Business Environment

flag Cyprus Cyprus: Business Environment

In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The tax year is the calendar year, from 1 January to 31 December.
Accounting Standards
Cypriot accounting practices used International Accounting Standards (IAS) for financial statements preparation. With the European Union membership, the Cypriot companies should adopt IFRS according to EU requirements.
Accounting Regulation Bodies
Treasury of the Republic of Cyprus
Accounting Reports
Annual financial statements including a balance sheet, a profit and loss account and an annex should be prepared in Greek and a company annual return be submitted to the Registrar of Companies.
Publication Requirements
The Company Law requires that a company maintains proper accounting records in accordance with the International Accounting Standards. Financial statements for a 12-month accounting period have to be prepared annually.

The Cypriot companies are required to maintain account books justifying:
- total payments received and expenses incurred
- total sales and purchases of goods
- details of debt and credit.

Professional Accountancy Bodies
ICPAC , The Institute of Certified Public Accountants of Cyprus
Certification and Auditing
The companies of Cyprus need to appoint one or many external auditors in order to authenticate the results announced in the Annual General Meeting. The competence of the auditor should be in accordance to those stated in Article 155 (1) of the Company Law. A Cyprus registered auditor is required to be appointed in the cases where the company: is required to prepare consolidated accounts; is a Public Limited company, or fails to meet the small company criteria. You can consult one of the following external auditors:
KPMG
, Ernst & Young, PricewaterhouseCoopers, Deloitte.
Accounting News
Information about taxation, auditing, and accounting.
IAS Plus

Return to top

Tax Rates

Consumption Taxes

Nature of the Tax
Valued Added Tax (VAT)
Tax Rate
19%
Reduced Tax Rate
Exports and international transport are zero-rated, same as international transport of persons and the supply, lease and repair of seagoing vehicles and aircraft and related services.
The 9% tax rate applies to hotel accommodation, restaurants, catering and certain local transport services (like transportation of passengers and their luggage by taxi).
The 5% tax rate applies to the purchase, construction or renovation of a house or flat to be used as a private main residence; various goods for incapacitated persons; bus fares for rural and urban areas; newspapers, books, magazines and similar items; water; medicines; food (except supplied in the course of catering); services provided by undertakers; services of writers and composers; refuse collection; waste treatment; road cleaning; fertilizers; animal feeding stuff; liquefied petroleum gas.
Certain items are exempt from VAT, including real estate (except “new buildings,” transfer of developed building land intended for the construction of structures in the course of carrying out a business activity, and leasing of immovable property to taxable persons for taxable business activities, for which a permanent non-imposition of VAT can be exercised by the lessor); services of doctors and dentists; social welfare; finance (except “SWIFT” services); insurance and reinsurance; human organs; education services).
Other Consumption Taxes
Excise duties are charged on the import of certain products like fuel, vehicles, cigarettes and alcohol. The exhaustive list of the products subject to excise duties can be found on the website of the Cypriot Customs and Excise Department.

Learn more about Service Providers in Cyprus on Globaltrade.net, the Directory for International Trade Service Providers.

Return to top

Corporate Taxes

Company Tax
12.5%
Tax Rate For Foreign Companies
Profits from activities of a permanent establishment situated outside Cyprus are completely exempt from taxes. In other cases, tax is paid only on income coming from activities done in Cyprus.
Tax resident companies are taxed on their worldwide income.
A company is resident in Cyprus if its management and control is exercised in the country.
Capital Gains Taxation
Capital gains from the sale of listed shares are fully tax-exempt. Capital gains from the disposal of immovable property situated in Cyprus and from the disposal of shares in an unlisted company that owns, directly or indirectly, immovable property situated in Cyprus are taxed at 20%. Gains from the disposal of shares in a company that indirectly owns immovable property in Cyprus and obtain at least 50% of its revenue from such property are also taxed at 20%.
Main Allowable Deductions and Tax Credits
Depreciation of tangible and intangible assets is tax-deductible at rates ranging from 3% to 100% (real estate, equipment, industrial buildings and hotels acquired between 2012 and 2018 are eligible for accelerated depreciation rates). Goodwill can be amortised for tax purposes.
Start-up fees are generally not deductible. Interest charges and bad debts are deductible. Donations to charitable organisations are fully deductible. Donations to political parties can give rise to a deduction of up to EUR 50,000.
Profits from the exploitation of intellectual property rights are deductible up to 80% whereas profits deriving from the disposal of such rights are fully deductible.
Employer contributions to approved funds on employees' salaries are fully deductible, same as for expenditure incurred in scientific research.
Fines and penalties are not deductible whereas unrecovered VAT is tax-deductible.
Business entertainment expenses are deductible up to 1% of the gross income or EUR 17,086 (whichever is lower).
Tax losses can be carried forward up to five years. The carryback of losses is not permitted.
Other Corporate Taxes
Social security contributions payable by the employer amount to 10% of salary (with rates expected to go up gradually until it reaches 10.7% by 2039) (the maximum amount of remuneration on which contributions are payable is 57,408 for 2021). Employers also pay a contribution equivalent to 2% of the salary to the Social Cohesion Fund. In some cases, employers are required to pay an 8% contribution to the Holiday Fund, 0.5% contribution to the Industrial Training Fund and 1.2% to the Redundancy Fund. Self-employed individuals contribute at 15.6%, calculated on notional income (varies according to the profession).

