Expenses That Are Deductible for a Cypriot Company

1. Up to the amount of €17,086 or 1% of the company’s gross revenue – annual turnover for expenses related to entertainment for business purposes (such as restaurants, cafes, etc.), by providing the corresponding supporting documents – expense invoices.
2. Transportation expenses (e.g., airline tickets) and accommodation expenses that are related to the professional activity and operations of the company, whether for attracting new clients, serving existing clients, participating in an exhibition, etc., by providing the corresponding supporting documents – expense invoices. Expenses incurred for personal use are not deductible from taxable income.
3. Donations made to approved charitable institutions, by providing the respective receipts.
4. Expenses incurred for scientific research purposes by small and innovative businesses.
5. Employer contributions to social insurance and approved funds arising from employee payroll. If not paid within the year, they are not deductible from that year’s taxable income.
6. For medical care expenses of employees, a deduction of up to 1% of their remuneration.
7. From the employee’s remuneration for expenses related to the provident and pension fund of the employees, a deduction from taxable income of up to 10%.

8. 80% of the net profit from royalty income, embedded income from intangible assets.
9. An expense deduction of up to 80% from the profits arising from the disposal or exploitation of assets.
10. For the acquisition of shares, directly or indirectly, the interest payable for the acquisition of 100% of a subsidiary’s shares is fully deductible, provided that the subsidiary does not own assets intended for exploitation by the business. If the subsidiary does own such assets, the interest deduction is limited to the amount corresponding to the assets exploited by the company.
11. Capital introduced into a Cypriot company from 01/01/2015 in the form of share capital and share premium is eligible for an annual Notional Interest Deduction (NID). The calculation of the annual NID is based on the amount of the new capital. The interest rate is equal to the 10-year government bond yield, increased by 3%.
12. The Notional Interest Deduction (NID) cannot exceed 80% of the taxable profit derived from assets financed by new capital (as calculated before the NID is deducted).
13. Expenses for marketing, research, communication, consulting, market research.
14. Personnel expenses (up to €19,500 tax-free for employees) with very low social security contributions for staff.