AIFs Tax Considerations

TAXATION OF THE FUND

  • Corporation tax at 12,5% on profits;
  • Notional interest deduction on qualifying equity allowing for tax to be reduced to as low as 2,5%
  • Excluded from tax:
  • Dividends received;
  • Profits on sale of securities;
  • Capital gains arising from sale of property abroad;
  • Capital gains from sale of shares of foreign property companies;
  • No subscription tax on the net assets of the fund;
  • Effectively only interest received is taxed at 12,5%;
  • May be exempted from VAT;
  • Access to extensive double tax treaty network for efficient tax structuring of investments.

TAXATION OF THE INVESTORS

Foreign investors:

  • No withholding tax on dividends;
  • No taxation on redemption of units;
  • No deemed distribution restrictions;

Resident investors:

  • A withholding tax of 17% if the investor is a physical person;
  • No taxation on redemption of units;
  • No withholding tax if investor is a company;
  • Deemed distribution of 3% instead of 17%.

Tax incentives for expatriates Fund Managers :

  • 50% exemption of income earned for a five year period from the date of first employment in Cyprus, if salary is over EUR 100.000