The property tax was abolished on 1 January 2017, but property transfer taxes are payable according to the value of the property. They amount to EUR 2,550 (or 3% of the value) for any property valued at EUR 85, 000 or less. The rate increases to 5% for real estate worth between EUR 85,001 and EUR 170,000, and to 8% for any value above EUR 170,000. These fees are reduced by 50% if the property is exempt from VAT. No rights apply if the property is subject to VAT. Mortgage registration fees are 1% of the market value of the property.

The capital contribution when setting up a company is EUR 105 and 0.6% of the nominal value of the authorised capital.
Stamp duties are capped at EUR 20,000 per document and apply to any transaction involving property situated in Cyprus or a deed signed in Cyprus.
Resident companies are subject to a special defensive contribution of 17% on dividends, 30% on interest income and 3% on rental income.

Credit institutions established in Cyprus and their foreign branches are subject to a 0.15% tax on certain deposits of money. Companies also pay a lump-sum fee of EUR 350 per year, capped at EUR 20,000 per group.

Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Cyprus Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 16.0 13.9 10.6 9.0
Time Taken For Administrative Formalities (Hours) 119.5 226.2 175.0 218.0
Total Share of Taxes (% of Profit) 22.4 36.5 36.6 48.8

Source: Doing Business - Latest available data.

Return to top

Individual Taxes

Tax Rate

Income Tax Progressive tax rates from 0% up to 35%.
EUR 0 -19,500 0%
EUR 19,501 - 28,000 20%
EUR 28,001 - 36,300 25%
EUR 36,301-60,000 30%
Over EUR 60,000 35%
Special Defence Contribution (SDC) 3% rental income
17% dividends
30% interest (3% for corporate and Cyprus government bonds)
Allowable Deductions and Tax Credits
The first EUR 19,500 is tax-free.
Subject to an overall maximum deduction of one-fifth of the chargeable income, deductible expenses include life insurance premiums (capped at 7% of the insured amount), employee contributions to the social insurance fund, individual pension, provident fund contributions (capped at 10% of remuneration), medical fund contributions (capped at 1.5% of remuneration), and contributions to the General Health System.
Documented charitable contributions to approved charities are deductible.
Employment-related expenses of an employee are deductible, unless reimbursed by the employer; whereas commuting expenses are not.
Investments in approved innovative small/medium-sized enterprises may be deducted (up to 50% of the taxable income or EUR 150,000 per year). Investments in audiovisual infrastructure and technological equipment related to the audiovisual industry are entitled to a 20% deduction (subject to conditions).
Special Expatriate Tax Regime
Residents are taxed on their worldwide income whereas non-residents are only taxed on their Cyprus-source income.
In general, individuals are considered resident in Cyprus for income tax purposes if they are present in the country for a period or periods of more than 183 days in aggregate in a tax year.

Return to top

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of double taxation agreements
Withholding Taxes
Dividends: 0% (non-residents; resident corporations)/17% (for resident individuals - levied as special contribution for defence), Interest: 0% (non-residents)/30% (for residents), Royalties: 0 (residents; non-residents for the use of rights outside Cyprus)/5% (film royalties)/10%
Bilateral Agreement
Cyprus and Mauritius concluded a Double Taxation Agreement.

Return to top

Learn more about Taxes and Accounting in Cyprus on Globaltrade.net, the Directory for International Trade Service Providers.

Intellectual Property

National Organisations
The organization responsible for the protection of brands and patents in Cyprus is the Department of Registrar of Companies and Official Receiver.
Regional Organisations
None
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Patents Law, last amended 1999
20 years from the date of registering the application provided that the patentee pays the annual renewal fee. Patent Cooperation Treaty (PCT)
Trademark
 
Trademark law, last amended 2002
Successful registration of a trademark allows its proprietor the monopolistic exploitation of the mark for a total of 21 years. Trademark Law Treaty
Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design
 
Industrial Design and Models law, last amended 2003
25 years from the date of application. The term of protection is five years, renewable five times.  
Copyright
 
Copyright law, last amended 2004
The protection subsists for the duration life of the author plus 70 years. Berne convention For the Protection of Literary and Artistic Works
Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms
WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty
Industrial Models
 
Industrial Design and Models law, last amended 2003
25 years from the date of application. The term of protection is five years, renewable five times.  

