New legislation improves Cyprus’ attractiveness to Foreign Investors

The plenary of Cyprus House of Representatives approved on Thursday two new bills tabled by the government with the aim of strengthening the attraction of Foreign Investments to the island.

Both the government and the political parties believe that the new bills remove provisions in the previous taxation regime believed to have been discouraging foreigners from investing in Cyprus.

President of the Parliamentary Finance Committee Nicolas Papadopoulos and ruling AKEL party Spokesman Stavros Evagorou welcomed the new bills, expressing hope that the new provisions will contribute to the attraction of foreign investments in Cypriot mutual funds, which are now considered more competitive on a European level.

The amended legislation introduces a single taxation on income from interests secured by both physical persons and legal persons as well as collective investment plans.

The new bill, inter alia, proposes taxation of income from interests gained by collective investment plans only through corporate tax of 10%, while income from dividend investing will be exempted from both corporate tax and income tax.

Furthermore, dividends received from the participation of Cypriot companies in companies abroad will be exempted from the special Defence contribution, whereas defence tax for the allocation of mutual funds profits will be reduced from 15% to 3%.

Non allocated profits in the last five years will be levied with 3% defence tax instead of 15% in case of dissolution of a mutual fund, while the liquidation of stocks or mutual funds will be hereby exempted from the special Defence contribution.