Corporate taxation is dependent on the residential status of the company. If the company is operated and managed in Cyprus, meaning that all major decisions and board meetings are done where the directors reside, it is considered a “Tax Resident”.
Since the 1st of January 2019 the Controlled Foreign Company (CFC) rules have been applied, indicating that non-distributed profits of CFCs either directly or indirectly controlled by a Tax Resident company of Cyprus, may become accountable to tax in Cyprus (some exemptions may apply).
Cyprus Tax Resident companies are accountable to tax based upon their worldwide income, whereas non-Tax Resident companies are accountable to tax based only upon their income earned in Cyprus.
The corporate tax on Limited Liability Companies in Cyprus is 12.5%.