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Feb 28
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Cyprus Tax Reform 2025: Proposed Amendments and Impact on Businesses and Individuals

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On 26 February 2025, the Economics Research Center of the University of Cyprus presented its proposal for an upcoming tax reform. This initiative aims to modernize Cyprus’s tax system while ensuring alignment with European standards. The proposed changes are currently under review by the Ministry of Finance before submission to the Council of Ministers and, subsequently, the House of Representatives for approval. A public consultation period is also expected before the finalization of the reforms.

These changes are still in the proposal stage and subject to further amendments. Some provisions may take effect in 2025, while full implementation is anticipated in 2026.

Key Proposed Changes

Personal Income Tax

  • Increase in Tax-Free Allowance: The tax-free annual income threshold is proposed to increase from €19,500 to €20,500.
  • Adjusted Tax Brackets: Revised tax rates and income bands are proposed as follows:
Taxable Income (€) Tax Rate (%)
Up to 20,500 0%
20,501 – 30,000 20%
30,001 – 40,000 25%
40,001 – 80,000 30%
Over 80,001 35%
  • New Deductions for Families and Individuals:
    • Additional tax-free allowance for parents with children.
    • Deductions for individuals with housing loans for primary residences or rent payments.
    • Tax relief for green home upgrades.

Corporate Income Tax

  • Increase in Corporate Tax Rate: Corporate tax is set to rise from 12.5% to 15%.
  • Abolition of Deemed Dividend Distribution Rules: A significant simplification benefiting corporate structures.

Special Defence Contribution (SDC) Adjustments

  • SDC on dividends for Cyprus-domiciled and tax-resident individuals will be reduced from 17% to 5%.
  • The SDC on rental income will be abolished.

Stamp Duty and Other Adjustments

  • Stamp Duty Limitations: Stamp duty will only apply to agreements concerning real estate transactions, banking, and insurance contracts.
  • Extended Tax Loss Carryforward: The tax loss carryforward period will be extended from 5 years to 10 years, subject to specific conditions.
  • Tax Residency Criteria for Individuals:
    • The 60-day tax residency rule will remain in place.
    • Individuals with business ties in Cyprus may also qualify under the revised residency criteria.
  • New Treatment of Ex-Gratia Payments & Stock Options:
    • Ex-gratia payments will be taxable for employees (subject to capped tax-free allowances), while employers may claim deductions.
    • Stock options, under certain conditions, may be taxed at a reduced rate at the time of exercise.

Green & Digital Investment Incentives

  • Tax incentives for green and digital transformations:
    • Eligible expenses for sustainability and digital transition may qualify for super deductions or accelerated depreciation.
    • There will be no restriction on carrying forward tax losses from such expenses.

What Stays the Same?

Despite these proposed changes, Cyprus will retain its competitive tax advantages, including:

  • Non-Domiciled Tax Status for foreign nationals relocating to Cyprus.
  • Notional Interest Deduction (NID) on new equity.
  • Intellectual Property (IP) Box Regime, offering significant tax advantages.
  • Tonnage Tax Regime for shipping companies.
  • 50% income tax exemption for first-time employees in Cyprus.

What This Means for Businesses and Individuals

The proposed reforms mark a positive shift toward a more modern and internationally aligned tax system. Businesses and individuals should assess how these changes could impact their tax liabilities and long-term financial planning.

How Doviandi Can Help

Doviandi specializes in corporate tax planning, Cyprus company formation, and business relocation services. Our team can assist with:

  • Impact Assessments to evaluate how the proposed tax changes may affect your business.
  • Strategic Tax Planning to optimize corporate structures under the new regulations.
  • Personal Tax Advisory for individuals seeking to benefit from Cyprus’s tax advantages.

Stay ahead of the changes and ensure your business remains tax-efficient. Contact Doviandi today for a tailored consultation.

 

Jan 20
Love0

The Ultimate Destination for Business and Tax Efficiency

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Cyprus isn’t just another jurisdiction—it’s a hub for innovation, business expansion, and tax optimization. Whether you’re launching a tech startup, safeguarding intellectual property, or restructuring global operations, Cyprus provides a comprehensive suite of advantages to support forward-thinking entrepreneurs, multinational corporations, and high-net-worth individuals alike.

