Save Money On Taxes: A Guide To Cyprus Income Tax
Taxes. This is one of the most dreaded word for any worker or business owner. After all, the way taxes usually work is that the government gets a big chunk out of your hard earned money. Depending on your personal situation and your area, taxes can cause a big blow as a substantial amount will be taken from your salary.
While there is no actual way for you to be able to avoid paying taxes, you may find yourself trapped with a feeling of helplessness as your money gets taken away from you. However, you should know that there are actually ways in which you can avoid paying a large amount of taxes.
Interested in learning more about this legal way to reduce your taxes? Go ahead and keep reading.
For many years, many businesses and individuals have smartly reduced their taxes through the use of what are called “tax havens”. Simply put, these are various areas in the world wherein tax rates are low and very advantageous for either residents, non residents, or even both.
Out of these so called tax havens, Cyprus is currently one of the leading places in the world wherein businesses choose to create a base at simply because of the wonderful taxation policies that this country has to offer for both individuals and businesses alike.
Here are some of the details which you may be interested to learn about Cyprus taxation rates.
Cypriot Income Tax rules For Individuals
- An individual gets taxed based on their income, whether they be employed or self-employed.
- For an employed individual, it is required that their employer immediately deduct the taxables before the total salary is handed to the employee.
- Self-employed individuals are required to pay in advance their income tax. This will be offset on their filing of an annual report.
- To be considered a permanent resident of Cyprus, an individual must have established a residence in Cyprus for 183 days. He or she must have established such a residence during a calendar tax year.
- A permanent Cypriot resident is taxed on the income earned in Cyprus, but is not taxed on income that is earned overseas.
- A foreign resident of Cyprus is taxed only on the income earned in Cyprus.
- Cypriot residents are charged taxes based on their salaries. This means the higher the salary, the bigger the percentage of tax charged.
- Residents of Cyprus with an income of up to €19,500 are exempt from paying taxes.
Cyprus corporate tax rules
- The basic tax rate which exists in Cyprus is 10%.
- Cyprus is part of the EU, effectively securing its residents from double taxation.
- There is no withholding tax charged from divided income and royalties and interest paid from Cyprus.
- The following are exempted from taxes in Cyprus: dividends, dividend income, and profits from overseas establishments.
- There is no capital gains tax for the disposal of assets of an international trust.
- A trust from a Cyprus international business which receives income, interest, or dividends are not charged with tax nor withholding tax.
- The gains and income of a Cyprus international trust which come from abroad are not subject to Cypriot taxation.
- Vessels such as those in shipping companies which ship under the Cyprus flag are exempted from taxation.
As you can see, Cyprus is truly a great place to use in order to save yourself from alarmingly high tax rates.
Demetris Achilleos works at Oxford Management Ltd in Limassol Cyprus. He has extensive experience in international tax planning and offshore company incorporation.