Cyprus Capital Gains
Cyprus has become a popular base for international traders, investors and business owners. Three things usually work well together here: the Non-Dom Status brought in during 2015, the securities exemption under Article 8(22) of the Cyprus Income Tax Law N118(I)/2002, and a flat 15 percent corporate tax. Together, they can let most trading gains be received at an effective rate of 0 percent. This is done in a compliant way, inside the EU, and with full access to banking.
Tax Advantages for Traders in Cyprus
In recent years, Cyprus has become an attractive base for many international companies. One main reason is the Non-Dom Status introduced in 2015, which gives international business owners clear tax advantages.
Cyprus also offers a high standard of living, modern infrastructure and a Mediterranean climate. But for many, it is mainly the tax benefits that make Cyprus, as an EU member state, so appealing.
Capital gains and dividends in Cyprus
You can already benefit from the Cyprus tax advantages by setting up a Cyprus Limited or a Cyprus holding company. The position usually gets even better when you also move your tax residence to Cyprus, so that you can use the Non-Dom Status.
Option 1 Trading Through a Cyprus Company
A Cyprus company pays corporate tax at 15 percent. But many gains are tax-free under Article 8(22) of the Income Tax Law N118(I)/2002. These include gains from:
- Trading in ordinary and preference shares
- Options on securities
- Debentures and bonds
- Short positions and forward contracts
- Securities swaps and repo transactions
- Investment funds and collective investment schemes
If one or more of your Cyprus company's trading activities fall outside the exemptions under Article 8(22) of the Cyprus Income Tax Law, the income from them is taxed in Cyprus at 15 percent. This is worked out after taking off any losses and the running costs of the company.
Taxation of profits paid out from the Cyprus company
The rules below usually apply to the taxation of dividends (money the company pays out to its shareholders). They apply whether or not the company's profits are taxed in Cyprus under Article 8(22).
Shareholders who are tax-resident in Cyprus with Non-Dom Status
Profits paid to shareholders with Non-Dom Status in Cyprus are tax-free*. These individuals usually receive the dividends with no extra tax.
Shareholders who are tax-resident in other countries
Tax in Cyprus: dividends are paid out from Cyprus to international shareholders free of any Cyprus tax.
Tax in the shareholder's home country: in high-tax countries, dividends are usually taxed at around 25 percent to 35 percent. This may be charged as dividend withholding tax, income tax or another tax on the payout, and some countries add extra charges on top. In some countries you can claim part or all of this tax back under a tax treaty. In others, the rate can change from one region to another. Where tax is taken at source in the home country, the final result can also depend on local rules and on any double taxation treaty.
Taxation of profits kept in the company
If the profits of the Cyprus company stay in the country and are not paid out to the international shareholder, no extra tax usually arises in the shareholder's home country.
Option 2 Trading as a Private Individual with Residence and Non-Dom Status in Cyprus
Moving to Cyprus can bring many advantages, especially on tax. The Non-Dom Status is one of the biggest benefits for people who relocate to Cyprus. The main points are set out below.
Long validity
Cyprus Non-Dom Status is granted for 17 years. Since the 2026 tax reform, you can extend it twice, by five years each time, for a fee. This usually gives you long-term planning certainty.
Low minimum stay
Unlike many other countries with a similar status, Cyprus asks for a minimum stay of only 60 days per year.
No tax on remitted income
Cyprus does not use remittance-basis taxation. This means money you bring into the country is not subject to extra tax.
Tax-free dividends
Dividends from both Cyprus and foreign sources are tax-free in Cyprus*.
For the trading of shares and securities, Article 8(22) of the Income Tax Law N118(I)/2002 allows tax-free gains from:
- Trading in ordinary and preference shares
- Options on securities
- Debentures and bonds
- Short positions in securities
- Forward contracts on securities (futures/forwards)
- Securities swaps
- Securities deposits (for example ADRs and GDRs)
- Repo transactions (repurchase agreements)
- Investment and unit trusts (Investment Trusts, Unit Trusts, Real Estate Investment Trusts)
- International Collective Investment Schemes (ICIS)
- Undertakings for Collective Investment in Transferable Securities (UCITS)
- And similar investment vehicles
If gains come from positions not listed above, they are usually subject to normal income tax in Cyprus. You may, however, be able to claim a 50 percent income tax reduction.
Option 3 International Company for Managing Your Own Assets
If you are a private individual with Non-Dom Status in Cyprus, you can usually receive dividends from both Cyprus and foreign sources tax-free. This option can give you a lot of flexibility in managing your assets.
A trader who is tax-resident in Cyprus and holds Non-Dom Status can set up a company to manage their own assets. This company can also be based outside Cyprus, which may bring further tax advantages** and a high level of privacy:
Tax-free profits
Whatever the type of investment, all profits of the non-resident company can usually be received tax-free.
Tax-free distributions
The profits built up inside the company can be paid out tax-free abroad, and from there into Cyprus.
Tax-free dividends in Cyprus
Profits paid to shareholders with Non-Dom Status are tax-free in Cyprus. These individuals usually receive the dividends with no extra tax.
With this structure, you can enjoy the tax advantages of Non-Dom Status without being limited to certain types of positions. It can be a practical way to keep privacy, handle administration and grow the value of your assets, while making full use of the Cyprus tax advantages.
Our Conclusion
Cyprus is a strong location for traders who want to improve their tax position. The Non-Dom Status and the company structures on offer give you flexible and favourable ways to lower the tax on capital gains and dividends.
Our in-house tax advisers can help you build a plan that fits your needs.
* The contribution to GESY / GHS Cyprus, the public healthcare system of the Republic of Cyprus, is 2.65%, capped at total annual income of EUR 180,000. ** This does not apply where the registered office of the non-resident company is in a jurisdiction with less than 6.25% corporate tax, or where more than 50% of the company's profits come from capital gains.
We are happy to assist!
for a free consultation
with one of our experts
Readers were also interested in
Our Terms & Conditions and our Terms of Use.
