The Cyprus taxation system is progressive, the higher your income, the more tax you are liable for. Tax rates for individuals range between 20% - 40%.

Personal Income Tax is as follows:

TAX YEARS 2003 and 2004

Chargeable income (EURO)		Tax Rate %
Up to 15377,41		0
15379,12 -20503,22		20%
20503,22 - 25629,02		25%
25629,02 and over		30%

As of January 2003, anyone resident in Cyprus for more than 183 days a year, is considered a resident and is liable to pay taxes on their worldwide income. The tax year ends on Dec 31st.

Income tax is not payable on dividend income, whether it originates in Cyprus or abroad.

According to our tax system you are obliged to declare your income from pension or any other sources to tax authorities. There are two groups of taxed income, as follows:

a) Those that have income from other sources other than pension their entitled to pay 5% income tax, exempt the first EURO€ 3417,20 (two thousand pounds).

b) Those that they have income from their pension are entitled to pay 5% income tax, exempt the first EURO€ 10251,61 (six thousand pounds).

Income from interest income is no longer liable to personal income tax. For interest income earned in 2002 the first EURO€ 1025,16 is not liable for taxation, and 50%of any amount over that is also exempt from taxation.
VAT is now at 15%.

Double Taxation Treaties

Cyprus has a wide and expanding network of double taxation agreements. Agreements for the avoidance of double taxation are currently in force with the following countries: Canada, China, the Czech Republic and Slovakia, Denmark, Egypt, France, Germany, Greece, Hungary, India, Ireland, Italy, Kuwait, Malta, Norway, Poland, Romania, Russia, (including all the CIS countries except for Kazakhstan) Sweden, Syria, United Kingdom, USA and the former Yugoslavia.

The main purpose of these agreements is the avoidance of double taxation of income earned in any of the two contracting States. Under these agreements, either (1) a credit is allowed in a contracting state in respect of tax levied by the other State on the same income or, (2) income taxed in one contracting State is exempt from tax in the other contracting State. Thus, the taxpayer does not pay more than the higher of the two rates of tax or he is not taxed twice on the same income.

A corporation or individual resident in one State may be liable to taxation in the other State by reason of being resident also of the other State or by receiving income emanating from that other State.

Corporations are usually considered residents of the State of their incorporation unless they maintain a permanent establishment in the other State, in which case profits attributable to such permanent establishment may be taxable in the other State.

Capital Gains Tax

Profit on the sale of real estate or of shares in a company that owns real estate, is taxable at the rate of 20%. There is a basic exemption for an individual. The exemption is conditional on the class of the real estate, a commercial asset being subject to a higher rate of capital gains tax than a residential apartment and so forth. The amount of the exemption on the sale of a residential apartment is up to a maximum of EURO€ 85430,07.

Corporation Tax:

The basic tax rate is 25%. For income up to EURO€ 68344,06, the rate of tax is 20%.

Offshore companies are taxed at one-tenth of the normal rate (4.25%) regardless of the place of management and control of the company. Shareholders who receive dividends from offshore companies are not subject to any further taxation.