About Cyprus Taxation and other information Following the tax reform in 2003 the corporate tax rate in Cyprus is the lower in the EU. The new tax regime provided tax exemptions for profit from the sale of shares and securities, dividend income and royalties. The large number of the island's double tax treaties remain in force and offer opportunities for international tax planning thus reducing the tax burden for businesses and individuals - refer to Cyprus Double Tax Treaties Schedule. The basic premise is that a Company in order to be taxed in Cyprus its management and control must be carried out of Cyprus. Management and control although not defined it is generally accepted as being the place at which board decisions are taken and where directors reside. New taxes, in brief Corporation tax Net profits are taxed at 10 per cent Profits from the sale of shares and securities are tax exempt Dividend income is exempt Interest income is exempt by 50 per cent if not the result of trading activities Defence tax Dividend income is generally exempt if some conditions are met Interest income from trading acitivities is exempt Interest income from investment activities is taxed at 10 per cent but a tax credit is allowed for any taxes withheld. Optimal Structures using Cyprus Cyprus holding company receiving dividend income Cyprus holding company receiving interest from its group Cyprus holding company receiving interest income Cyprus holding company making capital gains on selling subsidiaries / related companies Cyprus company trading in shares and securities Cyprus company with royalty income Contact us for more information and explanation of the above structures.

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