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Cyprus-Hong Kong Double Taxation Treaty

Cyprus-Hong Kong Double Taxation Treaty

Cyprus’ double taxation treaties

One of the main advantages foreign investors benefit from in Cyprus is its double taxation agreements which associated with its low corporate tax rate make the island an excellent country to set up a company in. The double taxation agreements Cyprus has signed so far provides both individuals and companies significant reductions on their tax burdens. Hong Kong companies operating in Cyprus may benefit from the following advantages:

  • Cyprus is an EU country and thus allowing Hong Kong businessmen to establish a subsidiary or branch in Europe,
  • one of the most employed languages in Cyprus is English thus facilitating communication,
  • Cyprus is located at the cross-roads of Europe, Africa and the Middle East.

For additional information about Cyprus as an investment destination you may also contact our law firm.

Tax treaties between Cyprus and Hong Kong

Cyprus hasn’t concluded any taxation agreement with Hong Kong, but due to its taxation system Cyprus provides numerous tax exemptions and reductions to foreign investors. Among these, Hong Kong residents may benefit from the following:

  • Hong Kong companies will only be taxed on the business profits made by their permanent establishment in Cyprus,
  • Cyprus does not tax dividend payments made to foreign recipients,
  • Cyprus does not tax interests payments made to foreign beneficial owners.

Our Cypriot lawyers may provide you with more information about the taxation of foreign companies.

Avoidance of double taxation in Hong Kong

Hong Kong has only recently started to sign double taxation agreements, which is why foreign companies are taxed only on the income or profit sourced in the country at the moment, therefore Cypriot companies with subsidiaries or branches in Hong Kong will be taxed only on the income arising in the country. Other incomes of Cypriot companies will be taxed in their resident country. Hong Kong also allows a deduction for the foreign tax paid on a turnover basis if an income is subject to taxation in both Cyprus and Hong Kong. With respect to Cypriot residents, they will be taxed only on the income earned from employment in Hong Kong.

For complete information about trade relations with Hong Kong you may refer to our lawyers in Cyprus.