Cyprus company financial statements

Since joining the EU in 2004, Cyprus has become one of the most attractive business destinations in Europe.

The tax rate for Cypriot companies is 12.5%, which is one of the lowest rates in Europe. This rate applies to all profits earned worldwide from a Cypriot company, however, if the company operates solely as a “holding company” (that is, owns shares in other companies), it will not be taxed. In addition, a single corporate tax rate of 10% is now applied to all “resident companies”. This new tax status is based on residency, so a company is only a “resident of the Republic” if its business is managed and controlled centrally in Cyprus. Under these new rules, a resident corporation is taxed on its worldwide income accrued or derived from sources both in Cyprus and abroad if it is managed and controlled from Cyprus. The accounting and auditing of a Cyprus private company is mandatory every year. 

The following income is exempt from tax:

• Dividends.
• Profit from the sale of listed securities.
• Interests not related to the ordinary course of business or not directly related to the main activities of the company.

Possible deductions:

• Donations to charity.
• Hospitality expenses.
• All costs associated with the maintenance of the building.
• Employers’ social security contributions.

Expenses cannot be deducted from:

• Maintenance of vehicles.
• Business taxes.

When do you need to file your tax return?

• For a company registered before July 1 (for example, April 22, 2010), statements must be submitted to the tax authority by December 31 of the following year (December 31, 2011) for the previous year (2010). ).
• If the company was registered after July 1 (for example, September 30, 2010), reports must be submitted to the tax authority by December 31, two years after (December 31, 2012) for previous years (2010 and 2011).

If you have any questions regarding the Cyprus tax system, please contact us  .