Cyprus, officially the Republic of Cyprus, is one of the countries with a strong global trade climate for business operations. It is a country with a high-income economy, with a GDP per capita of $26,623, and a population of about 1.2 million people. Cyprus is an attractive country to open a business, both for entrepreneurs and investors as it refers to being one of the fastest-growing economies worldwide. Some of the main industries where Cyprus has succeeded are shipping, financial services, and, of course, tourism.
Ease of Doing Business in Cyprus
When it comes to the business environment in the Republic of Cyprus, it actually creates favorable conditions for entrepreneurs and their business: providing an excellent balance of developed infrastructure and business climate, encouraging the establishment of various startups by creating a favorable development, research, and innovation system. Moreover, Cyprus is known for its legal system based on the principles of the British Common Law which is recognized as effective and business-friendly for investors.
Because of the simplicity of the procedures, it is easy for entrepreneurs to handle the business formation process in Cyprus. You can open your own company within a few working days and, furthermore, with minimal expenses. The office rental fees in Cyprus are known as the lowest in the EU. For example, the office setup fees range from $1400 to $3500.
According to the Doing Business 2020 report, ease of doing business ranking in Cyprus is:
- Rank: 54
- DB score: 73,4
The ease of doing business score (DB score) serves as the basis for ranking economies on their business environment and shows an economy’s absolute position relative to the best regulatory performance, while the ease of doing business ranking is an indication of an economy’s position relative to that of other countries’ economies.
When launching a business in the Republic of Cyprus, all entrepreneurs and investors should pay special attention to business taxation regulations. Taxation in Republic of Cyprus may seem a complex one. Resident companies will be subject to income taxes, while foreign companies will be subject to corporate taxes in Cyprus only on income generated there. However, this country also has an extensive and developing double taxation treaty with 65 countries around the world.
There are also tax payments, which are known as the total number of taxes paid by businesses (plus electronic filing). This tax is counted as paid once a year even if payments are more often. The World Bank research shows that the Cyprus tax payments number is 16.
An individual who is not a tax resident of Cyprus is subject to income tax only on a certain income derived from any sources in Cyprus.
An income tax is a tax imposed on individuals or business entities (taxpayers) in respect of their income or profits earned. Income tax rates may vary by the types or characteristics of the taxpayer and the type of income.
As for the Cyprus Personal Income Tax Rate, it rates from 0% up to 35%.
A corporate tax (also called corporation tax or company tax) is a direct tax imposed on the profits of a corporation. The corporate income tax (CIT) rate in Cyprus is 12,5% (since January 1, 2019).
There is a Consumption Tax in Republic of Cyprus, with a rate of 19%.
The taxation system in the Republic of Cyprus says that there are no withholding taxes on any of the following:
This applies when such payments relate to transfers to non-residents in Cyprus.
The integrated tax rate on corporate income is included in the company income and is taxed as part of corporate income taxes.