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Results: 4 Answers
Corporate Tax
2.
Special regimes
2.1
What special regimes exist (eg, for fund entities, enterprise zones, free trade zones, investment in particular sectors such as oil and gas or other natural resources, shipping, insurance, securitisation, real estate or intellectual property)?
 
Cyprus
Insurers: The taxable profits of insurers are subject to the standard income tax rules and rates. However, if the corporate tax liability is less than 1.5% of the gross premiums, the difference is paid as an additional tax.

Intellectual property: 80% of the net profits (calculated using the modified nexus fraction) earned from the exploitation of intellectual property is exempt from tax, subject to conditions and to the eligibility of the intangible assets.

Shipping: Entities which operate in the shipping industry (eg, shipowners, ship managers, charterers) may elect (this is mandatory in some cases) to be exempt from all direct taxes and instead be subject to the tonnage tax regime.

Funds: Funds which are managed and controlled from Cyprus and which have a legal form which is not tax transparent (eg, companies) are subject to tax based on the normal tax rules and rates.

Gambling: Companies regulated by the National Betting Authority are also subject to gaming tax, which is applied at a rate of 13% of net gaming revenue.

For more information about this answer please contact: Charles Savva from C.Savva & Associates Ltd
2.2
Is relief available for corporate reorganisations or intra-group transfers of companies and other assets? Please include details of any participation regime.
 
Cyprus
The transfer of assets or liabilities through a qualifying corporate reorganisation is exempt from tax, subject to conditions.

For more information about this answer please contact: Charles Savva from C.Savva & Associates Ltd
2.3
Can a taxpayer elect for alternative taxation regimes (eg, different ways to calculate the taxable base, such as revenue-based versus profits based or cash basis versus accounts basis)?
 
Cyprus
No, taxation is applied uniformly to net taxable profits, unless the taxpayer falls under one of the special regimes mentioned in question 2.1.

For more information about this answer please contact: Charles Savva from C.Savva & Associates Ltd
2.4
What are the rules for taxing corporates with different functional or reporting currency from that of the jurisdiction in which they are resident?
 
Cyprus
For entities with a functional or reporting currency other than the euro, their net taxable profits must be converted into euros.

For more information about this answer please contact: Charles Savva from C.Savva & Associates Ltd
2.5
How are intangibles taxed?
 
Cyprus
80% of the net profits (calculated using the modified nexus fraction) earned from the exploitation of intellectual property is exempt from tax, subject to conditions and to the eligibility of the intangible assets.

For more information about this answer please contact: Charles Savva from C.Savva & Associates Ltd
2.6
Are corporate-level deductions available for contributions to pensions?
 
Cyprus
Yes, employers’ contributions to approved pension schemes constitute tax-deductible expenses.

For more information about this answer please contact: Charles Savva from C.Savva & Associates Ltd
2.7
Are taxpayers from different sectors (eg, banking) subject to different or additional taxes or surtaxes?
 
Cyprus
As mentioned in question 2.1, different (or additional) taxes may apply to taxpayers in the insurance and shipping sectors, among others.

For more information about this answer please contact: Charles Savva from C.Savva & Associates Ltd
2.8
Are there other surtaxes (eg, solidarity surtax, education tax, corporate net wealth tax, remittance tax)?
 
Cyprus
No other surtaxes are applied to tax resident entities.

For more information about this answer please contact: Charles Savva from C.Savva & Associates Ltd
2.9
Are there any deemed deductions against corporate tax for equity?
 
Cyprus
Yes, a notional interest deduction is available for any new equity (ie, equity introduced after 1 January 2015) which is used to generate taxable income. The amount of the notional interest deduction cannot exceed 80% of the taxable income of the entity before applying the deduction.

The notional interest deduction is calculated as the higher of:

  • the return on the 10-year government bond of Cyprus as at 31 December of the previous year, plus a margin of 3%; or
  • the return on the 10-year government bond of the country in which the equity was invested as at 31 December of the previous year, plus a margin of 3%.
For more information about this answer please contact: Charles Savva from C.Savva & Associates Ltd