Tax Law in Cyprus

Specialist Legal Advice in Domestic and International Taxation

At Papantoniou & Papantoniou LLC, we provide expert legal advice across the full spectrum of Cypriot and international taxation. Our team advises corporate entities, financial institutions, and private clients on corporate tax, income tax, VAT, property tax, trusts, and international tax planning. We help clients implement efficient and compliant tax structures through Cyprus companies and international trusts.

Cyprus Tax Framework

Since the adoption of the new tax legislation in 2003, Cyprus has established a transparent and modern tax regime fully aligned with European Union law, OECD standards, and the EU Code of Conduct. The abolition of the former offshore regime transformed Cyprus into a respected, low-tax EU jurisdiction offering certainty and predictability for businesses and investors worldwide.

Advantages of the Cyprus Tax Regime

Cyprus continues to maintain one of the most competitive and business-friendly tax systems in Europe. Key benefits include:

  • Corporate income tax rate of 12.5% on taxable profits.
  • No withholding tax on dividends, interest, or royalties paid to non-residents.
  • Exemption from corporate tax on dividend income from abroad (subject to participation and substance conditions).
  • Exemption from tax on profits from the sale of securities.
  • Group reorganisations (mergers, demergers, takeovers) may occur without tax consequences.
  • Profits from a foreign permanent establishment are generally exempt from corporation tax.
  • Tax losses can be carried forward indefinitely.
  • Extensive Double Tax Treaty (DTT) network with over 60 jurisdictions.

Double Tax Treaties and International Tax Planning

Cyprus’s extensive DTT network provides relief from double taxation and supports efficient international structuring. Treaties include tax-sparing provisions and reduced withholding rates for dividends, interest, and royalties, ensuring cost-effective international tax planning and compliance with global standards.

Recent Tax Reform and Compliance Trends (2025)

The Cypriot Parliament approved significant tax amendments in 2025, introducing defensive tax measures targeting low-tax and non-co-operative jurisdictions. These include:

  • A new 17% withholding tax on dividends paid to associated companies in low-tax or blacklisted jurisdictions, effective from 1 January 2026.
  • Denial of deductions for interest and royalty payments to such jurisdictions.
  • Enhanced documentation and compliance obligations for cross-border payments.

These amendments are part of a broader reform package aimed at increasing transparency, aligning Cyprus with the EU’s global tax commitments, and strengthening its reputation as a fully compliant jurisdiction. The Ministry of Finance has also initiated public consultation on a comprehensive 2025 tax reform package, which proposes adjustments to corporate tax rates, extended loss carry-forward periods, and new enforcement powers for the Tax Department.

For an overview of these reforms, see the EY Cyprus Tax Alert (April 2025) and the KPMG Consultation Summary on the 2025 Reform Package.

Cyprus Holding Companies and International Structuring

A Cyprus holding company remains a preferred vehicle for international investment and tax planning. It benefits from EU directives, treaty protections, and flexible reorganisation rules. Whether used for holding, financing, royalty, or service activities, Cyprus entities offer tax efficiency and substance options that meet modern compliance standards.

Why Choose Papantoniou & Papantoniou LLC

With decades of experience in Cyprus and international taxation, Papantoniou & Papantoniou LLC provides strategic, forward-looking advice tailored to evolving global tax standards. We assist clients in maintaining compliance, optimising cross-border structures, and navigating complex regulatory developments in Cyprus and abroad.

Contact Our Tax Law Team

If you require expert tax advice, international structuring, or guidance on upcoming legislative changes in Cyprus, our dedicated tax law team is ready to assist.

Papantoniou & Papantoniou LLC
📍 Katsoni 8, Ayioi Omoloyites, Nicosia, Cyprus
📞 +357 22817711
📧 info@paplaw.com.cy
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