With its EU membership, strategic location, and business-friendly environment, Cyprus offers more than just tax benefits—it’s a platform for growth and global success. Explore how Cyprus Company Registration, Holding Companies, and Non-Dom Residency can unlock new opportunities for you.

What Makes Cyprus Stand Out?

  1. A World-Class Tax Regime
    • Low Corporate Tax: At 12.5%, Cyprus offers one of the most competitive rates in the EU.
    • No Withholding Taxes: Dividends, interest, and royalties paid to non-residents are tax-free.
    • Extensive Double Tax Treaties: Over 60 treaties minimize or eliminate tax on cross-border transactions.
    • IP Box Regime: An effective 2.5% tax rate on income derived from qualifying intellectual property makes Cyprus a top choice for innovation-driven businesses. Learn more on our Cyprus IP Box Regime page.
  1. Business-Friendly Ecosystem
    • Ease of Doing Business: Streamlined incorporation, minimal bureaucracy, and access to expert service providers.
    • Flexible Company Structures: Establish Holding Companies, trading entities, or tech-focused ventures with ease.
    • Advanced Infrastructure: Reliable banking, telecommunications, and professional services support global operations.
  1. A Gateway to Global Markets
    • Positioned at the intersection of Europe, Asia, and Africa, Cyprus provides unparalleled access to diverse markets.
    • Full membership in the European Union ensures seamless trade across the EU.
  1. Comprehensive Support for Digital and Tech Businesses
    • Home to a growing Digital Tech Ecosystem, Cyprus is a hub for SaaS companies, AI startups, and gaming ventures.
    • Benefit from R&D tax credits and incentives for innovation-driven industries.
  1. Personal Tax Advantages
    • The Non-Dom Cyprus regime allows individuals to benefit from zero tax on dividends, interest, and rental income for up to 17 years.
    • Simplified residency options under the 183-day and 60-day rules.
  1. Lifestyle Benefits
    • A safe, welcoming environment with a high standard of living.
    • Over 300 days of sunshine a year, excellent healthcare, and a vibrant cultural scene.

Industries Thriving in Cyprus

Cyprus has become a magnet for innovation and business excellence. Its tax and business framework support industries such as:

  • Technology & IP-Driven Companies: Leverage the Cyprus IP Box and skilled tech workforce to fuel growth.
  • Holding & Investment Companies: Optimize global operations with tax-efficient dividend management.
  • Wealth Management: Utilize International Trusts and advanced asset protection strategies.
  • Startups & Entrepreneurs: Benefit from a pro-business regulatory framework and access to EU markets.

How Cyprus Supports Forward-Thinking Companies

  1. SaaS and Tech Startups
    A SaaS startup shifted its IP portfolio to Cyprus, leveraging the IP Box Regime for a 2.5% tax rate on royalties, which allowed for rapid scaling and global market expansion.
  2. Holding Company Optimization
    A multinational established a Cyprus Holding Company to consolidate investments and streamline dividend distributions globally.
  3. Non-Dom Tax Residency
    Entrepreneurs relocating to Cyprus under the Non-Dom Regime enjoy tax-free income on global dividends and interest, enhancing personal and business finances.

FAQs: Your Cyprus Business Questions Answered

1. What makes Cyprus a better option than other EU jurisdictions?
Cyprus combines a low corporate tax rate with the benefits of EU membership, extensive tax treaties, and specialized incentives like the IP Box Regime.

2. Is it necessary to live in Cyprus to benefit from its tax advantages?
No, companies can operate from Cyprus without their owners relocating. However, individuals who choose to live in Cyprus can benefit from the Non-Dom Cyprus regime and its favorable personal tax structure.

3. Are startups eligible for Cyprus’s tax incentives?
Yes, startups in tech, R&D, and SaaS are particularly well-suited to leverage the Digital Tech Ecosystem and IP Box benefits.

4. What types of businesses benefit most from Cyprus Holding Companies?
Industries managing global subsidiaries, intellectual property, or investment portfolios often achieve significant tax efficiencies through Holding Companies in Cyprus.

5. How long does it take to set up a company in Cyprus?
Most companies can be incorporated within 5–7 business days. Learn more on our Cyprus Company Registration page.

