Personal Income tax:

Corporation tax: Companies are taxed at a flat rate of 10% on profit.

Defence fund contribution: Defence fund (provisional) contribution applies to income earned by Cyprus Tax residents while non-Cyprus tax residents are exempt. Defence fund contribution is imposed at the rates of:

• 15% on dividends earned by Cyprus tax resident individuals only
• 10% on interest earned by Cyprus tax resident individuals and companies
• 3% on rental income, reduced by 25%, earned by Cyprus tax resident individuals and companies and
• 3% on interest from government bonds.

Individuals whose income does not exceed €11.960 in a taxable year the rate is reduced to 3%.

Dividend income: Dividends are taxed at source with the flat rate of 15% defence fund contribution for Cyprus resident shareholders, whereas companies and non-resident shareholders are exempt of taxation.

Interest income: Interest is taxed at source with the flat rate of 10% defence fund contribution for Cypriot resident individuals and companies. Companies registered in Cyprus whose interest income is not arising from the ordinary activities or closely related to the ordinary activities of the company, they have the benefit of 50% exemption from corporation tax (i.e., 5%)

Rental income: From gross income of rents there is a reduction of 20% before taxation, as 3% defence fund contribution is imposed on the balance, which is payable by the 30th of June and 31st of December each year. Companies and individuals pay additionally corporation and income tax respectively after the deduction of 20% on rental income, 3% depreciation on building cost (not on land) and any interest arising from a loan made to either acquire or improve the property. Non resident individuals are not taxed on rental income earned abroad.