77 terms

Glossary

The vocabulary of Cyprus structuring, defined once and used consistently across every page on this site. Each entry links to the full treatment, with its own sources and review date.

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60-Day RuleCyprus: An individual who does not spend more than 183 days in Cyprus may still be treated as Cyprus tax resident where, in the same tax year, they spend at least 60 days in Cyprus, spend no more than 183 days in any other single country, carry on business, are employed or hold an office in a Cyprus tax resident company that is not terminated during the year, and maintain a permanent residential property in Cyprus that is owned or rented.
183-Day RuleCyprus: An individual is treated as tax resident in Cyprus for a tax year if they are physically present in Cyprus for a period exceeding 183 days in aggregate during that year. The tax year is the calendar year. No further condition attaches to this route.

A

Administrative Service Provider: A regulated provider of corporate and fiduciary services, licensed and supervised in Cyprus by a recognised competent authority, in the case of accountancy practices the Institute of Certified Public Accountants of Cyprus. Regulated activities include company formation, registered office, provision of directors and secretaries, nominee shareholding and trustee services.
AGAktiengesellschaft: The public limited company form used in Switzerland, Germany and Austria. Named here because the relocation playbooks refer to it when describing what happens to a company when its shareholder moves.
AIREAnagrafe degli Italiani Residenti all’Estero: The Italian register of citizens resident abroad. Enrolling in it accompanies deregistration from the resident population register on leaving Italy, and it is a necessary administrative step rather than proof that Italian tax residence has ended.
Alternative Investment FundCyprus: A collective investment undertaking established under the Alternative Investment Funds Law, raising capital from a number of investors with a view to investing it in accordance with a defined investment policy for the benefit of those investors. Vehicles may be established as a common fund, an investment company with variable or fixed capital, or a limited partnership, and may be structured as umbrella funds with segregated compartments.
AMLAnti-Money Laundering: The body of obligations requiring regulated firms to identify their clients, understand the source of their funds and report suspicion. In Cyprus it governs what a licensed provider must collect before it can act.
ASPAdministrative Service Provider: A firm licensed to provide company administration, directorships, registered office and related fiduciary services. Doviandi is a licensed ASP.
ATADAnti-Tax Avoidance Directive: The EU directive setting minimum anti-avoidance standards across member states, including controlled foreign company rules, interest limitation, exit taxation and a general anti-abuse rule. Cyprus has transposed it.

B

BEPSBase Erosion and Profit Shifting: The OECD programme addressing arrangements that shift profit away from where value is created. Action 5 produced the modified nexus approach that governs how the Cyprus IP Box is calculated.
BVBesloten Vennootschap: The Dutch private limited company. A holding of at least 5 percent in one is a substantial interest, which is what triggers a preserving assessment when the shareholder emigrates.

C

CbCRCountry-by-Country Reporting: Annual reporting by large multinational groups of revenue, profit, tax and headcount in each jurisdiction they operate in, exchanged between tax authorities.
CDDCustomer Due Diligence: The identification and verification a licensed provider carries out before onboarding a client, covering identity, beneficial ownership, source of funds and source of wealth.
CFCControlled Foreign Company: Rules attributing the undistributed income of a low-taxed foreign subsidiary back to its parent. They are the main reason a Cyprus entity held from a higher-tax country needs genuine activity rather than ownership alone.
CGTCapital Gains Tax: In Cyprus, a charge levied on gains from Cyprus immovable property and from shares deriving value from it, rather than a general tax on capital gains. Most disposals of shares fall outside it.
CIGACore Income Generating Activities: The substantive functions that actually produce a company's income, as distinct from the administrative acts that record it. Substance analysis asks whether those activities are performed where the company claims to be resident.
CITCorporate Income Tax: The tax on company profits. The Cyprus rate is 15 percent from 1 January 2026, raised from 12.5 percent.
Controlled Foreign Company Rules: Rules implemented under Article 7 of the EU Anti-Tax Avoidance Directive, attributing to a controlling company the non-distributed income of a controlled foreign entity or permanent establishment where the parent holds directly or indirectly more than 50 percent of voting rights, capital or profit entitlement, and the actual corporate tax paid by the entity is lower than the difference between the tax that would have been charged in the parent state and the tax actually paid.
CySECCyprus Securities and Exchange Commission: The regulator supervising investment firms, funds and fund managers in Cyprus, and one of the bodies that licenses administrative service providers.

