Cyprus Other deductionsTax must be deducted at source from the following payments to residents as follows:
- - Dividend - Standard deduction for a resident - is 17% (A payment to a foreign company - is exempt from any deduction at source).
- A dividend paid by an off shore company to its shareholders is exempt from any deduction at source
- Royalties - Zero tax must be deducted at source.
- Interest - The standard rate of deduction at source - 30%
Deduction at source for payments to foreign residents is subject to the Double Taxation Prevention Treaty.
Cyprus Tax Relief
- All forms of tax relief in Cyprus relate to the income of an individual.
- The following amounts are subject to the definitions in law.
|Cyprus Individual Relief||Amount|
|Donations||If agreed, to a limit
With no agreement depending on the monthly income.
|Life Insurance||Up to 1/6 of the taxable income.|
|Child allowance||An allowance defined by law for a child under the age of 16 who is not working or studying.
An allowance defined by law for a child who is studying at an institute of advanced studies.
An allowance defined by law for a child who is serving in the national guard.
|Old age allowance||An allowance defined by law is granted to any person over the age of 65.|
|Life partner||A reduction as defined by law.|
|Professional membership dues||The entire amount is allowable|
|Income from rent||20% of the income is tax exempt.|
Cyprus Tax Exempt IncomeThe following are eligible for an exemption from income tax on the forms of income specified:
- An individual's income up to EUR 19,500 per year per resident.
- An individual who receives a pension in Cyprus from overseas employment, to a limit.
- Interest on an individual's income from a government savings plan or from a mortgage company.
- Bank interest paid on deposits from overseas by a Cypriot bank to a foreign resident who is resident in Cyprus.
- Part of capital gains that are received by an individual on the sale of real estate - see under the heading "Capital Gains" for fuller details.
In addition to the deductions / credits that were listed above, deductions and business expenses may be claimed as follows:
|Offset of losses||Loss up to 1 million EUR can be offset forward for five years.|
There is no carry back of losses .
|Transactions between associated parties||These are transactions with associated companies with which there are significant ownerships or control associations.|
When transactions between associated parties are concerned, they are closely monitored by the tax authorities while comparing them to accepted market prices.
|Consolidated statements||A parent company may submit loss consolidated tax statements for the subsidiary companies and so offset company profits against losses in other subsidiary companies.|
Submission of a consolidated statement is conditional on the parent company holding in excess of 75% of the voting rights in the subsidiary company and certain other terms including an agreement for profit & loss transfer.
|Financing expenses||Interest is not deductible when financing assets which generate tax exempt income for the first seven years.|
|Bad Debts||Bad debts are tax deductible when proving that proper attempts to recover the bad debts were done.|
Cyprus Depreciation of Fixed Assets
- The customary method of depreciation in Cyprus for fixed assets is the straight-line method.
- For assets bought in the years 2012-2018 the accelerated depreciation of up to 20% is allowed.