Return to top

Legal Framework

Independence of Justice
Judiciary is independent in Cyprus. It operates according to the British tradition by upholding the presumption of innocence and the right to due process.
Equal Treatment of Nationals and Foreigners
Foreign nationals in Cyprus enjoy equal treatment from the judiciary including the commercial disputes.
The Language of Justice
Both Greek and Turkish are the judicial languages in the country.
Recourse to an Interpreter
Having an interpreter is always possible.
Sources of the Law and Legal Similarities
The source of the law is the Constitution of 1960 which is based on common law. The country accepts compulsory ICJ jurisdiction but with reservations. Cyprus has joined the European Union in May 2004. The application of the european legal framework is suspended in the north part.
Checking National Laws Online
Cyprus Government Gazette online

Learn more about Lawyers and Legal in Cyprus on Globaltrade.net, the Directory for International Trade Service Providers.

Return to top

Standards

National Standards Organisations
CYS, Cyprus Standards Organization
Integration in the International Standards Network
Due to its accession to the European Union in 2004, technical standards and specifications in Cyprus have shown increasing conformity with the European standards. The organization defining technical standards is the CYS (Cyprus Organization for Standards and Control of Quality). CYS is linked to the Ministry of Trade, Industry and Tourism. It is an affiliate member of three main European Standards organizations: the CENORM (European Standardisation Committee), the CENELEC (European Committee for Electro Technical Standardization) and the ETSI (European Telecommunications Standards Institute). It is also a member of the ISO (International Standardisation Organisation).
Classification of Standards
Cyprus has adopted more than 15,000 European Standards since its accession to EU membership.
First of all, in terms of standardization, Cyprus has to respect EU rules and directives and then additional National rules can apply in the field of standardization. One of the good example of a EU standardization is CE marking which is compulsory for certain types of products.
To have an overview of the Standardization process in the European Union, consult the european website dedicated to it: New Approach.
Online Consultation of Standards
The standards catalogue is available on the Cyprus Organisation for Sandardization website.
Certification Organisations
CYCERT Cyprus Certification Company

Return to top

Business Practices

General Information
Commisceo Global, Cyprus Guide: Culture, Customs and Etiquette
Passport to trade, Cypriot business culture
Opening Hours and Days
- Banks:
Monday-Friday: 8:30 to 12:30. Banks located in city centers offer afternoon services for tourists. Banks at international airports of Larnaca and Paphos are open to the public during the day and provide a night service hours on most flights.

- Stores:
a) Winter time (November 1st - March 31)
Monday, Tuesday, Thursday, Friday: up to 18:00, Wednesday, Saturday: up to 14:00.
b) Spring time (April 1st - May 31) and autumn (September 15 - October 31)
Monday, Tuesday, Thursday, Friday: up to 19:00, Wednesday, Saturday: up to 14:00.
c) Summer time (June 1 - September 14)
Monday, Tuesday, Thursday, Friday: 19:30 but closed in the afternoon from 13h to 16h. Wednesday, Saturday: up to 14:00.

- Offices:
September 15 - May 31
Monday - Friday: 08:00 - 13:00 and 15:00 - 18:00.
June 1 - September 14
Monday - Friday: 08:00 - 13:00 and 16:00 - 19:00.

- Administration:
Winter (1st September - 30th June)
Monday - Friday: 07:30 - 14:30 Thursday: 07h30 - 14h30, 15:00 - 18:00.
Summer hours (July 1 - August 31)
Monday - Friday: 07h30 - 14h30.
 

Public Holidays

New Year's Day January 1
Epiphany Day January 6
Green Monday - Start of Lent It occurs in the beginning of the 7th week.
Greek Independence Day March 25
Cyprus National Day April 1
Good Friday Good Friday is on the Friday before Easter sunday.
Easter Monday It occurs in the beginning of the 8th week.
Labor Day May 1
Holy Spirit Day 50 days after Greek Orthodox Easter.
Assumption Day August 15
Cyprus Independence Day October 1
National Day of Greece October 28
Christmas Eve December 24
Christmas Day December 25
 
 

Periods When Companies Usually Close

Christmas break 3-7 days during Christmas period
Summer break Varying closure during August, slower economic activity
 

Return to top

Any Comment About This Content? Report It to Us.

 

© Export Entreprises SA, All Rights Reserved.
Latest Update: April 2022