D

DAC6Directive on Administrative Cooperation, sixth amendment: The EU regime requiring intermediaries and taxpayers to report cross-border arrangements bearing defined hallmarks to their tax authority, which then exchanges them with other member states.
DAC7Directive on Administrative Cooperation, seventh amendment: Reporting obligations for digital platform operators on the income earned by sellers using their platforms, exchanged between member states.
DAC8Directive on Administrative Cooperation, eighth amendment: Extends automatic exchange of information to crypto-asset service providers and the transactions of their EU clients, closing the reporting gap that applied to crypto before it.
Deemed Dividend Distribution: Provisions of the Special Contribution for the Defence of the Republic Law under which a proportion of a Cyprus tax resident company's accounting profits, if not distributed within two years of the end of the tax year in which they arose, were treated as distributed to Cyprus tax resident and domiciled shareholders and subjected to the Special Defence Contribution accordingly.
DTTDouble Tax Treaty: A bilateral agreement allocating taxing rights between two countries and setting maximum withholding rates on dividends, interest and royalties. Cyprus has an extensive treaty network.

E

Economic Substance: Cyprus treats a company as tax resident where its management and control are exercised in Cyprus. The test is applied to the location of strategic decision making rather than to the place of incorporation, and it is evidenced through board composition, the location of board meetings, the authority actually exercised by directors, and the records supporting both.
EEAEuropean Economic Area: The EU member states together with Iceland, Liechtenstein and Norway. Several exit tax regimes, including the French and Spanish ones, treat a move within the EEA more favourably than a move to a third country.
EFTAEuropean Free Trade Association: Iceland, Liechtenstein, Norway and Switzerland. The distinction matters for Swiss occupational pension capital, where withdrawal in cash is restricted when moving to an EU or EFTA state and remaining covered by its social security system.
EMIElectronic Money Institution: A licensed non-bank provider of payment accounts and electronic money. EMIs are commonly used alongside a bank account for operating flows, and they are supervised, but they are not banks and deposits are safeguarded rather than covered by deposit guarantee schemes.
EORIEconomic Operators Registration and Identification: The customs identification number required by a business importing goods into or exporting them out of the EU. It is separate from VAT registration and is frequently discovered late.
ETFExchange Traded Fund: A pooled investment traded on an exchange. Relevant to a German departure because exit taxation was extended from 1 January 2025 to significant private holdings in investment funds, not only shares in operating companies.
ETREffective Tax Rate: Tax actually borne expressed as a percentage of profit before tax, as opposed to the headline rate. It is the figure that matters when comparing the IP Box against a jurisdiction with a lower headline rate and no preferential regime.

F

FBAFulfilment by Amazon: A service under which Amazon stores and ships a seller’s inventory. Because the platform moves stock between countries, a seller can acquire VAT registration obligations in a member state through a transfer they did not initiate.
FEMAForeign Exchange Management Act: The Indian statute governing cross-border transactions and the movement of capital. Residential status under FEMA is determined separately from residential status for income tax, and the two can differ at the same moment.

G

GESY: A contributory national health system established under the General Healthcare System Law, funded by contributions at rates that differ by contributor category, applied to emoluments, self-employment income, pensions, rent, dividends and interest. Contributions are assessed on total income across all categories subject to an annual ceiling of 180,000 euro.
GILTIGlobal Intangible Low-Taxed Income: A US regime attributing certain income of a controlled foreign company to its US shareholders before any distribution is made. It is why a Cyprus company owned by US persons is designed around attribution rather than around the Cyprus rate.

H

HE1Registrar form HE1: The declaration of compliance filed with the Registrar of Companies on incorporation, confirming that the requirements of the Companies Law have been met.
HE2Registrar form HE2: The notification of the registered office address of a Cyprus company.
HE3Registrar form HE3: The notification of the first directors and secretary of a Cyprus company.
HE32Registrar form HE32: The annual return of a Cyprus company, filed with the Registrar of Companies with the financial statements attached. Failure to file attracts penalties and can lead to strike off.
HMRCHis Majesty's Revenue and Customs: The United Kingdom tax authority, responsible among other things for applying the Statutory Residence Test and the central management and control test for company residence.

