How much is the Withholding Tax in Cyprus?
Cyprus withholding tax is what an employer removes from an employee’s gross wages and is paid directly to the government in the name of the employee. In short, the amount deducted is what an employee has to pay during the year as their annual income tax bill.
As a result, if too much money is taken overall, the employee will receive a tax refund, similarly, if not enough is withheld then the employee will have to pay additional taxes.
Double Tax Treaty Agreements
What is a Tax Treaty?
A bilateral, two-party agreement that two countries make in order to resolve issues that regard passive and active income double taxation.
The amount of tax that a country can apply to an individual’s income, capital, estate or wealth is what a tax treaty usually determines. Cyprus is in over 60 double-tax treaties with other countries. More information on these treaties can be found on the Ministry of Finance’s website.
WHT on income
Cyprus does not levy a WHT on dividends, interests, and royalties paid to non-residents of Cyprus. Except in the case of royalties earned on rights used within Cyprus, such as:
- Rights used within Cyprus. These are subject to 10% WHT (5% for cinematographic films).
- Cyprus Withholding Tax on Royalties for rights, used within Cyprus. Double tax treaties that Cyprus or the EU has entered into can reduce or remove these.
WHT on other types of income:
Firstly, A 10% is also imposed by Cyprus on the gross income/receipts that originate from the exercise in Cyprus of any profession or vocation. Moreover the remuneration of non-resident public entertainers (i.e., theatrical, musical including football clubs, other athletic missions etc.).
Then, Cyprus imposes a 10% WHT on the counted Cyprus Tax Residents for any services of technical nature that have originated in Cyprus. That is to say that no Cyprus Withholding Tax is imposed if the services are carried out through a PE (Permanent Establishment) in Cyprus, or between companies of association. This is defined by the EU Interest & Royalty Directive that has been enacted into the tax legislation of Cyprus.
Finally, A 5% WHT is levied on gross income derived from within Cyprus by non-residents with no local PE for services in regards to the exploration, extraction or exploitation of the continental shelf. Similarly, the establishment and use of pipelines and other installations on the ground, on the seabed and on the surface of the sea.
At MariCorp, we offer an understanding of WHT and how it affects your business by providing services such as;
Cyprus & International Tax & VAT Consulting.
Redomiciliation for Cyprus Companies.
Representation & Trustee Services.
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