Tax advisory in Northern Cyprus.
The tax exemption of a Free Port company is subject to a condition. We assess whether this condition is met in your activity, and we consider together with you the filing obligations in your country of residence.
- The condition for the exemption is assessed according to your activity
- Accounting and tax since 1996
Free Port Tax Framework.
Taxation varies according to whom the activity is directed at. For activities directed outside Northern Cyprus and within the Free Port, corporate tax and income tax do not apply.
- 0%Corporate tax
On activities directed outside Northern Cyprus and within the Free Port.
- 0%Income tax
On the same condition.
- NoneVAT
A Free Port company is not a VAT payer.
- FreeProfit transfer
The rules of your country of residence apply separately.
Service Scope and Limits.
We assess which of your income falls within the exemption. Records and annual returns are handled together with our accounting team.
The condition for the exemption
We assess whether your activity is directed outside Northern Cyprus or within the Free Port.
Separating local sales
Normal rules apply to sales within Northern Cyprus; these transactions are tracked separately.
Record-keeping
The basis of the exemption is regularly kept records; we set up the record-keeping with you.
Annual accounts and returns
Even where no tax arises, the company files its balance sheet and annual reports every year.
Dividends and your country of residence
We consider together with you the filing obligations in your country of residence on the income received.
Follow-up during the year
If your customer structure or type of income changes, we reassess your position.
Outside the scope
- Monthly bookkeeping (under the accounting service)
- The annual activity fee itself
- Your personal tax return in your country of residence
- Any guarantee of the tax outcome
Annual Tax Calendar.
The calendar below applies to a Free Port company. Even where no tax arises, the return is filed in April.
- Corporate tax returnApril
- Corporate tax paymentMay, October
- Year end
Annual accounts
The period is closed and the balance sheet is prepared.
- April
Annual accounts and return
Filed in April even where no tax arises; it is mandatory.
- Every year
Annual activity fee
It is a fixed charge, not a tax; it is paid every year.
- May and October
If there are sales to the local market
Where tax arises on sales within Northern Cyprus, payment is made at the end of May and October.
Shareholders' Tax Position by Country of Residence.
As long as profit stays in the company and is used for the company's activities, no tax arises in Northern Cyprus. Tax may arise when profit is paid to you as personal income.No tax arises while profit stays in the company; it arises when it passes to you as personal income.
- Your customerOutside Northern CyprusInvoice
The invoice is issued by your company and payment is made to the company account.
- Your companyIn the Free Port0%
Corporate tax, income tax and VAT do not apply to this activity.
- YouIn your country of residenceDeclaration
If profit is distributed to you as a dividend, it may need to be declared in your country of residence.
Details
- Structures weighted towards passive income
Where income consists mainly of passive income such as interest, rent or licence fees, undistributed profit may also be treated as the shareholder's income.
- If the company is managed from your country of residence
A company whose activities are effectively brought together and managed from another country may be treated as a corporate taxpayer in that country.
- Personal opinion
We do not give personal tax opinions; we assess your situation in the consultation.
Common Mistakes.
That no tax arises at company level does not mean that no tax will arise at any other stage.
Assuming the exemption is unconditional
The exemption applies only to activities directed outside Northern Cyprus and within the Free Port.
Not separating sales to the local market
On sales to a local company within Northern Cyprus, customs, VAT and corporate tax rules apply.
Neglecting the filing obligation
Even where no tax arises, the balance sheet and annual reports are filed every year.
Not declaring dividends in your country of residence
If you live in another country, dividends may need to be included in your tax return there.
Managing the company from your country of residence
A company effectively managed from another country may be treated as a taxpayer there.
Neglecting the annual fee
The activity fee is a fixed charge, not a tax; it is paid every year.
Our Working Method.
The process consists of four steps; the first step is taken before formation.
Assessing the activity
Information is taken on whom sales are made to and where the activity is directed.
Assessing the exemption
The income that falls within the exemption is notified in writing.
Setting up record-keeping
The record-keeping that underlies the exemption is established.
Monitoring during the year
If your customer or income structure changes, your position is reassessed.
Frequently Asked Questions.
For activities directed at companies outside Northern Cyprus and within the Free Port, corporate tax and income tax do not apply; the company is not a VAT payer. For sales to a local company within Northern Cyprus, the normal tax rules apply. The annual activity fee is a fixed charge, not a tax.
The exemption is a statutory arrangement based on the Free Port and Zone Law. Its condition is genuine activity directed outside Northern Cyprus and regularly kept records.
Dividends are declared and taxed under the rules of your country of residence, which differ from country to country. We do not give personal tax opinions; please consult a tax adviser in your country of residence.
Where income consists mainly of this kind of passive income, undistributed profit may also be treated as the shareholder's income. The position differs for service and trading income; we assess it together in the consultation.
Yes, it is mandatory. Even where no tax arises, a Free Port company files its balance sheet and annual reports every year.
For activities directed at companies outside Northern Cyprus and within the Free Port, the company is not a VAT payer. For sales to a local company within Northern Cyprus, the normal tax rules apply.
A profit transfer is free of tax as far as Northern Cyprus is concerned. The personal tax rules of the country in which you are tax resident apply separately.
Because the scope varies from company to company, no fixed price is stated; the fee is notified in writing after the consultation.