Cyprus has one of the most favourable tax regimes in South Eastern Europe and the Mediterranean region. More specifically, the island is particularly attractive to Norwegian investors as a result of a double-taxation treaty between Norway and Cyprus. It is thus no surprise that John Fredriksen, Norway's wealthiest individual, has chosen Cyprus as his country of residence.

In Cyprus, the revenues of trading companies are taxed at a rate of 10% as opposed to the 28% typical charge in Norway. When compared to countries which are generally perceived to be attractive investment locations, Cyprus' corporation tax regime is the most favourable.

Country	Corporation Tax
Morocco	35%
Greece	25%
Turkey	20%
Croatia	20%
Romania	16%
Bulgaria	10%
Cyprus	10%

Capital gains tax on land and immovable property

Capital gains tax on land and immovable property in Cyprus is 20% as opposed to 28% in Norway. Cyprus' capital gains tax rate remains competitive when compared to other investment locations.

Country	Capital Gains Tax
Morocco	35% (Companies), 20% (Individuals)
Greece	20%
Turkey	20%
Croatia	20%
Cyprus	20%
Romania	16%
Bulgaria	15%

Taxation of dividends

It is in this regard that Cyprus is one of the most attractive destinations for Norwegian investors. By way of brief background, before 2007 dividends from Norwegian companies to Norwegian individuals were tax free. This is no longer the case and dividends to Norwegian investors are taxed at a rate of 28% whether they come from a Norwegian or a foreign company. The effect of the Norway/Cyprus double taxation treaty is that dividends from a Cypriot company to a Norwegian company are exempt provided that the Norwegian Company owns more than 1% of the share capital of the Cypriot company. Otherwise, the charge is a mere 5%.

The table below summarises the treatment of dividends in Norway from companies incorporated in the following countries.

Country	Tax on dividends
Greece	40%
Croatia	28% (no DTT)
Turkey	25%
Morocco	15%
Bulgaria	15%
Romania	10%
Cyprus	Exempt (see comment above)

Stamp Duty Tax

Transfer tax, borne by the purchaser of real estate upon an acquisition, is common in most jurisdictions. In Cyprus it takes the legal form of “stamp duty” and it ranges from 3 to 8%. The payment of stamp duty tax is required in order to transfer the freehold ownership to your name and is payable once the property is registered in your name at the Land Registry Office.

It is probable that the stamp duty tax will be reduced or removed when Cyprus introduces it's 15% VAT on property from June 2008.

The tax is payable once only to the Land Registry and is calculated as follows:

Value of Property (CYP)	Stamp duty rate %
Up to 50,000	3%
From 50,001 to 100,000	5%
Above 100,000	8%

Curency rate: 1 CYP = 1.7 EUR

Method of charging: if a property has been bought jointly by two or more people i.e. if their names are on the Contract of Sale, then the cost of the property may legally be divided equally between those owners. The tax will then be charged to each owner for their portion, meaning that the individual cost will fall into a lower price band. The grand total will then be less.

For example:
Property purchase price: CYP 120,000

With 1 owner

50,000 at 3% = 1,500
50,000 at 5% = 2,500
20,000 at 8% = 1,600
Total = 5,600

With 2 owners

50,000 at 3% = 1,500
10,000 at 5% = 500
Total for each owner = 2,000
Grand total = 4,000