How to become a tax resident of Cyprus?
Benefits:
· Flexible tax system for individuals and legal entities.
In particular, the amounts related to the interest income (unless this is the only source of income, i.e. arising from the main professional activity of the person), as well as to the dividend income, are deducted from the taxation basis in Cyprus.
The income tax of individuals is calculated on a progressive tax scale.
|
Chargeable income for the tax year, euro |
Tax rate % |
Accumulated tax, euro |
|
До 19,500 |
0 |
0 |
|
19,501-28,000 |
20 |
1,700 |
|
28,001-36,300 |
25 |
3,775 |
|
36,301-60,000 |
30 |
10,885 |
|
От 60,000 |
35 |
· Foreign nationals, as well as citizens of the Republic of Cyprus, who obtained citizenship not at birth but by application, can obtain “non-domicile” status after 17 years of their stay in Cyprus. Accordingly, they are not subject to the taxes on this type of income, and in particular such as:
- Deposit interests
- Rentals
- Dividends.
Up to 01.03.2019, the holders of the “non-domicile” status were not imposed taxes on passive income. From then on, a special levy for Cyprus Health System (GESY) development was introduced.
The rates of the levy for the Health System development are shown below (contributions are capped at €180,000 annual income):
| Category | Rate from 01.03.2019 | Rate from 01.03.2020 |
| Persons earning rental, interest, dividend, and other income | 1,70% | 2,65% |
IMPORTANT: Any person can become a tax resident of Cyprus provided:
A) he/she is present in Cyprus for more than 183 days in a calendar year,
OR
B) he/she remains in Cyprus for at least 60 days (during one visit or several), but does not reside in any another country for a period exceeding 183 days (i.e. it is convenient for those who live in three countries), and also is not a tax resident in any other state. At the same time, this person must have defined Cyprus ties, such as:
- carrying out business activities or being employed in Cyprus (including appointment as a director or shareholder in a company that is a tax resident of Cyprus), provided that such is not terminated until 31 December of the tax year the residency is requested, and
- maintaining a permanent home in Cyprus that is either owned or rented (a short term rent is not taken into account).
HOW THE DAYS ARE CALCULATED
(Attention! Original boarding passes are required!)
For the purposes of both the '183 day rule' and the '60 day rule', days in and out of Cyprus are calculated as follows:
• The day of departure from Cyprus counts as a day of residence outside Cyprus.
• The day of arrival in Cyprus counts as a day of residence in Cyprus.
• Arrival and departure from Cyprus on the same day counts as one day of residence in Cyprus.
• Departure and arrival in Cyprus on the same day counts as one day of residence outside Cyprus.
OUR SERVICES
Lawyer in Cyprus Olga Papadimitri and the team of professionals of Limassol law office "O. Papadimitri LLC" provide assistance in setting up a company in Cyprus, as well as registration of the company and its owners (individuals) in order to obtain tax residency. We also handle filing of annual tax declarations and other reports. It should be noted that foreign nationals have a number of tax benefits in the first years of their stay in Cyprus.
If necessary, we undertake filing of an application with Cyprus Migration Services in order to obtain a residence permit (both temporary and indefinite leave to remain).
Additionally, we provide assistance in finding lodging or office space. - It is possible to view the suggested objects via Skype / video call.
To save time, you can arrange an online consultation with our specialists.