies are members of the same group for the whole of a tax year.

Two companies are considered to be part of a group for group relief purposes if:
• One is a 75% subsidiary of the other , or
• Both are 75% subsidiaries of a third company

SPECIAL CONTRIBUTION FOR DEFENSE

All residents of the Republic are subject to defence contribution on the sources of income indicated below. Non residents are not subject to the defence contribution.

• Dividends 17%
• Interest Income 15%
• Rental Income less 25% 3%

Diviends

Exemptions:

Dividends received by a company resident in the Republic from another company resident in the Republic

Dividends received by a company resident in the Republic or a company not resident in the Republic which maintains a permanent establishment in the Republic from a company which is not resident in the Republic

This exemption does not apply if:

• The non-resident company paying the dividend engages directly or indirectly more than 50% in activities leading to investment income; and
• The foreign tax burden on the income of the dividend paying company is substantially lower than the tax burden of the Cyprus tax resident company or the non resident company which has a permanent establishment in the Republic.

Interest income that is received as a result of the carrying on of a business activity, including interest closely connected to the ordinary activities of the business, and interest earned by open-ended or close-ended collective investment schemes, is not considered interest for defence contribution purposes.