I

ICPACInstitute of Certified Public Accountants of Cyprus: The professional body for accountants in Cyprus. It is one of the authorities that licenses and supervises administrative service providers, alongside CySEC and the Cyprus Bar Association.
International TrustCyprus: A trust established under the International Trusts Law where the settlor was not a Cyprus tax resident in the calendar year preceding establishment, no beneficiary other than a charity or a company was Cyprus tax resident in that year, and at least one trustee is resident in Cyprus for the whole duration of the trust. Cyprus immovable property may be held.
IOSSImport One Stop Shop: The EU scheme for collecting VAT at the point of sale on goods imported in consignments valued at 150 euro or less, rather than on import.
IPIntellectual Property: Intangible assets including software, patents, designs and know-how. For the Cyprus IP Box, only qualifying intangibles count, and marketing intangibles such as trademarks are excluded.
IP BoxCyprus: A notional deduction of 80 percent of the qualifying profit derived from a qualifying intangible asset, where qualifying profit is the overall income from the asset multiplied by the nexus fraction. The nexus fraction is qualifying expenditure plus uplift expenditure, divided by overall expenditure, capped at one.
IR1Personal income tax return: The annual income tax return of an individual, filed with the Cyprus Tax Department. Now issued under the TD1 designation following the department renumbering.
IR4Corporate income tax return: The annual income tax return of a company, filed with the Cyprus Tax Department alongside audited financial statements. Now issued under the TD4 designation following the department renumbering.
IR7Employer's return: The annual return of employees' emoluments and tax withheld, filed by the employer. Now issued under the TD7 designation.
ISREInternational Standard on Review Engagements: The standard governing review engagements. ISRE 2400 provides limited assurance through enquiry and analytical procedures, and is the alternative to a full audit available to small Cyprus companies for financial years beginning on or after 6 February 2026.

K

KYCKnow Your Customer: The identification element of customer due diligence, used loosely as shorthand for the onboarding file as a whole.

M

MEU1Registration certificate for EU, EEA and Swiss nationals: The Cyprus registration certificate issued to EU, EEA and Swiss nationals exercising a right of residence, known colloquially as the yellow slip. It is a registration rather than a permit.

N

NIDNotional Interest Deduction: A deduction against taxable profit calculated on new equity introduced into a Cyprus company, designed to bring the treatment of equity closer to that of debt. It is capped as a proportion of taxable profit.
Nominee Director: A director appointed to a Cyprus company by an administrative service provider, ordinarily under a written mandate recording the scope of the appointment and the shareholder's expectations. The nominee owes the company the ordinary statutory and fiduciary duties of a director notwithstanding the terms of that mandate.
Non-Dom StatusCyprus: A Cyprus tax resident who is not domiciled in Cyprus falls outside the scope of Special Defence Contribution on dividend, interest and, until 2025, rental income. Domicile follows the general law concept of domicile of origin, subject to a deeming rule that treats an individual as domiciled once resident in Cyprus for at least 17 of the 20 tax years preceding the year of assessment.
Notional Interest Deduction: A deduction from taxable income equal to the reference interest rate multiplied by the new equity introduced into a Cyprus tax resident company on or after 1 January 2015. The reference rate is the yield on the ten-year government bond of the state in which the new equity is invested, plus a premium, subject to a floor. The deduction is capped at 80 percent of the taxable profit derived from the assets financed by that equity.

O

OEOverall Expenditure: The denominator of the IP Box nexus fraction. It captures all development spending on the asset, including acquisition cost and related-party outsourcing, which the numerator excludes.
OECDOrganisation for Economic Co-operation and Development: The intergovernmental body whose work on harmful tax practices and profit shifting sets the standards Cyprus applies, including the modified nexus approach behind the IP Box and the global minimum tax framework.
OIOverall Income: Total income derived from a qualifying intangible before the IP Box deduction, being royalties, embedded income and gains net of the direct costs of producing it. The nexus fraction is applied to this figure.
OSSOne Stop Shop: The EU scheme allowing a seller to account for VAT on cross-border sales to consumers in other member states through a single return, above the 10,000 euro distance selling threshold.

