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At a starting point then there applies a 10% corporate tax on profits made by a Cyprus company / business, however you may see exceptions as explained in details below.

Cyprus Companies have to pay a 10% corporate tax if they are incorporated as resident companies which status the majority of companies have and which gives several privileges like VAT registration, Double tax treaties and a Cyprus Tax Resident Certificate which is important to minimize the tax in your home country if applicable.

For nonresident Cyprus companies or Offshore companies there applies a 0% tax means they are entirely exempted from any corporate tax in Cyprus. Depending on where one live (which country) it can be of a huge benefit to have the Cyprus company to gain the privilege as an Offshore Company but it may as well have its limitation, for instant it is not possible for a Cyprus Offshore Company to obtain a Cyprus Tax Resident certificate, a Cyprus Offshore company can as well not be registered for VAT and the double tax treaties are also not applicable here.

I have seen on the company registrar in Cyprus's website that there is no such thing as a Cyprus Offshore company, how comes you offer this ?
The above questions is one of the most common questions we get in the middle of a discussion with new clients, when we ask where they found this information they refer to a publication which makes reference to the years 2002, 2003 and 2004 and which isn't valid any longer, what they found there is the following:

Cyprus imposes corporation tax on 'companies': this term includes all companies incorporated or registered under any Cyprus law, and any foreign company which carries on business or has an office or place of business (permanent establishment) in Cyprus.

In July, 2002, as part of the Income Tax Act No. 118(I) of 2002, Parliament approved a uniform 10% corporate tax rate, to apply to both onshore and offshore companies, plus a 2% levy on wage bills (meant to subsidise pensioners), and a 'Special Contribution' related to defence which in effect applies the 10% corporate tax rate to inter-company dividend and interest payments. However, the rules are complex.

An additional tax of 5% is imposed on company profits exceeding CYP1,000,000 for the years 2003 and 2004.

As from 2003, Cyprus applies a residence-based taxation regime: "Resident in the Republic", when applied to a company, means a company whose management and control is exercised in the Republic; and "non-resident or resident outside the Republic" will be construed accordingly.

So to repeat it for good faith and to avoid any confusion then the following applies:

In 2002 , 2003 and 2004 Cyprus had some special tax provisions. What applies today is very simple.

Cyprus have 2 types of Cyprus companies, as far as their tax status is concerned.

These are:

(a) A Cyprus resident company which is taxed at 10% on its net profits.
(b) A Cyprus non-resident company which is not taxed.

The place where management and control of the company is exercised determines the residence status of the company. If the majority of the company Directors are Cypriots, then it can be assumed that decisions are taken in Cyprus and the company is Cyprus resident.

A Cyprus resident company, can get Cyprus Tax Resident Certificate and can distribute to its shareholders all remaining profits without any withholding taxes provided that these are non Cyprus Tax Residents. If they are Cyprus tax residents, there is an withholding tax of 15%. Also the company can take advantage of more than 40 double tax treaties that Cyprus signed with various countries. It can also get a VAT Registration number.

A Cyprus non-resident company, pays no taxes, but it cannot take advantage of the double tax treaties network and cannot get a Cyprus Tax Resident Certificate. It cannot get a VAT Registration number.

We understand that it is difficult for one who is new to the incorporation of Offshore companies and to place a business in a foreign country in order to reduce the tax burden.

CCLOGIC.COM is specialized in the incorporation of companies in Cyprus, Seychelles, Belize and BVI and as well to open real corporate offshore bank accounts for clients worldwide, we do not participate in any activities which may be considered illegal but rather try to advice how it is possible to reduce tax, establish a bullet proof asset protection and structure companies in offshore jurisdictions in a way for maximal profits and privacy.