Income taxes

  • conditions of granting and preserving the status of a Cyprian tax resident

The basic rate of the corporate income tax for persons possessing the status of the resident in the territory of Cyprus is 10%

A holding company will be recognized by the Polish tax bodies as a Cyprian resident when the managerial and control operations are performed on behalf of the established holding company by the Cyprian residents or a representative being a Cyprian resident. Appointing the board of directors where most of the members are not persons having the status of the Cyprian resident or appointing a Polish representative who makes decisions on behalf of the board of the Cyprian holding company causes that the holding company may lose the resident status, which in turn will imply:

  • creation of the residence in the territory of Poland [the seat of the board or the seat of the company are in Poland – art. 3 of the law on corporate income tax]; or
  • creation of a plant of a foreign company in the territory of Poland (the person who on behalf and in favour of the subject having the seat or the board in the territory of one country operates in the territory of another country, if the person possess the authority to conclude agreements on its behalf and exercises this authority – art. 4a pt 11lit. c of the law on corporate income tax.

The loss of the resident status will cause that for the holding company there will be created in the territory of Poland an unlimited tax obligation and thus, its incomes will be taxed on general basis. Creating in turn a plant of the foreign company in the territory of Poland will result in assigning this plant the incomes and their taxation in Poland on general basis.

Therefore, we recommend Polish taxpayers establishing holding companies in the territory of Cyprus where the majority of the board of directors constitute the subjects (physical and legal persons) not possessing Polish residence or having a representative who is not a Polish resident. It is worth adding here that a partner of a holding company having the seat in the territory of Cyprus may be a capital company possessing the status of the resident in the overseas territories such as The Republic of Vanuatu, The Republic of Maldives or The Republic of Seychelles