Jan 20
Love1

Cyprus: A Thriving Hub for Tech Companies and Startups

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Why Tech Thrives in Cyprus

Cyprus has rapidly evolved into a leading destination for technology companies and startups. Boasting a business-friendly regulatory framework, world-class tax incentives, and a strategic location at the crossroads of Europe, Asia, and Africa, the island provides a fertile environment for tech innovation.

From SaaS startups and AI developers to gaming companies and app creators, Cyprus offers unparalleled opportunities to scale, innovate, and thrive in a competitive global market.

Key Opportunities for Tech Companies in Cyprus

  1. Strategic Tax Advantages for Tech Companies
    Cyprus’s tax regime is one of the most attractive in the EU, particularly for tech-driven businesses:
  • Cyprus IP Box Regime: Qualifying IP income benefits from an effective tax rate as low as 2.5%. Explore more about this regime on our Cyprus IP Box page.
  • Corporate Tax at 12.5%: Among the lowest in the EU, ensuring tax efficiency on global operations.
  • No Withholding Taxes: Dividends, interest, and royalties paid to non-residents are tax-free, offering seamless profit repatriation.
  1. Pro-Business Environment
  • Streamlined Incorporation: Setting up a company is efficient and cost-effective, with full compliance under EU regulations.
  • Supportive Legal Framework: Modeled on common law principles, Cyprus offers clarity and reliability in business operations.
  • Double Tax Treaties: Over 60 agreements minimize tax exposure across international markets.
  1. Access to a Skilled Workforce
    Cyprus has cultivated a highly skilled, multilingual workforce specializing in IT, software development, and digital services.
  • Relocation Incentives for Foreign Talent: The revised immigration policy allows companies to hire third-country nationals with ease.
  • Educational Excellence: Local universities and international institutions provide a steady pipeline of tech-savvy graduates.
  1. Connectivity and Infrastructure
  • Advanced Digital Networks: High-speed internet and robust telecommunications infrastructure support global tech operations.
  • Strategic Location: Positioned as a gateway to the EU, Middle East, and Africa, Cyprus is ideal for expanding tech enterprises.

Benefits for Specific Tech Sectors

  1. SaaS Companies
    Cyprus is an ideal jurisdiction for SaaS businesses thanks to its:
  • Access to the EU market, enabling seamless scaling.
  • Tax incentives under the Cyprus IP Box for software copyrights and licenses.
  • Skilled developers and engineers at competitive costs.
  1. AI and Machine Learning Firms
    AI startups benefit from Cyprus’s:
  • Proximity to emerging tech markets in the Middle East and Europe.
  • Low-cost R&D environment supported by IP tax benefits.
  • Government grants and EU-funded programs for innovative projects.
  1. Gaming and App Development
    Gaming and app companies can leverage Cyprus for:
  • Favorable licensing frameworks.
  • Tax-free dividend payments to non-residents.
  • Access to global talent pools for specialized design and development.

Full-Cycle Benefits for Startups

  1. Launch
    Startups can establish a corporate presence in Cyprus with minimal friction.
  • Cyprus Company Formation:
    Efficient incorporation process.
  • Tax exemptions and deductions to fuel initial growth.
  1. Scale-Up
    Growing tech companies benefit from:
  • EU market access and international trade agreements.
  • Tax efficiencies for reinvesting profits into R&D and expansion.
  • Tailored corporate structures like Cyprus Holding Companies for managing investments.
  1. Exit Strategy
    Cyprus supports smooth and tax-efficient exit strategies for founders and investors:
  • Profits from share sales are exempt from capital gains tax.
  • Strategic tax planning ensures optimized returns for stakeholders.

Why Cyprus Outshines Other Jurisdictions for Tech

Feature Cyprus Other Jurisdictions
Tax on IP Income 2.5% (effective, via IP Box) 10–15%
Corporate Tax 12.5% Higher in most EU countries
Startup Ecosystem Support Proactive government policies and grants Varies by jurisdiction
Talent Pool Multilingual, tech-oriented Not always globally accessible
Strategic Location Crossroads of Europe, Asia, and Africa Geographically limited reach

FAQs for Tech Companies in Cyprus

1. Can startups benefit from the Cyprus IP Box Regime?
Yes, startups developing innovative software, AI tools, or gaming platforms can take full advantage of the IP Box’s 2.5% effective tax rate.

