Telecoms & Satellite Communications Guide Cyprus

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CyprusProfile Digital Series Telecoms & Satellite Communication TAXATION Cyprus offers one of the most attractive tax regimes in Europe. A member of the European Union since 2004, Cyprus’ regulatory regime is in full compliance with the requirements of the EU and OECD. Cyprus has one of the lowest EU corporate tax rates at 12.5%. The island’s advantageous tax rate coupled with an extensive list of double tax treaties places it high on the list of preferred jurisdictions for international tax planners. The Corporation Tax Rate: 12.5% CORPORATION TAX BASIS OF TAXATION All companies that are tax residents of Cyprus are taxed on their income accrued or derived from all 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 considered tax resident of Cyprus if it is managed and controlled from Cyprus. VAT The standard rate of 19% applies to the supply of all goods and services in Cyprus which are not subject to the zero rate, the reduced rates (5% and 9%) or are not exempt. 34
CyprusProfile Digital Series Telecoms & Satellite Communication Key Features of the Cyprus Tax System w Simple, transparent and EU harmonised tax system following recommended OECD practices w Enjoys the tax benefits of EU Directives (Parent – Subsidiary Directive, Merger Directive and Interest and Royalties Directive) w Extensive Tax Treaty network with 66 countries w A corporate income tax rate of 12.5%, one of the lowest within the EU with possibility to enjoy a much lower effective tax rate w Availability of a Notional Interest Deduction for companies receiving new equity funding. The tax deduction can reach up to 80% of the taxable income generated by the new equity w IP Box regime based on the nexus approach which allows 80% deemed deduction on qualifying profits from the business use of qualifying IP w Attractive Tonnage Tax (TT) regime for ship owners, managers and charterers w Attractive tax jurisdiction for funds and attractive tax regime for fund managers w Capital gains are exempt from tax (except for capital gains arising from the disposal of immovable property located in Cyprus) w Profits of a foreign Permanent Establishment exempt from tax w Gains from trading in securities (shares, bonds and certain other financial instruments) are exempt from tax w Unilateral credit relief for foreign taxes w No withholding tax on dividend, interest or royalty payments (for use of royalties outside of Cyprus) made abroad w No taxes on entry and on qualifying reorganisations w Carry forward of tax losses for five years w Tax incentives for expatriate employees taking up employment in Cyprus (20%/50% exemption) w Dividend income and interest income are exempt from SDC for non-domiciled individuals taking up tax residency in Cyprus w Possibility to obtain Cyprus tax residency by spending only 60-days in Cyprus (subject to conditions) w No inheritance tax w No immovable property tax 35
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Telecoms & Satellite Communications Guide Cyprus

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