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Corporate Tax Compliance in Cyprus

Corporate Tax Compliance in Cyprus

Corporate tax compliance in Cyprus encompasses the practices of observing the rules and regulations regarding the taxation or profit both for resident and foreign companies deriving income from the country. Our Cypriot accountants specialized in tax compliance can provide you with complete information about the tax principles, the applicable laws and the options for tax planning and minimization. Working with our team of experts will facilitate the process of observing the local rules and, in general, will allow investors to avoid any unpleasant sanctions that can rise from noncompliance. 

Cyprus is seen as one of the most advantageous locations for company creation in Europe because of its low-tax regime. Moreover, the country’s position makes it a strategic location to base a business because it offers quick access to three major markets: Europe, Asia, and Africa. These two key benefits make it a preferred location both for those who wish to open a new business and those who are looking to expand internationally.

Working with an accounting firm in Cyprus presents important advantages that relate not only to tax compliance and tax planning but also the overall process of outsourcing accounting matters. This makes it a lot easier for company owners to focus on developing their business in Cyprus.

Corporate taxes in Cyprus

The list below is a summary of the most important types of corporate taxes, summarized by our Cypriot accountants specialized in tax compliance.

  1. The low corporate income tax: this has a value of 12.5%, one of the lowest in Europe and it applies to resident companies on their worldwide profits and non-residents on their Cypriot-derived profits.
  2. Transfer tax: a transfer fee for an immovable property has values ranging from 3 to 8%
  3. Social security: the social security contributions of the employer are 9.5% of the employee’s gross salary (plus 2% for the social cohesion fund).
  4. VAT: the standard rate is 19% with lower rates of 0%, 5% and 9% for certain types of goods and services.

Cyprus imposes no withholding tax on dividends, another advantage for investors looking to open a company here. There is no real estate tax and stamp duty is payable only in certain conditions. One of our agents can give you complete information about all of the taxes for corporations in Cyprus.

Tax compliance, explained by our accountants in Cyprus

Some of the key principles referring to tax compliance for corporations in Cyprus are listed below:

  • Tax year: the calendar year is often used as the tax year, however, companies may choose to close their accounts on different dates;
  • Consolidated returns: companies cannot submit consolidated returns, they are required to submit their own returns; a group losses setoff is possible when the relationship is one that can be referred to as a 75% parent-subsidiary;
  • Filing: electronic filing is mandatory and the deadline for the submission is 31 March for the year following the year for which the assessment is submitted; two provisional tax payments are made at the end of July and at the end of December;
  • VAT filing: quarterly Vat returns and VAT payments are to be submitted until the 10th of the second month following the period of assessment;
  • Penalties: penalties ranging between 100 and 200 EUR may be imposed for late filing or for late submissions; additional penalties can apply when the tax liability is still not paid.

In addition to the principles listed above, every company in Cyprus must maintain proper books and prepare the annual financial statements in accordance with the International Financial Reporting Standards. Moreover, the books and registers of a Cypriot company are to be kept for a period of six years. 

The audit in Cyprus is performed by an authorized auditor and the audited financial statements are to be attached to the annual return, according to year.

Our team of tax experts provides a complete range of services, adjusted according to company size, type as well as the business field. We can help companies with specialized services as well as counseling for all matters relating to taxation and the current obligations, as imposed by theTax Department. 

Corporate tax compliance while doing business in Cyprus can be facilitated by our team of accountants. We can provide tax advice and build tax strategies for small companies and large corporations alike. Our Cypriot accountants specialized in tax compliance have worked with local and foreign companies and can offer the necessary assistance for a variety of clients.

Contact our accounting firm in Cyprus for complete details about the tax and corporate services we provide.