2. Is it easy to relocate tech talent to Cyprus?
Absolutely. Revised immigration policies enable tech companies to hire third-country nationals, with streamlined processes for obtaining work permits.

3. What are the costs of incorporating a tech company in Cyprus?
The cost varies depending on your specific needs, but Cyprus Company Formation services are cost-effective and can be completed within a few days.

4. How does Cyprus compare to other EU jurisdictions for tech companies?
Cyprus offers a unique combination of low taxes, regulatory clarity, and access to international talent, making it more competitive than many EU nations.

5. Can Cyprus support the scaling of a tech company?
Yes, Cyprus provides access to EU markets, double tax treaties, and robust infrastructure, enabling seamless scaling across regions.

Dec 27
Love0

Tech Companies in Cyprus: Opportunities & Benefits

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Why Cyprus is a Thriving Hub for Tech Companies

Cyprus has rapidly emerged as a leading European destination for technology and innovation-driven businesses. With a business-friendly environment, attractive tax incentives, and a growing digital ecosystem, the country offers unique advantages for startups, established tech firms, and global enterprises looking to scale.

Key Opportunities for Tech Companies in Cyprus

  1. Strategic Location & EU Access
    Situated at the crossroads of Europe, Asia, and Africa, Cyprus provides easy access to major markets. As an EU member, businesses benefit from trade opportunities, regulatory compliance, and seamless operations across Europe.
  2. Attractive Tax Benefits
    Cyprus offers one of the most competitive corporate tax rates in Europe at 12.5%, with further reductions through the Cyprus IP Box Regime. This allows qualifying intellectual property (IP) income to be taxed at an effective rate as low as 2.5%, making it ideal for software companies, AI developers, and tech startups.
  3. Robust Legal & Business Framework
    The country boasts a well-regulated financial and legal system based on English Common Law, ensuring a secure and transparent business environment. This stability attracts international tech companies seeking long-term growth and asset protection.
  4. Growing Tech Ecosystem
    Cyprus is home to an expanding network of tech incubators, accelerators, and innovation hubs. With government support and private sector investment, startups and established firms have access to funding, mentorship, and collaboration opportunities.
  5. Skilled Workforce & Talent Pool
    With a high standard of education and a strong emphasis on STEM disciplines, Cyprus provides a skilled workforce fluent in English. This makes it an attractive location for tech companies seeking top-tier developers, engineers, and IT professionals.
  6. Business-Friendly Incorporation & Residency Options
    Setting up a tech company in Cyprus is straightforward, with minimal bureaucracy and fast-track company formation processes. Additionally, entrepreneurs and investors can benefit from attractive residency programs such as the Cyprus Permanent Residency Scheme and the Non-Domicile Tax Status, offering tax incentives for foreign professionals.

The Cyprus IP Box Regime: A Game-Changer for Tech Businesses

One of the biggest draws for tech companies in Cyprus is the IP Box Regime, which offers substantial tax savings on income generated from intellectual property, including:

  • Software copyrights, AI tools, and SaaS platforms
  • Gaming technologies and mobile applications
  • Patents and utility models

With up to 80% tax exemption on qualifying IP income, tech firms can maximize profits while fostering innovation in a business-friendly jurisdiction.

How Doviandi Can Help You Establish & Scale Your Tech Business in Cyprus

At Doviandi, we specialize in helping tech companies leverage Cyprus’s advantages. Our services include:
Company Formation & Structuring – Fast and compliant setup of your tech business
IP & Tax Planning – Maximize tax efficiencies with expert strategies
Legal & Business Advisory – Navigate Cyprus’s regulatory landscape with confidence
Residency & Relocation Support – Secure the best options for business owners and employees

Start Your Tech Journey in Cyprus Today

Whether you’re a startup, AI developer, SaaS provider, or global tech firm, Cyprus offers the perfect environment for growth and innovation. Let Doviandi help you establish a strong foundation and take advantage of Cyprus’s unmatched benefits.