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Cyprus Fact-File Part 2:
Individual Business Domestic Taxation

2.14 Cyprus Individual Business Tax-Efficient Profit Distribution

Choosing between dividends, salary and fringe benefits

The relatively favourable rate of tax on dividends (15% Special Defence Contribution is imposed on payments to individuals, and no tax is imposed on domestic payments to companies, or payments to non-residents, whether individuals or companies), compared to the 30% rate of personal income tax that would be imposed on salary payments, is likely to make this a more attractive compensation option for a small business owner, where the business form permits.

Fringe benefits given to an employee (or to a company director, where they are employed by their business) would be subject to income tax in the normal way.
 

Introductory Guides

Brief, clearly written summaries with links to relevant sections of the Fact-File. The Fact-File itself is linked in full below.

 

Fact-File

Part 1: Cyprus Business Formation for Individuals

  1. Cyprus Individual Business Structures
  2. Cyprus Individual Business Registration
  3. Cyprus Individual Business Registration Cost
  4. Cyprus Individual Business Licensing
  5. Cyprus Foreigners in Business
  6. Cyprus Business Organisations
  7. Cyprus Business Accounting
  8. Cyprus Family Business Ownership
  9. Cyprus Venture Capital
  10. Cyprus Individual Business Franchises

Part 2: Cyprus Individual Business Domestic Taxation

  1. Cyprus Individual Business Tax Residence Rules
  2. Cyprus Permanent Establishment
  3. Cyprus Individual Income Tax Rates and Bands
  4. Cyprus Personal Allowances and Business Deductions
  5. Cyprus Husband and Wife Partnerships
  6. Cyprus Partnership Income Taxation
  7. Cyprus Limited Companies Income Taxation
  8. Cyprus Business Profit Retention
  9. Cyprus Business Losses
  10. Cyprus Value Added Tax (VAT)
  11. Cyprus Individual Business Capital Gains Tax (CGT)
  12. Cyprus Individual Business Other Taxes
  13. Cyprus Individual Artists Royalties
  14. Cyprus Individual Business Tax-Efficient Profit Distribution

Part 3: Cyprus Individual Business International Taxation

  1. Cyprus Individual Business International Tax Liability
  2. Cyprus Individual Business Withholding Taxes
  3. Cyprus Double Tax Treaties

Part 4: Cyprus Individual Business Tax-Efficient Structures

  1. Cyprus Individual Business Trusts and Foundations
  2. Cyprus Individual Business for Non-Residents
  3. Cyprus Individual Business use of Offshore
  4. Cyprus Controlled Foreign Corporation (CFC) Rules
  5. Cyprus Personal Estate and Inheritance Planning

Part 5: Cyprus Small Business Incentive Programs

  1. Cyprus Small Business Support Schemes
  2. Cyprus Training Incentive Schemes
  3. Cyprus R&D Tax Credits
  4. Cyprus Individual Business Tax Holidays

Part 6: Cyprus Individual Business Employment Issues

  1. Cyprus Individual Business Employer Responsibilities
  2. Cyprus Employment vs Self-Employment Tax Issues
  3. Cyprus Apprenticeship and Work Experience Schemes
  4. Cyprus Employee Dismissal Rules
  5. Cyprus Business Owner Employment and Invoicing Rules

Part 7: Cyprus Business Owner Welfare and Lifestyle

  1. Cyprus Business Social Security
  2. Cyprus Business Domestic Pensions
  3. Cyprus Offshore and International Pensions
  4. Cyprus Individual Business Healthcare
  5. Cyprus Individual Business Banking Services
  6. Cyprus Education
  7. Cyprus Individual or Business Leaving Cyprus
  8. Cyprus Domestic Real Estate
  9. Cyprus International Real Estate