- Interest earned from financing activities is taxed as ordinary business income at a rate of 10% (after deducting all business expenses). A very low profit margin of as little as 0,35% is acceptable for tax purposes which it can decreased up to 0,125%. This legislation makes Cyprus financing companies very attractive. Also group companies can benefit from this legislation since the low margins are acceptable for financing group companies.
- If interest does not qualify as business income then it is subject to SDC at a rate of 10%
Taxation of Interest
Tax Advantages
- Access to EU interest and royalties directive
- Access to EU parent subsidiary directive
- Capital gains on disposal of securities
- Capital gains tax
- Corporation tax
- Double Tax Treaties
- No withholding taxes on payments of dividends, interest and royalties outside Cyprus
- Tax legislation approved by the EU
- Tax losses carried forward indefinitely
- Taxation of Dividends
- Taxation of Interest
- Taxation of overseas Permanent Establishment priorities
- Taxation of Royalties
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