P

Participation Exemption: Dividend income received by a Cyprus tax resident company from a non-Cyprus company is exempt from Cyprus taxation, subject to an anti-avoidance test. The exemption is denied only where both limbs are met: more than 50 percent of the paying company's activities result directly or indirectly in investment income, and the foreign tax burden on the distributed profit is significantly lower than the Cyprus burden.
PEPermanent Establishment: A taxable presence created in another country by a fixed place of business or a dependent agent. It is the risk a company creates when key people operate from a country where it has not registered.
Permanent Establishment: Under the OECD Model Convention and the treaties following it, a permanent establishment is a fixed place of business through which the business of an enterprise is wholly or partly carried on, and includes a dependent agent who habitually concludes contracts, or habitually plays the principal role leading to their conclusion, in the name of the enterprise. Preparatory or auxiliary activities are excluded.
POEMPlace of Effective Management: The treaty concept used to break residence ties where two countries both claim a company. It looks at where key management and commercial decisions are in substance made, which is closely related to the Cyprus management and control test.

Q

QEQualifying Expenditure: The numerator of the IP Box nexus fraction. It captures research and development the claimant itself funded, through its own staff or unrelated contractors, and excludes acquisition cost and related-party outsourcing.
QPQualifying Profit: The portion of overall income that the IP Box deduction applies to, being overall income multiplied by the nexus fraction. Eighty percent of it is deducted, leaving the remainder taxed at the corporate rate.

S

SARSSouth African Revenue Service: The South African tax authority. Ceasing South African tax residence is notified to SARS through a prescribed process, and it issues confirmation of non-resident status recording the effective date.
SDCSpecial Defence Contribution: A Cyprus tax charged on dividends, interest and rent received by domiciled residents. Non-domiciled residents are outside it, which is the substance of what non-dom status delivers.
Special Defence Contribution: A contribution levied under the Special Contribution for the Defence of the Republic Law on dividends, interest and formerly rental income arising to Cyprus tax residents who are domiciled in Cyprus. Companies are also within scope in defined circumstances. Individuals who are Cyprus tax resident but not domiciled in Cyprus are exempt.

T

Tonnage TaxCyprus: A tonnage-based system of taxation applied under the Merchant Shipping (Fees and Taxing Provisions) Law to qualifying owners, charterers and ship managers in respect of qualifying vessels engaged in qualifying shipping activities. Tax is computed on the net tonnage of each vessel on a banded scale, and profits from qualifying activities are not separately subject to corporate income tax.
TPTransfer Pricing: The rules requiring transactions between related parties to be priced on arm's length terms and supported by documentation. It applies to the royalty between an IP company and an operating company.
Transfer Pricing in Cyprus: The application of the arm's length principle to controlled transactions between associated enterprises, implemented in Cyprus through the Income Tax Law and supporting regulations aligned to the OECD Transfer Pricing Guidelines. A local file is required where controlled transactions in a category exceed the annual threshold, a master file where the group is above the consolidated revenue threshold, and a summary information table is filed for controlled transactions.

U

UBOUltimate Beneficial Owner: The natural person who ultimately owns or controls a company. Cyprus maintains a beneficial ownership register, and nominee arrangements do not change who is identified.
UEUplift Expenditure: An addition to the nexus numerator of up to 30 percent of qualifying expenditure, capped at the amount of non-qualifying expenditure. It softens the effect of acquisition cost and related-party outsourcing without removing it.

V

VATValue Added Tax: The consumption tax on goods and services. The standard Cyprus rate is 19 percent, with reduced rates of 9 percent and 5 percent for defined categories.
VIESVAT Information Exchange System: The EU system for validating VAT numbers and for reporting intra-community supplies. A Cyprus company selling to VAT-registered businesses elsewhere in the EU files VIES statements alongside its VAT returns.

W

WHTWithholding Tax: Tax deducted at source on a cross-border payment. Cyprus applies no withholding on dividends, interest or most royalties paid to non-residents, subject to the defensive measures against listed jurisdictions.
WIPOWorld Intellectual Property Organization: The United Nations agency administering international intellectual property treaties and registration systems, including the Patent Cooperation Treaty and the Madrid System for trademarks.

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