Cyprus special types of taxation
1. Life insurance companies
Life insurance companies are subject to a minimum tax of 1.5% of their gross premiums. The interest income is deemed to be the result of the original nature of business and therefore is considered as business income rather than interest.
2. Pensions from overseas
The individual resident’s received pensions from abroad up to €3.420 are exempt; any excess above €3.420 is taxed separately at a flat rate of 5%.
The taxpayer can choose to be taxed at normal Cyprus Tax rates if more favourable.
3. Variable remuneration of individuals employed in the Funds industry
The variable remuneration of employees of :
An Alternative Investment Fund (AIF) Manager or self-managed AIF, or
a Management company for Collective Investments in Transferable Securities (UCITS),
which is connected to the carried interest, is taxed at a flat rate of 8% with a minimum tax liability of €10.000 per annum (subject to conditions). Qualifying employees can elect to be taxed under this special mode of taxation on an annual basis for a 10-year period or otherwise be taxed in accordance with the personal income tax rates.
4. Income of professionals, artists, and athletes
The gross income derived by any non-resident individual of Cyprus from the activity within Cyprus of any profession or vocation is subject to 10% Cyprus withholding tax deducted at source (unless a tax treaty provides for a lower tax rate).
5. Income from technical assistance
The gross income arising from sources in Cyprus, as consideration for technical assistance provided by any person who is not resident in Cyprus, is subject to withholding tax at the rate of 10%. Such income is exempt from withholding tax if the services are provided by a permanent establishment in Cyprus.
6. Film rentals
The gross income from film projection in Cyprus for a non-resident is subject to a 5% Cyprus withholding tax. (unless a tax treaty provides for a lower tax rate).
Royalties received by a connected company registered in a European Union Member State are exempt from withholding tax (subject to conditions).
7. Income arising from intellectual property rights etc.
The gross income arising from intellectual property rights, other exploitation rights, compensations, or other similar income arising from sources within Cyprus, of a person who is not resident in Cyprus and does not arise from a permanent establishment in Cyprus, is subject to withholding tax at the rate of 10% (unless a tax treaty provides for a lower tax rate).
Royalties received by a connected company registered in a European Union Member State are exempt from withholding tax (subject to conditions).
Rights granted for use outside Cyprus are not subject to any withholding tax.
8. Natural resources
The gross income derived from non-resident with no permanent establishment in Cyprus relating to extraction, exploration, or use of the continental shelf as well as the establishment and use of pipelines and other installation on the Cyprus ground or exclusive economic zone, is subject to 5% Cyprus withholding tax (unless a tax treaty provides for a lower tax rate).
9. Payment of tax withheld
Tax withheld on payments to non-Cyprus residents should be paid to the Tax Department by the end of the following month.
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