Corporate Income Tax in Cyprus
Corporate income tax is charged at 12.5% on worldwide income of Cyprus tax-resident companies — one of the EU's most competitive rates. Compliance combines the annual TD4 return, provisional tax payments, and specialist regimes for participation exemption, IP Box, and Notional Interest Deduction. Every Cyprus accountant handles corporate tax as a core service.
The Cyprus corporate tax regime
Cyprus imposes corporate income tax at 12.5% on the worldwide income of Cyprus tax-resident companies (residency based on management and control in Cyprus). Non-resident companies are taxed only on Cyprus-source income. Certain qualifying income streams enjoy full or partial exemption, notably foreign dividends and capital gains from qualifying participations, and IP Box qualifying income (effective rate 2.5%).
Because virtually every Cyprus accountant handles corporate tax as core work, choosing based on general "corporate tax" services is less useful than assessing specific specialist needs — see our international tax planning and tax compliance pages.
Key reliefs and exemptions
Participation exemption: dividends from foreign subsidiaries are exempt from Cyprus corporate tax provided the underlying activity is not passive and foreign tax is not "significantly lower" than Cyprus. Capital gains: generally not taxed except on Cyprus real estate (20%). NID: notional interest deduction on new equity (~6-7% currently). IP Box: 80% deduction on qualifying IP income (2.5% effective rate). Group loss relief: losses can be surrendered between Cyprus group companies (75% common shareholding).
Global network members
4 firmsAndreas Michaelides
Certified Public Accountant
📍 Limassol
INTEGRA InternationalMarios Michaelides
Certified Public Accountant
📍 Limassol
INTEGRA InternationalMichael A. Michaelides
Certified Public Accountant
📍 Nicosia
INTEGRA InternationalMaria Michael
Certified Public Accountant
📍 Limassol
INTEGRA InternationalWhere these firms are located
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Frequently asked questions
Is Cyprus corporate tax really 12.5%?
Yes, the headline rate is 12.5%. Effective rates can be significantly lower through participation exemption, IP Box, NID, and other reliefs. Complex structures should be planned with specialist tax advice.
Do all accountants handle corporate tax?
Yes, corporate income tax return preparation is a standard service across ICPAC-registered Cyprus firms. For complex situations (international structures, IP Box, TP), specialist tax advice from firms with dedicated international tax teams is more appropriate.